The State Capitol is quiet this week, but things will pick up quickly after the Memorial Day Weekend. Pennsylvania House leaders expect to introduce a 2013-14 budget bill on Tuesday, with a vote to follow the week of June 10.
As I wrote last week, balancing the budget without new deep spending cuts will be difficult, as lawmakers have to make up for a $518 million shortfall projected by the Independent Fiscal Office. Plus, the House bill will NOT include $177 million in savings from changes to the state's public pension systems proposed by Governor Corbett in his February budget.
To help close the budget gap, lawmakers should delay the phaseout of the capital stock and franchise tax, a corporate tax that has already been cut by 85%. Under current law, this tax will be completely eliminated in 2014.
At a Pennsylvania Press Club speech this week, Senate Democratic Leader Jay Costa proposed keeping the tax at 2012 levels. Even Budget Secretary Charles Zogby acknowledged in a Philadelphia Inquirer story that "whether we can afford to continue the phaseout is something we're going to have to examine."
The planned tax cut is just not affordable, especially at a time when critical investments in our schools and communities are already suffering. Keeping this very low tax in place would raise an estimated $390 million more to help prevent a new round of cuts to schools and other investments that make Pennsylvania a good place to live and do business.
Despite billions in new business tax cuts over the past decade, Pennsylvania’s job growth ranking among the 50 states has not changed much.
The bottom line is, after two years of deep state budget cuts, Pennsylvania cannot afford to trim more from schools, health care, and other critical investments in our future.