On Tuesday June 30th, Republican majorities in the Pennsylvania House and Senate passed a 2015-16 budget with no new taxes and sent it to Democrat Governor Tom Wolf who promptly vetoed the bill and called upon legislative leaders to join him in working out a compromise budget.
House and Senate Republican leaders said their proposed budget was balanced and said it provided significant new funding to basic education. The Republican majorities also passed public pension revisions to put new employees in a defined contribution plan rather than the existing defined benefit plan, and passed a liquor reform plan to expand the availability of wine and liquor, and eventually sell off state-owned wine and liquor stores.
The Governor said the Republican budget failed to address the Commonwealth's structural budget deficit, provided no significant boost for education funding and did nothing to cut school district property taxes. The Governor issued a press release stating that the Republican budget proposal relied on $1.5 billion of "gimmicks and one-time fixes" and would lead to a $3 billion deficit. The release further stated that the "plan is filled with smoke and mirrors like budgets of the past four years that have resulted in serial credit downgrades" for the Commonwealth.
The good news for Pennsylvania's business taxpayers is that, at this time, there are no new taxes or tax increases in the Commonwealth's 2015-16 budget. The bad news is that, as of June 30, we have no 2015-16 budget! How soon the Governor and the leadership in the General Assembly will be able to develop a compromise budget is anyone's guess. Taxpayers who have concerns about tax proposals advanced over the last several months (e.g. the proposed expansion of the sales and use tax discussed in our March 2015 newsletter) should continue to be vigilant and communicate their positions to their legislators and to the Governor's Office.
