Pennsylvania Governor Tom Wolf (D), amidst his push for a larger state budget, is welcoming reports of high revenue intake, but Republicans are urging caution in response to the new economic downturn.
Data from the Pennsylvania Department of Revenue indicate the commonwealth’s General Fund took in $6.5 billion in April, an amount exceeding the department’s prediction by 38.7 percent. It is the largest sum of taxpayer dollars that the state has collected in one month. In Fiscal Year 2021-22 so far, the General Fund has received $40.7 billion, or 12.4 percent more than forecasted.
Wolf has taken the department’s report as an occasion to renew his call for his final proposed annual budget, which would hike the next fiscal year’s overall expenditures by 16.6 percent to total $43.7 billion.
“After this month’s collections, Pennsylvania revenues are so far ahead of estimate that we already have the money in the bank to pay for the historic investment I want to make in K-12 education, as well as the Corporate Net Income Tax [CNIT] cut and reforms I have proposed to bolster Pennsylvania businesses,” he said in a statement. “My administration has done a lot of work to get the commonwealth of Pennsylvania in a good place financially. It has taken a lot of hard work and a lot of years, but our state government is frankly swimming in cash right now and we need to reinvest it in things that will make Pennsylvanians’ lives better.”
Republicans in Pennsylvania’s General Assembly have resisted supporting Wolf’s spending plan, citing predictions by the nonpartisan Independent Fiscal Office (IFO) that the state will collect $762 million fewer than the governor expects. While GOP legislators have backed reducing the state’s 9.99 percent CNIT – the second-largest state corporate tax rate in the U.S. – they would not increase funding for most departments to the extent Wolf wishes.
GOP lawmakers also suggest further wariness of spending increases is warranted due to last week’s revelations that America’s gross domestic product fell by an annualized rate of 1.4 percent in this year’s first quarter. If the economy contracts again from April through June, America will officially undergo a recession and hope of continuously high tax collections will significantly dim.
“The benefits of any surplus dollars and remaining federal funds should be cautiously appropriated to mitigate against a looming economic downturn and related revenue shortfall, especially when the artificial means by which the federal government has propped up the economy [i.e., the 2021 stimulus] are no longer in place,” Jason Gottesman, press secretary to state House Majority Leader Kerry Benninghoff (R-Bellefonte) said in a statement. “We are fiduciaries of taxpayer dollars and Pennsylvanians depend on us to use their money wisely and for their benefit. We have the opportunity now to look at what is ahead of us, learn the lessons of the past, and create a sound fiscal plan for the commonwealth for years to come.”
Gottesman also cited an analysis by the National Association of School Business Officials indicating that Pennsylvania fails to dedicate as large a fraction of its budget to its rainy-day fund, as most other states do. The median percentage for all states this year is 11.9 percent, whereas Pennsylvania’s is 7.4 percent.
– – –
Bradley Vasoli is managing editor of The Pennsylvania Daily Star. Follow Brad on Twitter at @BVasoli. Email tips to [email protected].
Photo “Tom Wolf” by Tom Wolf. CC BY 2.0.
