Some important things have changed in Pennsylvania politics as a result of the 2018 election. But the basic political dynamic that constrains our budget politics remains. We have a Democratic governor and a Republican-controlled General Assembly. And more importantly, we face an ideological division that partly maps onto the partisan one. On one side are those who believe that the only path to prosperity for our state is to cut taxes for the rich and for businesses, cut spending, and hold wages down. On the other side—where the Pennsylvania Budget and Policy Center stands—are those who believe that prosperity for everyone requires us to raise wages and expand the safety net that protects those who need our help, invest in people through new educational initiatives at all levels and in workforce training, and invest in building our public infrastructure and protecting our environment.
The priorities for spending found in Governor Wolf’s 2019-20 budget proposal suggest that in most respects he stands with the second group. His budget includes a major proposal to raise wages as well as proposals to expand the safety net and invest in education at all levels. And outside the budget proposal, the governor has put forward a new initiative that is designed to increase investment in infrastructure and the environment.
But while we share the priorities for new spending in the governor’s budget, we do not believe that his budget invests at a sufficient level in most areas to achieve broadly shared prosperity. Despite some important new initiatives, the 2019-20 executive budget is austere in many respects. And it leaves Pennsylvania, once again, facing a huge and growing public investment deficit in education at all levels, in health care and housing, in infrastructure spending, and in environmental protection.
The limit on reaching a sufficient level of public investment in these and other areas is a tax system that does not generate sufficient revenues to fund them, mainly because it does not ask the richest Pennsylvanians or multi-state and multi-national corporations to pay their fair share of taxes. When Governor Wolf announced during his budget address that his budget proposes “no new taxes,” many legislators who embrace the agenda of cutting taxes and spending cheered. But we could not do so. If standing against taxes is our first priority, many critical goals for this state will not be met.
In the following pages, we will analyze the details of Governor Wolf’s proposal, pointing to the important initiatives he has put forward as well as some of the ways in which the 2019-20 budget will fall short of what Pennsylvanians need. Towards the end of this report, we will summarize the ways in which the budget leaves us with a severe public investment deficit. Given the makeup of the General Assembly, we understand why it is difficult to ask for new taxes or expect them to be adopted. But if we are to honestly evaluate the governor’s budget proposal by the light of our own ideals, we must point out that as long as our first priority is to leave our tax system unchanged, we will never be able to attain many other priorities.
We will conclude our analysis on a positive note, however, by showing how the governor’s proposal to raise the minimum wage is a critical step forward toward creating a Pennsylvania that works for everyone.