HARRISBURG – The Pennsylvania General Assembly overwhelmingly voted to approve a spending blueprint with a historic tax cut for business, a hefty boost for education, and an expansion of state savings accounts that House Speaker Bryan Cutler called a responsible investment in the future.
Gov. Tom Wolf signed the state’s $45.2 billion general appropriations spending bill and several other budget-related bills Friday night.
The House and Senate votes reflected strong bipartisan support in the plan negotiated by lawmakers and Wolf, a Democrat. Only one Lancaster County lawmaker in either chamber, Rep. Dave Zimmerman, a Republican, voted against the spending plan. The legislation was approved 180-20 in the House.
The Senate on Friday approved the budget by a 47-3 vote.
“This budget certainly reflects the priorities of Lancaster County,” from farming, schools and nursing homes, to fiscal responsibility, said Sen. Ryan Aument, R-Lancaster County.
Aided by unprecedented additional funding to help states deal with the pandemic, the budget deposits $2.1 billion into the Rainy Day Fund, an emergency savings account, bringing the fund to its highest level of $5 billion.
“Whether it is maximizing savings in our Rainy Day (savings) Fund, protecting and investing in our farmers, or making historic targeted strides in improving our children’s futures, this is a budget every Pennsylvanian can be proud of,” said Cutler, R-Lancaster.
“One, it responsibly saves money, two, it responsibly invests money, and three, while making sure that we’re taking care of today we’re also planning for tomorrow,” Cutler told reporters.
Zimmerman said he voted against the budget because “this is simply too much spending with a crippled economy and looming recession.” He added, “inflation is up 8.6% from last year and earnings are down.” The spending levels are “not sustainable” and “appropriations should be limited to match revenues,” Zimmerman said. He is also irked that there’s too little focus on special education compared to K-12.
Corporate tax cut
For decades, Republican lawmakers and some Democrats have pushed to reduce the state’s onerous corporate net income tax, which historically has been one of the highest flat rates in the nation. The spending plan cuts the business tax from 9.99% to 8.99% in 2023 and then gradually reduces it to 4.99% by 2031. Proponents have long said doing so will improve the state’s business climate and help create jobs.
The 9.9% rate has been “sticker shock” for companies considering locating in Pennsylvania, Aument said. He has sponsored bills to reduce the tax rate but says he would take a “more aggressive” timetable for rolling back the rate.
Senate Democrats on Thursday night complained there is no revenue to replace state funds lost through the tax reduction.
Aument said theirs is a shortsighted argument. Long-term tax revenue from new company locations and employees paying income and sales taxes would far outstrip any first-year loss of corporate net income revenue, he says.
Lancaster County will benefit from what Republicans are calling in a budget document the “largest environmental program in a decade.” A majority of $220 million in federal relief for clean streams and agriculture projects is expected to go to Lancaster County, said Rep. Mike Sturla, D-Lancaster, a member of the Chesapeake Bay Commission. “We know from talking to the DEP (Department of Environmental Protection) a majority is coming to Lancaster County. It’s where they get the biggest bang for the buck.”
Lancaster County is a major contributor to Chesapeake Bay pollution via the Susquehanna River, Sturla said.
Sen. Scott Martin, R-Lancaster County and co-sponsor of the Clean Streams Fund legislation, said, “This is a momentous investment in our rivers and streams to improve water quality for all Pennsylvanians. We will be able to reduce pollutants to support healthy habitats for fish and humans alike, decrease flooding in prone areas, while reducing water treatment costs. This is all at no additional expense to taxpayers.”
“This is about cleaning up Lancaster County water for Lancaster Countians” with an added benefit of improving the bay, Sturla said.
Big education boost
The big ticket item was education funding: a $525 million boost in basic education funding to more than $7 billion and $100 million more for special education funding to $1.3 billion.
In a statement, Wolf said the budget solidified “his commitment to education at all levels.”
“Since I took office, Pennsylvania’s students and families have been my top priority,” Wolf said. “We have made long overdue investments in the people of Pennsylvania, including better education for all, safer communities, and a brighter future.”
Martin, chairman of the Senate Education Committee, also celebrated the boost.
“We’ve greatly heightened school safety and mental health program dollars and expanded school choice for families, leaving our education landscape with more opportunities and support than ever before,” Martin said.
The boost will help school districts — including in Martin’s Senate district — that have “long-waited for full implementation of the Fair Funding Formula,” Martin said.
Created in 2016, the fair funding formula is intended to equitably fund school districts, but a pending lawsuit alleges it has not worked.
Martin noted the basic education funding level was $500 million less than Wolf requested.
Even though the governor got much less than requested “it was still a historic number,” Sturla said.
“There were enough good points I thought it was worth voting for,” Sturla added.
The education code, a budget trailer bill, boosts tax credit and scholarship programs by $125 million enabling parents to choose private and parochial schools. The programs “give families a way out of consistently deteriorating school districts that have failed their children, or to meet their individualized needs,” Martin said.