Apr. 29, 2015

By State Rep. Craig Staats (R-Bucks)
Despite Gov. Tom Wolf’s repeated claims that his $33.8 billion budget proposal would reduce taxes on the middle class, a recent report by the Independent Fiscal Office (IFO) found that all Pennsylvanians in every income bracket would pay more in taxes under the governor’s plan.
Since he unveiled his budget proposal in March, it has become increasingly clear that the governor’s unprecedented spending increase is supported by higher taxes that would prove harmful to every Pennsylvanian. The IFO confirmed this point last week. Its report found that the governor’s plan would result in “a net tax increase for all groups, including a small net increase for the lowest income group.”
The IFO report – an independent, impartial and statutorily required analysis of the governor’s budget proposal – revealed two truths. One is the need to protect taxpayers from the excessive tax and spending increases in Wolf’s budget. The other is the importance of clearly explaining the issues being discussed in Harrisburg so that taxpayers understand the costs associated with them.
Taxpayers deserve a budget that controls costs. Unfortunately, the governor’s plan increases them.
Wolf’s $33.8 billion budget represents a 16 percent spending increase over the last budget year. To support this massive spending increase, the governor proposes an effective 40 percent Sales and Use Tax (SUT) increase by raising the rate and removing exemptions that currently exist on more than 550 goods and services, including day care, education costs and nursing home care. Wolf also proposes a 21 percent increase to the state’s Personal Income Tax (PIT).
These tax increases and expansions would prove extremely costly to Pennsylvania taxpayers. Working families would pay thousands more per year under the governor’s plan. Businesses would also see higher taxes, as 79 percent of Pennsylvania companies pay their taxes under the PIT. Far from forcing large corporations to “pay their fair share,” this tax hike would disproportionately affect small businesses, which account for 65 percent of our economy’s job creation.
In order to create an environment in which businesses can grow and create family-sustaining jobs, we must not overburden them with more taxes. Yet, that is exactly what the governor’s budget plan would do.
Once fully implemented, the governor’s plan would raise an additional $8 billion from Pennsylvania taxpayers. For perspective, it took former Gov. Ed Rendell eight years to increase the state budget by $8 billion. Wolf is proposing that we do so in two years.
The rhetoric employed by the governor and his administration to describe the impact his budget would have on Pennsylvania taxpayers does not reflect these facts. During his budget address in March, the governor said, “My budget actually reduces the total tax burden on average middle-class homeowners by 13 percent.” The IFO report directly rebuts this claim.
Taxpayers deserve to understand the full costs of the issues being debated in Harrisburg as they are ultimately responsible for picking up the tab. Rather than taking more money out of the pockets of hard-working Pennsylvanians, lawmakers should work toward a responsible state budget that meets the state’s obligations while protecting taxpayers.
What should a responsible budget look like? For one, it should address cost-drivers such as the state’s growing obligations to its two largest pension funds. Each year, Pennsylvania’s pension costs eat up a larger portion of its budget. In fiscal year 2013-14, taxpayers contributed $1.5 billion into the State Employees Retirement System (SERS) and the Public School Employees Retirement System (PSERS). By fiscal year 2017-18, taxpayers are expected to contribute $4.3 billion – a nearly 200 percent increase in taxpayer contributions in just four years.
Without significant legislative action to address Pennsylvania’s pension problem, taxpayers will continue to pick up the ever-increasing tab. The cost of doing nothing is staggering; property taxes could continue to rise and state spending on core government programs – such as public education, public safety, infrastructure, health and human services – could be at risk.
Like the governor’s budget proposal, that’s a scenario that would cost all Pennsylvanians in every income bracket.
Representative Craig Staats
145th Legislative District
Pennsylvania House of Representatives

Media Contact: Jonathan Anzur
www.RepStaats.net / Facebook.com/RepStaats