Gov. Tom Wolf presented his 2021-22 state budget proposal a few weeks ago, kicking off the next official step of the budget process: legislative hearings. Starting this week and over the next several weeks, members of the House and Senate Appropriations Committees will host hearings with the heads of state agencies and state-related entities that are slated to receive funding from the Commonwealth in the upcoming Fiscal Year. The hearings offer lawmakers the chance to hear from these individuals about the current and future needs of their respective departments and determine whether the governor’s proposed level of funding for those departments is adequate – or, perhaps, beyond what is necessary – to fulfill their mission.
The governor’s $37.87 billion plan aims to spend 11 percent more than the budget passed last year. Lawmakers have already expressed concern with increasing spending through higher taxes on the natural gas industry and a nearly 50 percent increase in the Personal Income Tax, the rate paid by individuals and the vast majority of employers. Last week, the Independent Fiscal Office issued an Economic & Revenue Update for the state which showed that Pennsylvania payroll employment fell 7.4 percent between 2019 and 2020, and GDP declined an estimated $31 billion, or 4.3 percent while U.S. GDP declined an estimated 3.5 percent. These revenue reductions will most certainly play a key role in lawmakers’ argument that it is not the time to implement expansive government cost increases.
Other tenets of the governor’s budget plan and legislative priorities include an increase in the state’s minimum wage to $15 an hour; the implementation of mandatory combined reporting in exchange for a slight reduction in the Corporate Net Income Tax; and the legalization of recreational marijuana in order to pay for higher state spending. These and other topics are expected to be widely discussed, both at the upcoming budget hearings and in subsequent months as talks about the state’s spending plan begin to take shape between the Wolf Administration and legislative leaders. Budget hearings are scheduled to be held from this week through and including the week of March 1.
The PA Chamber will be paying close attention to these hearings and the impact that the spending plan and related policy proposals will have on the state’s business community and will report on highlights from some of these hearings in the weeks ahead. Our organization is advocating for lawmakers to pass a fiscally responsible, on-time budget that doesn’t place undue new tax burdens on businesses and individual taxpayers.
The full budget hearings schedule, which is subject to change, is available on the General Assembly’s website.