Sunday, August 14, 2016

Pennsylvania's Budget Is Balanced

           With my focus lately being on my concerns about the Republican presidential nomination, I have not had a chance to discuss the 2016-2017 Pennsylvania budget, which was passed by the Republican majority legislature in late June and became law in early July, thereby avoiding a second consecutive protracted budget crisis.  

           The requisite fiscal code was subsequently passed and also became law.   

The Commonwealth’s budget has been balanced without personal or businesses income tax increases or additional taxes on natural gas extraction, such as liberal Democratic Governor Tom Wolfe had sought last year.  See my posts from November to April on Pennsylvania’s budget crisis last fiscal year.  However, there were other major tax increases of $1.3 billion, although this figure is less than half of what Wolfe sought this year.  The budget expands the state sales tax of 6% to digital downloads and increases and expands taxes on tobacco, including to smokeless tobacco, and imposes other taxes, such as on banks.  Other additional revenue in the budget comes from expanding gambling to the Internet, despite concerns about greater risks of addiction, especially for young people.

The budget increases spending, especially on education (by $200 million), but by considerably less than Wolfe wanted.  There was some privatization of retail sales of wine, which could boost tax revenue somehwat by discouraging bootlegging, but the budget leaves in place the Commonwealth’s wholesale alcohol monopoly, as well as its socialist system of state wine and spirit stores and most restrictions on the sale of beer.  There was no pension reform in the budget, despite Pennsylvania’s pension crisis that is its largest budgetary challenge and which also is pressuring every county, municipal and school district’s budget in the Commonwealth.  

Pennsylvania’s budget increased taxes and spending, but much less than what the liberal Democrats wanted and in less economically onerous ways than they would have imposed.  However, it made only minimal fiscal reforms, which leaves much more progress to be made next year.

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