Governor’s Fifth Budget Proposal Focuses on Workforce Goals; Contains Elements Employers Oppose

Jen Swails, PA Budget Secretary, and C. Daniel Hassell, PA Revenue Secretary, provided an overview of Governor Wolf’s proposed 2019-20 budget to members of the PA Chamber on Wednesday, Feb. 6, 2019.

From PA Chamber of Business & Industry

Gov. Tom Wolf presented his fifth budget address last week to a joint session of the state House and Senate.   His 2019-20 proposal calls for a spend amount of $34.1 billion – a 2.79 percent increase over the current year. 

Speaking with optimism about the work elected officials achieve when political divisiveness is put aside, Gov. Wolf focused much of his speech on a bipartisan issue on which the PA Chamber is heavily engaged – workforce development.  During the address, the governor announced the formation of the new Keystone Economic Development and Workforce Command Center that will be co-chaired by PA Chamber President Gene Barr and PA AFL-CIO President Rick Bloomingdale and will engage state agencies that are involved in workforce efforts to develop a multi-tiered, public-private strategy to close the jobs skills gap and build a competitive 21st century workforce in Pennsylvania. 

What the governor did not mention during his speech but was unveiled in the days prior to the budget address were several proposals about which the PA Chamber has already voiced opposition: first, an increase in the minimum wage to $12 an hour with gradual increases until it reaches $15 an hour and elimination of the tipped wage; another severance tax on the natural gas industry that would help to pay for a bond that would fund Gov. Wolf’s new “Restore Pennsylvania” initiative; and a move to combined reporting in exchange for a reduction in the state’s Corporate Net Income Tax.  The PA Chamber wholeheartedly supports a reduction in the CNI, which is among the nation’s highest and raises a red flag for would-be investors to come to the Commonwealth; but has long argued that combined reporting would bring unnecessary complexity and economic hardship to many Pennsylvania companies.   

Despite areas of disagreement between the Wolf administration and pro-business lawmakers, the general takeaway from the governor’s budget address was that both sides should work on areas on which they can agree.  The more positive outlook can certainly be attributed in large part to a strong economic year which has seen revenues coming in higher than expected.  In a statement following the budget address, PA Chamber President Gene Barr also embraced a positive tone – particularly in regard to prospects for greater collaboration on workforce – while warning of the elements of the proposal that would end up hurting the state’s competitiveness.

“We commend the governor for using his budget address to shine a spotlight on the need for the private sector and government to work together to ensure Pennsylvania’s workforce is equipped to meet the needs of the state’s evolving jobs market,” Barr said.  “We are, however, concerned with some components of the governor’s proposal – including an aggressive mandated increase to entry level wages …. Additionally, we are disappointed by the administration’s continued call for an additional tax on the state’s natural gas industry.  We are at risk of losing our competitive edge in the critical energy arena if state elected officials continue to look at higher energy taxes as a way to generate more revenue for government spending.”