What Would an Adequate Pennsylvania Budget Look Like This Year?

Marc Stier |

What Would an Adequate Pennsylvania Budget Look Like This Year?

A really good budget for Pennsylvania would begin addressing our long-term public investment deficit. It would provide new funds to:

  • eliminate our worst-in-the-nation inequality in K-12 school funding;
  • expand pre-K education to all three and four year-olds;
  • make higher education more accessable, especially to students from low-income families;
  • restore the funding that would allow the Department of Environment to better protect our air and water;
  • provide new funding to repair roads and bridges and support public transit.

It’s clear that a really good budget – one that expanded public investment – would help us create thriving communities in Pennsylvania. Minnesota and California, which raised taxes in a recession to fund public investment, are doing well. Louisiana and Kansas, which embraced austerity, have seen their economies collapse and deficits increase. Finally, a bi-partisan majority in Kansas reversed course last week.

We aren’t going to emulate Kansas and get a really good budget out of this General Assembly. But we can get an adequate budget if the General Assembly adopts the austere but reasonable spending plan (including his proposals to reform and restructure government) put forward by Governor Wolf and new taxes to fund it.

Right now, however, Republican leaders are talking about supporting a spending plan closer to that passed by the House Republicans. That plan cuts Medicaid, child care, pre-k education, county assistance offices, substance abuse treatment, and environmental protection hundreds of millions of dollars below what the Governor proposed. That plan is unacceptable to many legislators and the vast majority of citizens of the state. And it is unbalanced, as well. When passed it was underfunded by $600 million. After a continuing decline in state revenues, it is closer to $1 billion in deficit.

We can fund an adequate budget in Pennsylvania without raising taxes on working people and the middle class. Indeed, given our upside-down tax system that taxes 10% of the incomes of families in the middle but only 4.3% of the incomes of the top 1%, we should seek new revenues only from the rich and large businesses. We propose:

  • a severance tax on natural gas drilling, which is imposed by every other state with natural gas reserves;
  • corporate tax reform that closes the loopholes that allow 71% of corporations that do business in the state to escape any taxation;
  • and a fair share tax that would increase the tax rate on income from wealth (capitals gains, dividends, business profits and other income mostly received by the rich), while cutting the tax rate on wage and interest.

Together these proposals would not only raise $2.5 billion in new revenues next year while offering 60% of Pennsylvanians a small tax cut, but they will raise even more in future years. And that might give us the opportunity to create not just an adequate but a really good budget in future years.