Two Roads Diverge in Penn’s Woods

Member Group : Lincoln Institute

The last year and a half have been difficult for legislative Republicans. The 2022 elections resulted in Democrats winning a tenuous one-seat majority in the House of Representatives while Republicans retained control of the Senate setting up divided government for the first time in over a decade.

For eight years the Republican dominated legislature had to contend with Democrat Governor Tom Wolf and, especially during the COVID-19 pandemic, the relationship was acrimonious. Early hope for a more collegial relationship with new Governor Josh Shapiro evaporated last July when he broke an agreement he had made with Senate leaders to fund a program designed to give educational choices to students in the state’s most underperforming school districts.

Due to a death and various resignations the House of Representatives has periodically fallen into a partisan tie which resulted in long periods of recess while Democrats maneuvered to remain in control. House Democrats have used rare session days to pass a steady stream of messaging bills – those designed to coddle their base voters, but which have no chance of gaining concurrence from Senate Republicans.

Controlling only one half of one of three branches of state government has made it difficult for Republicans to accomplish anything more than curtailing the ideological excesses of the opposite party. A couple of weeks ago, in what will likely go down as the legislative play of the year, Senate Republicans changed the power equation.

Largely due to an inflow of federal dollars ostensibly sent combat the Covid-19 pandemic Pennsylvania has enjoyed a rather large General Fund surplus. Democrats have eyed that surplus with the ardor of a hungry dog seeing a ham sandwich on the kitchen counter. Led by Governor Josh Shapiro they have proposed massive increases in state spending on a wide range of Left-wing causes.

Senate Republicans, under the leadership of President Pro Tempore Kim Ward (R-Westmoreland) and Majority Leader Joe Pittman (R-Indiana) uncorked a plan to return some of those dollars to taxpayers via $3 billion in tax cuts. Approved on a veto-proof 36-14 vote the Senate plan would cut the Personal Income Tax (PIT) from 3.07% to 2.8% and eliminate the Gross Receipts Tax on energy sales effective January 1, 2025.

The brilliance of the legislation is the drawing of a crystal clear taxpayer-friendly alternative to the reckless spending proposals put forth by Governor Shapiro and House Democrats. Working families, suffering the impact of cumulative 20% inflation under President Joe Biden, would immediately see more take home dollars in their paychecks. Elimination of the Gross Receipts Tax would provide relief from high electric bills which likewise have skyrocketed due to Biden Administration policies.

The tax cut would also benefit small business many of which pay state taxes via the PIT. For manufacturers, reduced energy costs would also be a relief from high inflation which, according to the Spring 2024 Keystone Business Climate Survey, is the top problem facing businesses today.

Senate Republican leaders have also now painted Governor Josh Shapiro and House Democrats into a political corner. The tax cut legislation moves to the House chamber after having received the bipartisan support of eight Democrats in the Senate. This robs big-spending House Democrats of the ability to portray the tax cuts in partisan terms.

The ball is now in the hands of House Democratic Leader Matt Bradford. A hardcore big spender, Bradford has in the past not allow legislation to come to the floor for a vote if he is likely to lose. The aforesaid mentioned scholarship program would have garnered Democrat support in the House and passed, but Bradford denied lawmakers the opportunity to cast a vote on the issue relying instead on a line item veto by Governor Shapiro.

House Republicans need to loudly demand a vote on the tax cut bill. Senate Republicans need to make it clear to Bradford that no budget legislation will be brought to the floor in that chamber until the House votes on the tax cuts. Every legislator – Republican and Democrat – must be forced to make their position clear by voting on the Senate-passed bill.

Many Democrats, including Governor Shapiro, pushed for the sending of additional so-called “stimulus” checks as a way to expend the state budget surplus. A tax cut would have the same impact; except the money would not be taken from taxpayers to begin with and politicians won’t be able to campaign on having given us back our own money.

Two roads have diverged in Penn’s Woods: will the commonwealth continue on an inflation-feeding big spending spree, or will families and small businesses be given some relief from persistent high inflation?

We shall soon see.

 (Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly American Radio Journal and Lincoln Radio Journal.  His e-mail address is  [email protected].)

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