With Pennsylvania’s June 30th budget deadline just over a week away, leaders in the Senate and House are attempting to come to an agreement with the Wolf administration on a fiscally responsible budget. For the first time since 2001, discussions to not have to include borrowing, tax increases, or delayed payments. Senator John Gordner, Representative David Millard, and Alex Halper with the Pennsylvania Chamber of Business and Industry provided an overview of this year’s discussions at The Chamber’s Spring Legislative Breakfast held June 16th at the Pine Barn Inn.
Halper began with an overview of Pennsylvania’s fiscal position. Tax revenues for the current fiscal year are $5.5 billion ahead of projections. Additionally, $2.6 billion in American Rescue Plan funds remains unallocated. The state’s Rainy Day Fund, which can be tapped during revenue shortfalls, is at $2.7 billion, up from just $100 million a couple of years ago. Senator Gordner expects a portion of the surplus funds to be added to the Fund.
Legislative leaders are cautious not to use these unanticipated funds for ongoing costs. The Independent Fiscal Office is already projecting a budget deficit for the 2023-24 fiscal year. Senator Gordner also noted that following the American Recovery and Reinvestment Act of 2009, many school districts used stimulus money to plug holes in their budgets. The next year, $1 billion was no longer available statewide.
Instead, Gordner anticipates some of the excess funds will be used for one-time investments, including paying down the $200 million owed to the Federal government for unemployment compensation, which will avoid increases for employers. Other potential uses of funds include bonuses for front line staff at nursing home and long term care facilities, child care incentives, investments in mental health, including school issues, and the property tax and rent rebate program. Gordner is the prime Senate sponsor of Growing Greener 3, which would make investments in state parks and forests, clean water efforts, and water and sewer projects. Representative Linda Schlegel-Culver, who will represent Montour County as part of the 108th District beginning next year, is the prime sponsor of the legislation in the House. Representative Millard has sponsored legislation to allocate $3 billion to establish a Rebuild Pennsylvania Fund for one-time projects.
The top priority for the PA Chamber in this year’s budget is reducing the state’s Corporate Net Income tax rate from 9.99%, which is the second highest in the nation. Senator Gordner expects that the budget agreement will include a revision to the tax code to reduce that rate. Other priorities for the PA Chamber are allowing small businesses to defer personal income tax liabilities through like-kind exchanges of certain property, and reforming the Unemployment Compensation system to reduce fraud and abuse.
While Governor Wolf has called for an increase in the state’s minimum wage to $15 per hour each year that he’s been in office, Gordner and Millard were confident that the final budget deal would not include an increase. Both cited market conditions that have led to increased starting wages including many unfilled positions at the $15 mark. Halper pointed out that another way the governor is attempting to increase wages specifically for hospitality workers is through an increase in the tipped wage, though that also appears to be off the table.
Senate and House Republican leaders, who are in the majority, are in agreement on a budget framework, according to Senator Gordner. “We are optimistic that between now and June 30th, we will get it done,” said Gordner. “If we do not get it done with the governor, I can assure you that the House and Senate will pass a fiscally prudent, fiscally responsible budget.”
While not part of the budget discussions, Senator Gordner has been outspoken on PennDOT’s plan to begin tolling nine interstate bridges beginning next year, including the I-80 bridges over Nescopeck Creek in lower Luzerne County. At the breakfast, he noted that the plan was introduced prior to the passage of the federal infrastructure bill in late 2021. As part of that package, Pennsylvania will receive over $3 billion for roads and bridges over 5 years. He joins other legislators and the No P3 Bridge Tolling Coalition in calling on PennDOT and the Wolf Administration to abandon the bridge tolling plan based on this additional funding.
The event was sponsored by Montour Solar One, the proposed solar facility in northern Montour County. The partnership between Talen Energy and Pattern Energy recently withdrew its application for a conditional use permit to clarify a number of details, and expects to resubmit it soon. “We intend to be a good neighbor, and an active part of the community for decades to come,” said Dave D’Onofrio, community liaison for the project.