Senator Mensch Comments on Senate Revenue Package

Harrisburg –Senator Bob Mensch (R-24) voted for a reasonable code package which included targeted revenue enhancements that offer the promise of meeting the state’s current and future financial obligations.  Coupled with a projected deficit for this year of more than $600 million, lawmakers faced a $2.1 billion hole that had to be filled in order to meet their Constitutional obligation of crafting a balanced budget.

In response to this one-time shortfall, the Senate passed a spending plan, in June 2017, which decreased funding to a number of government agencies and departments. Only a handful of departments saw an increase in funding, and those increases were fiscally conservative.

Historically, Senate Republicans have consistently encouraged an approach to the state budget that prioritizes spending cuts before ever considering a tax increase. The spending plan approved in late June 2017 adhered to that approach. 

“Since 2008, we’ve been working to keep the state afloat without raising any taxes,” said Mensch.  “If you take out mandated costs like human services, corrections and pensions, we are spending less money today than we were in 2010.  We’ve done what we can in state government to contain spending in the areas that we have the ability to do so that we could avoid any tax increase.”

During the recession of 2008, when almost every other state increased taxes, Pennsylvania legislators chose to reduce state government spending and did not burden taxpayers with a tax increase.  The size of the deficit this year, however, made it impossible to balance the budget through spending cuts alone. 

In order to maintain the responsibility to educate Pennsylvania children, provide for higher education, provide for human services and our debts, the Senate was in a position to raise more revenues.  Without sustainable, reliable new revenue streams, the state will almost certainly suffer another credit downgrade that will cost Pennsylvanians tens of millions of dollars in additional borrowing costs.

“To do nothing to avoid another credit downgrade and address our debts would be the height of irresponsibility,” said Mensch.   “Without action, the state will be functionally bankrupt.”

Independent analyses of the state’s finances conclude that the deficit in last year’s budget was a one-time occurrence. In fact, revenues in the last two months of the 2016-17 Fiscal Year already began to rebound closer to projections.

The creation of a limited severance tax will play a strong role in preventing the same revenue shortfalls in next year’s budget. The extraction tax rate is less than half of the original proposal.  An increasing portion of this severance tax will be paid by international purchasers as pipelines and distribution networks are completed, which makes it less likely that the entire tax will be passed on to consumers. The plan also helps remove one of the most serious and persistent concerns for natural gas companies – the deeply flawed and burdensome permitting process.  The proposal offers consistency and uniformity in permitting — something that will help these employers that have been struggling with a patchwork of regulations and policies and numerous, unnecessary and excessive delays.

The revenue package also incorporated the consolidation of the Department of Corrections and Probation and Parole which will result in savings.  The General Assembly previously passed a historical pension reform bill, Act 5 of 2017, which creates a new pension system that will reduce rising pension costs. “This was the first step in providing relief for homeowners who have been bearing the brunt of the rising pension costs through property tax increases,” said Mensch. “The modernization of Pennsylvania’s pension systems bucks this trend and sets our commonwealth on a more sustainable path for the future.”

“This year’s budget was difficult and the revenue package was challenging,” said Mensch.  “I gave this a lot of thought and I incorporated the input from the constituents and businesses from my district.  This is the most responsible financial path that will create reoccurring revenue and get us on the right track to fix a long term issue.”

The five code bills were sent to the House of Representatives for consideration.

CONTACT: Sarah Rasmussen srasmussen@pasen.gov  (215) 541-2388