With a Republican-controlled legislature and a Democratic governor riding high after a 17% reelection win, it’s a safe bet that there’s going to be some friction when it comes to the state budget, easily one of the most contentious issues in Harrisburg every year. Prior to the 2018 election, campaigning Republicans warned that if Tom Wolf were successful in his re-election campaign, Pennsylvanians would be faced with a significant broadbased tax increase through either sales tax increase and expansion or a personal income tax (PIT) increase. And things seemed to be holding true in late January, when the administration released a companion proposal ahead of the February budget address.
The companion was, on its face, nothing new to Republicans – a natural gas severance tax, which Wolf had been calling for since his first day in office. What made the proposal unique, however, is that the proceeds of the severance tax, for the first time, would be devoted to debt service on a large infrastructure bond to improve roads and bridges, expand broadband access, and shore up aging structures.
While there have been minor criticisms of the plan from the most conservative of lawmakers, many see the value, particularly given the fact that Pennsylvania has been desperately awaiting the federal infrastructure plan that was promised when President Trump took office in 2017.
While many saw the severance tax proposal as the first attack of a massive tax increase, the February budget proposal took everyone by surprise. Not only did it include no broad-based tax increase, it provided increased funding for nearly every major focal point for Republicans: infrastructure, workforce development, and the most rural of areas.
The plan also addressed a critical issue that the legislature has been struggling with for years – the division of Act 89 funds. In 2013, the legislature passed Act 89, uncapping the wholesale tax on gas and diesel, allowing wholesalers to pass along increased rates on retailers (who then passed those costs on to consumers). The additional tax was devoted to a restricted account and can only be used for three programs: road and bridge repair, mass transit, and state police funding.
As local governments have begun to shutter their local police forces, thereby ending their legacy liabilities like pensions, the state police have been forced to add coverage to those areas, without any charge to residents. Every additional dollar taken by state police, builders argue, is one less for road and bridge repair. The budget proposal, however, includes a per capita fee for state police coverage.
Finally, one of the most critical and strategic pieces of the budget proposal is one which Democrats have typically ignored. Known as SWEAP, the State Workforce, Education, and Accountability Program would assemble a roundtable of business and industry professionals to review existing policies within the Department of Labor & Industry and the Department of Education. The programs would be evaluated for efficiency and need, and the roundtable would make recommendations to modify programs as well as any outstanding needs. This focus on efficiency in government has been a staple for Republicans for years, so it has been met with praise by legislative Republicans.
While the ultimate outcome of the budget won’t be seen until this summer, this proposal is certainly an unconventional approach toward bipartisanship that has been lacking for some time.
March 7, 2019