Pennsylvania Budget Signed, Sealed, Delivered Without Tax Hikes Thanks to Helping Hand from Federal Reform

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Posted by Hans Schundler on Tuesday, July 3rd, 2018, 5:38 PM PERMALINK

Standing firm against the tax increases perpetually pushed by Governor Tom Wolf (D-Pa.), the Republican-led state legislature passed a 2018-19 budget that bolsters the funding of public schools, expands school choice through educational tax credits, invests in workforce training and imposes no new tax hikes.

The budget process under Governor Wolf has never been a smooth one. In fact, this year’s bill is the first one he’s ever signed. In prior go-arounds, the Governor has proposed massive tax hikes on the grounds that fiscal catastrophe was otherwise imminent. In his first year for example, he requested a $12.5 billion tax increase, which was staved off by the legislature.

What changed in this year’s discussions was the new revenue stream coming from federal tax cuts last December. As Charlie Gerow writes at PennLive.com:

“While every budget travels a bumpy road, this year's was made a lot smoother because the revenue flowing into the commonwealth is significantly ahead of previous years.

“What's causing the strong revenue this year and the equally robust projections for the next?

“There's no denying that a large part of it comes from the tax cuts enacted with the recent tax reforms and tax cuts at the federal level.”

There was a notable spending increase. From the 560 million dollars added to the budget this year, $450 million are being directed to Pre-K education, $25 million toward Educational Improvement Tax Credits, $15 million to state universities and community colleges, and $30 million to workforce training.

Despite some imperfections, this budget is a win for taxpayers as tax increases like a severance tax on natural gas were avoided, and talk of a job-killing $15 minimum wage did not lead anywhere.

It also provides a valuable lesson on the benefits of the federal tax reform package, which has broadened the tax base in the states and offered them new revenues as businesses invest more and increase wages.

Photo Credit: Bestbudbrian

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