PA Budget

Gov. Tom Wolf presented his 2018-19 State Budget Proposal on February 6th, 2018.  The Pennsylvania Budget and Policy Center will be posting analysis, infographics and related documents on this page as they become available. Check back often for the latest updates.

In the past several months, Pennsylvania’s legislature has shown renewed interest in enacting a severance tax on natural gas extraction as part of the state’s overdue revenue package to fund the state budget. In that context, the natural gas industry has maintained a steady drumbeat of communications claiming that Pennsylvania already has a tax on gas extraction because of its per well impact fee which does not rise with the volume or value of gas drilled. The industry and its allies also continue to claim that Pennsylvania’s impact fee amounts to a tax that is higher (relative to the volume or value of gas produced) than the severance taxes in many other states.

Marc Stier, Director of the PA Budget and Policy Center, made the following statement following the announcement of a credit downgrade for the state of Pennsylvania:

"The decision by Standard & Poor’s to downgrade Pennsylvania’s credit rating should come as no surprise. There was ample warning by S&P and other credit agencies, as well as by political observers including us at PBPC, that this would be the result of the continuing failure of Republicans in the General Assembly, and especially Speaker Turzai and his followers in the House, to raise sufficient recurring revenues to close state’s long-term structural deficit. Instead, year after year, budgets passed with Republican majorities have been balanced with one-year revenues, phantom funds, and other budgetary gimmicks.

Marc Stier, Director of the PA Budget and Policy Center, made the following statement on the passage of the House GOP revenue plan.

The budget plan released today by a group of Republican House members fails in the most important task before our state today: to resolve the long-term structural imbalance between expenditures and revenues. Even if every fund transfer proposed by the Republican back-benchers today were Constitutional and legal, and even if they had no impact on the commitments made by the General Assembly to provide funding for public purposes, this one-time transfer will provide almost no recurring revenues to support the state’s on-going commitments. Even if this proposal made sense, it leave us facing a deep deficit next year — one that would grow deeper every subsequent year.

Republican members of the Pennsylvania House of Representatives, with the support of outside advocates, are moving to announce plan to borrow massively, perhaps up to more than $2 billion, from many of the 100 or so special funds that, along with the General Fund, are part of the state budget. Their justification for doing so is that, at the end of each year, many of these funds have a surplus. So it seems easy enough to shift those surpluses – money they are quick to say is “just sitting there not doing anything” – into the General Fund.

Forthcoming proposals by the House Republicans and the Commonwealth Foundation to balance the current year budget by raiding over $2 billion from other state funds is budget gimmickry on steroids, which does not solve the state’s structural deficit and makes it worse in future years. It will also undercut the purpose of many state funds and lead to a co-mingling of operating and capital funds, which is bad budget practice.

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