Gov. Tom Wolf kicked off his second term with a $34.1 billion budget proposal for the state’s upcoming fiscal year, which begins July 1.
The plan boosts spending by nearly 2.8 percent from the current budget, but it would not raise broad-based taxes on Pennsylvania residents.
The governor’s plan will face scrutiny from the Republican-led General Assembly.
Minimum wage still a big proposal
Among its linchpins is a higher minimum wage.
The administration said the state could save $156 million over the next two fiscal years by raising the minimum wage in Pennsylvania. Wolf wants to hike the minimum wage from $7.25 per hour to $12 per hour in July and to $15 by 2025.
In his budget proposal, Wolf says a higher minimum wage would save the state millions of dollars in public assistance benefits, including costs associated with food stamps, subsidized day care and housing assistance.
The administration said raising the minimum wage also could generate about $120 million in new income and sales tax revenue for the state.
But Republicans and business groups oppose minimum-wage hikes, arguing that market forces, including a low unemployment rate, can boost pay without government intervention.
Education spending increase sought
Wolf also continues to focus on increasing education spending. He is asking for $200 million in more in basic education funding for this new budget, plus another $50 million in special education funding.
The Pennsylvania State System of Higher Education also is slated to see $7 million more, an increase of 1.5 percent, from the governor’s plan. PASSHE would get $475 million in total funding.
Workforce a priority
Wolf said workforce development remains a priority for his administration. He is launching a new Keystone Economic Development and Workforce Command Center.
The effort is designed to better align communications across state agencies and connect businesses in need of workers to the right programs.
Part of that initiative includes an employer fund, a public-private partnership to help businesses address skills gap challenges and share best practices with the state.
The command center is going to be led by the secretaries of the departments of Community and Economic Development, Labor & Industry and State, with business and labor leaders Gene Barr and Rick Bloomingdale serving as co-chairs.
“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 in a statement. “On behalf of the commonwealth’s broad-based business community, I am honored to co-chair the governor’s new workforce initiative – which aims to bring together the various elements of state government that oversee workforce development programs with the private sector to identify ways to help close the jobs skills gap, fill the many open positions that already exist throughout the state and make us more competitive on a national and global scale.”
In fact, the governor has said he wants to reduce the corporate net income from 9.99 percent to 5.99 percent by 2024. But Wolf insists that the cuts be linked to combined reporting, a policy business leaders and Republicans oppose.
Combined reporting would require multistate corporations to add together into one tax report the profits of all of their subsidiaries, regardless of their locations. Businesses argue that combined reporting is burdensome and hard to administer.
Wolf did not address a severance tax on natural gas producers in the state in his budget. The governor did however lay out a plan last week to use the severance tax as a way to invest $4.5 billion over the next four years in technology, development and infrastructure.