State’s Fiscal Health the Focus of Senate’s First Budget Hearings with Revenue, IFO Departments

The Senate Appropriations Committee took a holistic look at Governor Josh Shapiro’s budget proposal and Pennsylvania’s overall fiscal health with the heads of the Department of Revenue and the Independent Fiscal Office kicking off the committee’s series of budget hearings last week.

According to coverage of the hearing by Pennsylvania Legislative Services, Knittel told the committee that there are “three unknown risk factors” that could impact spending in the coming fiscal year: the banking situation, the debt ceiling and the potential restart of the student loan moratorium. “I don’t know what the U.S. Supreme Court will rule on that,” Knittel said, though he suggested that student loan forgiveness will have a “very big impact” on the nation and state’s future economic performance.

When Knittel was asked about the potential impact of accelerating the CNI down to 4 percent, he said, “Pennsylvania is currently much higher than many other states and regarding [CNI], that’s really a bad place to be an outlier,” saying that while a reduction to 4 percent would be very “positive” his office has yet to model its impact.

Knittel also talked about the impact of population loss on Pennsylvania’s economic bottom line, predicting that the working age population “will contract by 129,000 over the next few years” and suggesting that could have a direct impact on economic growth as the state’s population is getting older. When asked if demographics should be a top priority for the state to address, Knittel said he would “put it at the top. It might even be number one.”

At the Department of Revenue hearing with Acting Secretary Pat Browne, the secretary responded that plans to halve the CNI rate were “years in the making” but suggested with the current financial schedule, corporate receipts must be adequate to justify an acceleration of the phase-down.

Browne was also asked about proposed increases in the income limit for Property Tax Rent Rebates. The governor is calling for increasing eligibility caps from $35,000 for homeowners and $15,000 for renters, up to $45,000 for both categories, which would expand the program to an additional 173,000 seniors and persons with disabilities. The income limits are also proposed to be indexed to inflation.

Some other topics raised during the hearing included how Pennsylvania can better attract and retain workers – which Browne said could be remedied through tax reform; along with a proposed minimum wage to $15 an hour (which Browne projected would generate $117 million).

The governor has also called for a refundable tax credit program for newly certified nurses, police, and teachers equal to $2,500 per year for three years to attract and retain workers in these fields.

Also, while Gov. Shapiro called for eliminating the sales tax and gross receipts tax on cell phones, which would save $62 million, he also called for increasing the 911 surcharge from $1.65 to $2.03, which would generate an additional $54 million.


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