Business Taxes

Last Friday, the General Assembly approved a $40.8 billion state spending plan for FYI 2021-22, without raising taxes. This budget, which covers the fiscal year starting July 1, marks seven in a row where lawmakers have rebuffed Gov. Tom Wolf’s requests for higher taxes, as he has proposed historically high tax increases in most years. Lawmakers now have one budget to go before Wolf runs up against his constitutionally mandated two-term limit.

Left behind in last week’s approval of the state budget are needed reforms to the business tax and regulatory structure that would help Pennsylvania take full advantage of an unrelenting surge in the nation’s economy. America just broke the record of 120 months of sustained growth thanks to the federal Tax Cuts and Jobs Act of 2017, and massive regulatory reform by the Trump Administration. Pennsylvania is missing out on opportunities, however, as businesses rush back into the country to invest in the substantially improved business climate.

Governor Tom Wolf has been travelling the state peddling this year’s version of his tiresome tax hike plan. His redundant tax on natural gas production is masquerading as an infrastructure improvement plan under the hopeful sounding name of “Restore Pennsylvania.” In typical tax-and-spend political irony, the plan would penalize the success of the very industry that is actually helping to restore Pennsylvania.

The Department of Environmental Protection (DEP) is cashing in on a permissive regulatory environment in Harrisburg. Late-2017 DEP fee increase approvals are on pace to cost businesses and consumers $50 million, with more increases on the way.

Governor Tom Wolf’s budget proposal offers little to encourage growth in Pennsylvania. As President Pro Tempore Joe Scarnati (R-Jefferson) said after the governor’s address, this budget does nothing to help Pennsylvania avoid getting stuck on the sidelines when the “wave of economic growth hits from the changes in federal tax law.”

For Rep. Steve Bloom (R-Cumberland), it’s time to turn Harrisburg’s troubles over to a higher authority. Partial and late budgets, declining credit ratings, costly and error plagued state contracts, and a trail of corrupt officials are symptoms of deep structural problems, he says, and a constitutional convention is the only way to fix them. “These are issues the Legislature is either unwilling or unfit to take care of,” Bloom said.

The General Assembly returns to Harrisburg this week in search of more than $2 billion to fully fund, as required by law, the $32 billion spending plan that was sent to the governor last Friday. The available options are all unwelcome: borrowing; more gambling; increasing taxes; shifting money between funds.