Saturday, April 16, 2016

Update on Pennsylvania’s Budget: Balanced without a Tax Increase

Pennsylvania Governor Tom Wolf, a liberal Democrat, allowed the Commonwealth’s balanced budget that had been passed by the Republican-led General Assembly a few weeks ago to become law without his signature. 

The 2016 budget, which attracted bipartisan support, increased education spending by hundreds of millions of dollars, but, in a significant victory for conservatives, did not raise taxes.   

The budget was nine months late because Wolf had vetoed or line-item vetoed earlier budget bills because of his insistence on tax increases for even more spending, even though the Commonwealth’s spending on education was already at record levels and despite the lack of any demonstrated correlation between higher spending and performance.  In fact, Pennsylvania has demonstrated the opposite.  The budget does not address pension reform or privatization of wine and liquor, both of which would save the state money or add extra revenue.  There remain hundreds of millions of dollars in other savings to be realized through the elimination of corporate welfare and the closing of tax loopholes, as well as through more welfare reform.  Pennsylvania has some of the highest corporate taxes in the world and has one of the most burdensome inheritance taxes. 

The Commonwealth’s fiscal situation remains uncertain, however, because Wolf vetoed the state fiscal code.  Also, despite his line-item veto of education funds, he had appropriated money from the Treasury for public schools, against the state Constitution, and now is threatening to veto the bipartisan school funding bill. 

Wolf did sign legislation into law requiring fiscal analysis for public employee union contracts. 

Like United States President Barack Obama, Wolf has proposed a budget for 2017 that would dramatically increase spending and require higher taxes.  

It is necessary that conservatives continue to advocate for fiscal responsibility through spending cuts to avoid any tax increases.  They should particularly work for pension reform, which would help not only the Commonwealth, but its counties, municipalities and school districts, as Pennsylvania’s unsustainable public pension obligations are well over $50 billion, which is causing a fiscal crisis for every state government body.

No comments: