Governor Unveils Massive Tax & Spend Budget Proposal

(HARRISBURG) – Governor Tom Wolf today unveiled his proposed $40.2 billion General Fund Budget for Fiscal Year 2021-22, which includes a massive increase in state spending, a substantial personal income tax rate hike, imposition of Marcellus Shale extraction tax, and elimination of funding for broadband expansion as well as vital agricultural and health programs and services.

“There’s no right time to raise taxes and certainly in the middle of a pandemic is no time to raise taxes,” Senator Devlin Robinson (R-37) said in remarks following the budget address. “The local economy has been squeezed during this pandemic and to put an undue tax burden on everyday Pennsylvanians is just not right. You don’t levee taxes on the people who are already burdened by taxes. You want to expand the tax base by creating new jobs. You want to grow horizontally not vertically.”

The Governor’s proposed FY 2021-22 Budget includes a $3.1 billion (8.2 percent) increase in state spending from the current fiscal year, according to Senator Robinson.

The Governor wants to increase the state personal income tax (PIT) rate from 3.07 percent to 4.49 percent (a 46.3 percent hike) as of July 1 to raise $3 billion annually. About one-third of all Pennsylvanians, would see their state tax burden increase under the Governor’s proposed PIT rate hike.

“You cannot tax your way into prosperity,” Senator Robinson said. “Pennsylvania does not have a revenue problem – it has a spending problem. I am willing to work with the governor to ensure a better tomorrow for all of my constituents. I haven’t seen in this budget how taxing everyday workers – blue-collar workers – is going to make their lives better”

Upwards of one million PA small businesses will have their tax rates increased by 46.3 percent under the Governor’s proposal, since these pass-through businesses (i.e. S corporations, partnerships, etc.) pay business taxes at the PIT rate.

This proposed PIT rate increase coupled with the Governor’s ongoing COVID-19 restrictions and his proposed minimum wage hike would be devastating for many family operations that are already struggling to stay financially solvent.

The Governor is again making his annual push for a Marcellus Shale extraction tax. This proposal would severely impact the gas industry. Pennsylvania saw a $50 million reduction in its impact fee revenue, according to the latest Independent Fiscal Office report.

The Governor is also proposing a $168 million plan to augment funding to the State Police by charging all municipalities for police services regardless of municipal coverage. 

While the Governor is calling for a major spending increase in several budgetary line items, he is also planning to eliminate $5 million in state funding for broadband expansion, even though the funding is mandated by Act 132 of 2020 (Senate Bill 835), as well as millions of dollars for agricultural programs and health care services.

 

Contact – Elizabeth Weitzel