Yesterday, Dec. 7, the Pennsylvania Senate passed budget-related legislation: SB 1073 and SB 1082. Now, taxpayers can finally see what’s in Gov. Wolf’s “framework” for a new budget. Here are five things we know:
1. Excessive Spending Growth. The $30.8 billion budget represents record spending and a 5.4 percent increase over last year’s budget. Even including items shifted off budget last year, this amounts to an increase of $500 million more than inflation and population growth.
2. WAMs are back. The Senate budget includes a $103 million increase in Community and Economic Development spending. This includes several line-items identified as WAMs (or “walking around money”)—slush funds used for special projects. In the past, they’ve been used to buy votes and foster rampant corruption.
3. Problematic pension reform. The revised pension bill includes a side-by-side hybrid, with a smaller defined benefit pension and a defined contribution component. While a step in the right direction, it doesn’t get the politics out of pensions.
The proposal further underfunds teachers’ and state workers’ pensions and lacks transparency. It suspends a provision that requires pension bills to have an actuarial note explaining long-term impact before a vote.
4. No privatization in “liquor privatization.” The Senate liquor plan—which has been reported on but not yet passed—would retain the government monopoly over wholesale distribution. That means every retailer would continue to buy wine and spirits from the PLCB. There would be a “study” to recommend whether the state should privatize. On the retail side, state stores would remain open in perpetuity.
5. Higher Taxes. The Senate plan requires higher taxes. We know this will include some broad-based tax increase to generate the $600-$700 million needed to pay for the spending.
We don’t know what taxes will go up. There is no agreement on a tax plan; that is, the Senate passed a budget without the revenues to pay for it. It’s unclear if there is support in the Senate to pass a tax hike, but there are very clear signs there isn’t support in the House for a tax hike of this magnitude.
It’s not over yet. To voice your concern to your Senate and House members, email them today.