Final Week of 2018-19 State Budget Hearings Wraps Up

From PA Chamber of Business & Industry

Last week, the House and Senate Appropriations Committees hosted their third and final week of budget hearings with the heads of state agencies and state row offices, to discuss Gov. Tom Wolf’s proposed spending level for their entities in the 2018-19 Fiscal Year, among related issues.

Amazon’s consideration of Pennsylvania for the location of its second corporate headquarters was a topic covered in the Senate Appropriations Committee’s budget hearing with the Department of Community and Economic Development. DCED Secretary Dennis Davin said that the Commonwealth is in a “very good position” to appeal to Amazon, with Pittsburgh and Philadelphia among Amazon’s top 20 potential locations. Davin also touted the state’s tax advantages of having no Capital Stock and Franchise tax, along with the administration’s efforts to lower the Corporate Net Income tax as benefits that would appeal to Amazon. While the PA Chamber supports the lowering of the CNI, we remain opposed to the Wolf Administration’s insistence that it be packaged with mandatory unitary combined reporting – a complex and burdensome system that would serve as a detractor to additional business investment and job creation in Pennsylvania.

Helping job candidates gain the skills and training they need to fill open positions was also covered in the same hearing. According to a story by Pennsylvania Legislative Services, Sec. Davin told the committee that the single biggest task in economic development is matching jobs with the appropriate people, mentioning initiatives in manufacturing such as Manufacturing PA to utilize specific training programs for the needs of area companies. He also expressed the importance of adequate training and broadband internet access to attract tomorrow’s workforce and discussed the department’s efforts with the Department of Education in making students career-ready – along with working with research universities, and getting younger people to explore education outlets other than a four-year degree.

The Department of Education also met this week with both Appropriations Committees. In the Senate hearing, lawmakers expressed frustration that the agency did not seem to incorporate the legislature’s recommendations on topics such as the implementation of the federal Every Student Succeeds Act and the potential of allowing students to take the SATs as an alternative to the Keystone Exams, which Sec. Pedro Rivera pushed back on. When questioned by Sen. Gene Yaw, R-Lycoming, on whether the department was focused on career and technical education as an option for students, Rivera said that they are “absolutely providing greater opportunity for students to work towards that career pathway.” In terms of the way that schools are currently funded – a combination of state funding and local property taxes – Sen. Dave Argall, R-Schuylkill, who is a leading proponent of legislation that would apply new and higher sales and income taxes to achieve so-called property tax reform – talked about the complaints he gets from taxpayers about the rising rates. Sen. Argall lamented that the governor didn’t include a mention of school property tax reform in his budget address, to which Sec. Rivera answered that while he couldn’t speak for the governor, their conversations have centered on academic opportunities, teaching, learning and instruction. The PA Chamber is opposed to property tax reforms like S.B. 76 that would target renters, small businesses and young families and put school districts and the Commonwealth on financially shaky ground.

Several Republican lawmakers on the House Appropriations Committee also expressed frustration at Gov. Wolf’s veto of welfare work requirements in the fall during a hearing with the Department of Human services. According to a story in Capitolwire, they asked for an explanation behind the veto because the legislation (H.B. 59) would have required some Medicaid recipients – namely the non-elderly who are not disabled – to work or be active in a work-related activity to maintain their Medicaid eligibility. Acting DHS Secretary Teresa Miller responded, “I think the issue is we know people experience barriers to working, and I think taking away access to health care is just going to add one more barrier.” Committee Chairman Stan Saylor disagreed with the governor’s veto, saying that “We’re not doing enough at the state level …. to get people into jobs.” Miller initially claimed in the hearing that a work mandate would end up costing the state about $600 million, because the agency would need to hire 300 new employees to implement the requirement – a comment she walked back a bit later in the hearing, as she said that the agency only has very rough figures regarding the potential cost. The committee did find common ground with the agency regarding the need to reevaluate programs to ensure that welfare recipients aren’t losing access to many of the programs that help them after they secure employment.

The final week of budget hearings concluded with Budget Secretary Randy Albright, who provided both committees with a thorough overview of the budget plan. To recap, Gov. Wolf is proposing spending $32.9 billion in the coming year’s budget – an increase of 3 percent over the current year’s spending. While no sales or income tax increases are in his proposal, he is yet again pushing for a punitive additional tax on the state’s natural gas industry, along with other policies that the PA Chamber will fight back against in the coming months – including a mandated entry-level wage increase to $12 an hour and the aforementioned imposition of combined reporting within the state’s tax structure.