The PA Chamber advocates for responsible state budgets that make wise investments and set the Commonwealth on a path toward fiscal prosperity. This largely means battling back against excessive mandates and tax increases on the employer community, enabling them to invest, hire and grow.
On February 5, Gov. Tom Wolf gave his 5th budget address to a joint session of the General Assembly. The administration’s 2019-20 spending plan calls for $34.2 billion in spending – a 2.79 percent or nearly $1 billion increase over the current year. With the state continuing to have strong revenue collections, the proposal does not call for any broad-based tax increases.
Following the governor’s address, the PA Chamber issued a statement commending the governor for using his speech to shine a spotlight on the need for the private sector and government to work together to ensure the Commonwealth’s workforce is equipped to meet the needs of the state’s evolving jobs market. During his remarks, the governor announced the creation of the Keystone Economic Development and Workforce Command Center – which aims to bring together the various elements of state government that oversee workforce development programs with the private sector to identify ways to help close the jobs skills gap, fill the many open positions that already exist throughout the state and make us more competitive on a national and global scale. To help lead this effort, the governor selected PA Chamber President and CEO Gene Barr and Pennsylvania AFL-CIO President Rick Bloomingdale to serve as co-chairs. The PA Chamber looks forward to continuing to partner with the Wolf administration and elected officials on both sides of the aisle to develop innovative solutions to address the Commonwealth’s workforce challenges.
There are, however, some components of the governor’s budget that cause concern for the Commonwealth’s broad-based business community. For the fifth year in a row, the Wolf administration has proposed changes to the Commonwealth’s corporate tax structure that links a phase-down of the state’s Corporate Net Income tax rate with mandatory unitary combined reporting. While the PA Chamber has long argued that the state’s CNI tax rate – which is one of the highest effective rates in the nation – needs to be lowered, we disagree that making a CNI rate reduction contingent on the implementation of combined reporting is good for business. This complex, overly broad tax reporting system will only lead to increased administrative and litigation costs and will put Pennsylvania at a greater competitive disadvantage.
Additionally concerning is the governor’s push for an aggressive increase to the state’s minimum wage rate. The administration’s plan calls for employers, in just a few months, to increase entry level wages by more than 65 percent. Restaurants – many of whom already operate on thin profit margins – would see their wages increase by more than 235 percent and ultimately by more than 500 percent, due to the governor’s plan to eliminate the tipped wage. Check out our Myth v Fact sheet for more details about the impact of government mandated wage hikes.
The Wolf administration has also renewed calls for an additional severance tax on the natural gas industry. While technically not part of the governor’s budget proposal, in the week prior to the budget address, the governor unveiled his “Restore Pennsylvania” initiative – which would use the proceeds from a severance tax to pay for $4.5 billion in borrowing to fund critical infrastructure projects. More information on that proposal can be found here.
Over the coming weeks and months, we will be keeping a close eye on the budget process – working with lawmakers from both sides of the aisle on those policy issues that we can build consensus on; pushing back on proposals that will negatively impact the Commonwealth’s business climate; and advocating for reforms that will improve our overall competitiveness.
The state budget process dominates the legislative agenda for the first part of each year. With two legislative chambers and the governor’s office all involved, there is a lot of back and forth between the parties and negotiations can often be confusing and hard to follow. Below is a simple timeline to help understand the annual budget process.
Pennsylvania Chamber of Business and Industry President and CEO Gene Barr issued the following statement regarding the recently finalized 2019-20 state budget:
Pennsylvania Chamber of Business and Industry President and CEO Gene Barr issued the following statement in regard to Gov. Tom Wolf’s 2019-20 budget address:
Within Pennsylvania’s borders are a diverse and vibrant collection of communities where employers set up shop, residents raise families and tourists come to visit. The success of our Commonwealth is directly tied to the strength of its communities and public policy should help communities thrive.
Pennsylvania’s labyrinthine system of local governments is not conducive to strengthening economic competitiveness. The Commonwealth is comprised of 67 counties, 56 cities, 958 boroughs, 1 town (Bloomsburg), 1,547 townships, 500 school districts and 1,961 authorities. Keeping government “close to the people” is certainly an important principle, but too many small governments with diminished capacities, inadequate resources, and limited economic wherewithal do not help advance economic development and job growth within communities. The PA Chamber believes that cooperation among counties and municipalities is part of what is needed to foster more functional and effective local government.
Moreover, the financial wellbeing of many Pennsylvania municipal governments is often harmed by antiquated and unbalanced state laws and regulations, which may necessitate higher costs and inefficient spending. Ultimately, these costs are borne by Pennsylvania residents and businesses, many of whom now live and operate in financially distressed communities. The PA Chamber supports efforts and legislation to help ease the financial burden municipalities face.
Municipal sustainability can be effectuated by: