Governor Unveils Massive Tax & Spend Budget Proposal

HARRISBURG – Today (February 3), Governor Tom Wolf unveiled his proposed $40.2 billion General Fund Budget for Fiscal Year 2021-22, which includes a massive increase in state spending, a substantial personal income tax rate hike, imposition of Marcellus Shale extraction tax, and elimination of funding for broadband expansion as well as vital agricultural and health programs and services.

The Governor’s proposed FY 2021-22 Budget includes a $3.1 billion (8.2 percent) increase in state spending from the current fiscal year, according to State Senator Bob Mensch (R-24).

The Governor wants to increase the state personal income tax (PIT) rate from 3.07 percent to 4.49 percent (a 46.3 percent hike) as of July 1 to raise $3 billion annually. About one-third of all Pennsylvanians, would see their state tax burden increase under the Governor’s proposed PIT rate hike.

“After listening to the Governor’s budget address today, it is clear that there has been no personal responsibility taken by the Wolf Administration,” Mensch said. “If the Governor would have done a better job of handling the COVID-19 pandemic from the start, we would not be in the mess that we are currently experiencing. Calling for an income tax increase at a time of such unpredictability for struggling Pennsylvania families, many of which have gone months without work and unemployment compensation benefits due to the Governor’s poor leadership, would be disastrous. Instead of focusing on the same old talking points that have been used for the last few years, we need to focus on getting the people of our state the help and resources they need to recover from the loss they’ve faced, and get businesses and our economy back on track.”

Upwards of one million PA small businesses will have their tax rates increased by 46.3 percent under the Governor’s proposal, since these pass-through businesses (i.e. S corporations, partnerships, etc.) pay business taxes at the PIT rate.

This proposed PIT rate increase coupled with the Governor’s ongoing COVID-19 restrictions and his proposed minimum wage hike would be devastating for many family operations that are already struggling to stay financially solvent.

The Governor is again making his annual push for a Marcellus Shale extraction tax. This proposal would severely impact the gas industry. Pennsylvania saw a $50 million reduction in its impact fee revenue, according to the latest Independent Fiscal Office report.

The Governor is also proposing a $168 million plan to augment funding to the State Police by charging all municipalities for police services regardless of municipal coverage.

While the Governor is calling for a major spending increase in several budgetary line items, he is also planning to eliminate $5 million in state funding for broadband expansion, even though the funding is mandated by Act 132 of 2020 (Senate Bill 835), as well as millions of dollars for agricultural programs and health care services.

Watch the news conference with members of Senate Republican Leadership responding to the Governor’s budget address for the 2021-22 fiscal year here: https://pasen.wistia.com/medias/lcnv4qd7od.

For more information on Senator Mensch’s legislation, visit www.senatormensch.com.  State updates can also be found on Senator Mensch’s Facebook at facebook.com/PASenatorBobMensch/ or Twitter @SenatorMensch.

CONTACT: Madison Scarfaro mscarfaro@pasen.gov  (215) 541-2388