Responsible Revenue Plan Taps Shadow Budget, Avoids Borrowing and Tax Increases
September 14, 2017, Harrisburg, Pa.ï¿½"Yesterday, House lawmakers passed a no-tax-hike, no-borrowing revenue plan that will close last yearâ€™s budget deficit and fill this yearâ€™s projected shortfall without forcing Pennsylvanians to pay one penny in additional taxes.
The $2.3 billion revenue plan includes $630 million from the shadow budgetï¿½"funds sitting in off-book government accounts that havenâ€™t been needed in years; $1 billion from the sale of the Tobacco Settlement revenues; $200 million from one-time sources, including the Legislatureâ€™s reserve fund; $225 million in gambling revenue; and $50 million from liquor reform.
â€œLast night, the House voted to protect the budgets of hardworking Pennsylvanians from being raided to pay for the stateâ€™s overspending,â€ commented Nathan Benefield, vice president and COO of the Commonwealth Foundation. â€œDespite Gov. Wolfâ€™s insistence that tax increases are the only solution to our budget problemsï¿½"and facing the Senateâ€™s plan to hit Pennsylvania families with more than $570 million in higher taxesï¿½"House lawmakers instead took a hard look at Harrisburgâ€™s off-budget fund surpluses to resolve the budget shortfall.â€
Due to overspending by both the General Assembly and Wolf, the state ended the 2016-17 fiscal year with $1.5 billion in unpaid bills. The problem was made worse this year when the Legislature passed a spending plan without a way to pay for it. Wolf then ignored his legal obligation to bring spending in line with revenues and let the plan become law. To close the gaps, the Senateï¿½"with Wolfâ€™s approvalï¿½"proposed higher taxes on working Pennsylvanians.
With calls for tax hikes from the Senate and Gov. Wolfï¿½"and hyperbolic claims that avoiding such hikes would wreak havoc on the stateï¿½"the House was the last line of defense between Pennsylvania families and harmful tax increases. Pennsylvanians can be grateful the House held the line and showed the budget can be balanced without higher taxes or more borrowing. We commend the House for standing up for the families in our state and urge the Senate to do the right thing and support this revenue plan.
Additionally, this yearâ€™s budget process demonstrates an important lesson: Donâ€™t spend more than you have. Pennsylvanians must continue holding their lawmakers accountable to control spending and address the cost drivers that lead to out-of-control spending growth. This includes meaningful human services reform to help people transition from dependence on government spending to self-sufficiency.
Nathan Benefield and other Commonwealth Foundation experts are available for comment. Please contact Gina Diorio at 862-703-6670 or [email protected] to schedule an interview.
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