Outstanding Issues to be Addressed in 2015-16 Budget Negotiations

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On Tuesday, November 10th, Governor Wolf and legislative leaders announced a budget framework for 2015-16. While an agreement could be good news, some key issues have not been addressed.

Education: The budget deal appears to make good on the promise of desperately needed funding for school districts; however, we and other members of the Campaign for Fair Education Funding are concerned about the inclusion of a mandatory back-end referendum for future school districts’ property tax increases. This drastic change in state policy would have a devastating impact not only on school districts' local control of their budgets, but also on school districts' capacity to deliver the kind of public education that Pennsylvanians want and that their students need.

Property tax relief: We have previously noted that property tax relief is an area of potential compromise. We are concerned that this relief is funded by a higher sales tax which will make Pennsylvania's already regressive taxes even worse, while offering nothing for renters and potentially giving unnecessary dividends to businesses and upper-income homeowners.

Severance tax: The budget fails to enact a severance tax on natural gas. Governor Wolf ran on the issue as did 15 Republican members of the House and Senate. The failure to adopt a tax on drillers is especially stunning given the overwhelming public support.

Recurring revenue: PBPC has identified hundreds of millions of dollars in recurring revenue by fixing the bank shares tax, closing the smokeless tobacco and e-cigarette loophole, and increasing the minimum wage to $10.10 per hour, whichwould reduce state Medicaid costs. None of those commonsense revenues appear to be part of the budget deal.

Human services: At this point, it does not appear that the budget deal includes enough revenue for the Governor’s proposed restoration of funding to human services. After years of funding cuts, flat-funding, and program reductions, it is essential that the final budget adequately invests in these programs that serve vulnerable Pennsylvanians.

Pension Changes and Privatization of Wine & Spirits Stores: Budget negotiators appear to be counting on changes to the state pension system and privatization of Wine and Spirits stores to generate additional revenue for the 2015-16 budget. No proposal to date would deliver such revenue. This is an additional reason this deal must include revenue from a severance tax and some of the other revenue options listed above.