Senator Elder Vogel today raised serious concerns about the Governor’s proposal to raise income taxes, increase state spending and slash Pennsylvania’s support for agricultural programs.
The Governor today (February 3) unveiled his proposed $40.2 billion General Fund Budget for Fiscal Year 2021-22, which includes a $3.1 billion (8.2 percent) increase in state spending, a substantial Personal Income Tax (PIT) rate hike, imposition of Marcellus Shale extraction tax, and elimination of funding for vital agricultural programs and services.
As Vice Chairman of the Senate Appropriations Committee, which oversees the budget review process in the Senate, and Chairman of the Senate Agriculture & Rural Affairs Committee, Senator Vogel said he has several serious concerns about the Governor’s proposal.
The Governor wants to increase the state personal income tax (PIT) rate from 3.07 percent to 4.49 percent (a 46.3 percent hike) as of July 1 to raise $3 billion annually. About one-third of all Pennsylvanians, would see their state tax burden increase under the Governor’s proposed PIT rate hike.
Upwards of one million PA small businesses will have their tax rates increased by 46.3 percent under the Governor’s proposal, since these pass-through businesses (i.e. S corporations, partnerships, etc.) pay business taxes at the PIT rate.
“First, an 8.2 percent increase in state spending is completely out of line with the current economic climate in Pennsylvania. We are coming off a year when 1.5 million Pennsylvanians were unemployed and we are nowhere near the end of the pandemic,” said Senator Vogel. “Then, his plan to increase the PIT to cover the costs places an onerous burden on workers and especially small businesses, many of which are already in dire financial straits.”
The Governor is again making his annual push for a Marcellus Shale extraction tax. This proposal would severely impact the gas industry. Pennsylvania saw a $50 million reduction in its impact fee revenue, according to the latest Independent Fiscal Office report.
“He keeps bringing the extraction tax to the table and the Legislature shoots it down each year,” Senator Vogel said. “We recognize the long-term benefits of the natural gas industry and look forward to the economic boost that the cracker plant will bring locally and across the state when it goes online. Further taxing gas extraction would not produce the revenue he projects and would more likely devastate the industry and cost jobs.”
While the Governor is calling for a major spending increase in several budgetary line items, he is also planning to eliminate $5 million in state funding for broadband expansion, even though the funding is mandated by Act 132 of 2020 (Senate Bill 835), as well as millions of dollars for agricultural programs and health care services.
“Agriculture is again taking another major hit in this budget,” said Senator Vogel. “This is nothing new. Governors have used this tactic on several occasions. They reallocate the money knowing full well that the General Assembly will restore these line items. We recognize the value of these important programs, even if the Administration doesn’t.”
The Governor’s proposed cuts to Agriculture funding include:
- Agriculture Research (-$2.2 million)
- Promotion, Education Exports (-$553,000)
- Hardwoods Research and Promotion (-$474,000)
- Livestock Show (-$215,000)
- Open Dairy Show (-$215,000)
- Food Marketing and Research (-$494,000)
- Livestock and Consumer Health Protection (-$1 million)
- Animal Health and Diagnostic Commission (-$2 million)
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