The Political Landscape in Harrisburg
Mar 06, 2015
By Alex Halper
PA Chamber of Business and Industry
The New Year brought many new faces to state government. With the inauguration of Gov. Tom Wolf, increased Republican majorities in both the state House and Senate and several new caucus leaders, the political landscape in Harrisburg has changed dramatically.
On March 3, Gov. Wolf unveiled his first budget proposal. The governor’s proposed budget increases state spending to nearly $34 billion, a 16 percent increase over the current fiscal year. Along with his state spending plan, he has also announced several changes to our current tax structure – including an additional tax on the natural gas industry, a decrease in the corporate net income tax rate and increases to the personal income tax rate, which small businesses pay, an increase and an expansion of the sales tax rate, and a new system for determining corporate tax liability, which could lead to significant tax increases.
Going into the 2015-16 fiscal year, the Commonwealth is facing an approximately $2 billion deficit. This shortfall is the result of one time revenue sources in the current fiscal year and growing pension obligations. There is no greater threat to the Pennsylvania’s long-term, fiscal stability than the state’s growing pension crisis. With an unfunded liability already more than $50 billion, increasing pension payments continue to drain state resources. Over the next three years alone, the state’s pension contributions will increase to more than $1 billion. The current system is unsustainable and will ultimately lead to increased taxes on employers and taxpayers throughout the Commonwealth if long-term reforms are not implemented.
Meanwhile, both chambers of the General Assembly have identified legislative priorities that will impact budget negotiations. The House has already passed Speaker Mike Turzai’s, R-Allegheny, proposal to end the state’s monopoly on wine and spirits sales and move to a privatized system. In the Senate, Majority Leader Jake Corman, R-Centre, has stated that pension reform must take place prior to any discussion on increasing revenues. The PA Chamber has long-advocated in support of both initiatives and believes pension reform is the top priority for this legislative session.
I look forward to discussing these issues and additional PA Chamber agenda items on March 12.