Pennsylvania Budget Update - PA Still Without a Budget

Pennsylvanians who have been following the budget negotiations between the Republican-controlled legislature and the Democrat Governor, Tom Wolf, are hardly surprised that at the beginning of the new fiscal year, Pennsylvania is still without a budget.

The legislature this week did pass a $30.2 billion budget that did not raise taxes, eliminated the Capital Stock and Franchise Tax at the end of the year and provided a modest increase to education spending.  In addition, the legislature also passed bills to privatize liquor sales and to eliminate defined benefit plans for future state employees. 

As these bills were passed along party lines with Republicans voting in favor and Democrats voting against the bills, it was hardly unexpected that Governor Wolf vetoed the entire budget bill.  The Governor has yet to act on the liquor sales or state pension bills; however, he has indicated in the past that he is not in favor of them. 

As the two sides are far from a consensus on a compromise, it may be months before a budget agreement will be finalized. 

The Governor and Democrats are still insistent on a severance tax for gas producers and increases in other state taxes to offset property tax reform.  Republicans have indicated that the current state of the gas industry makes this the wrong time to discuss a severance tax and that property tax reform does not justify ballooning the state budget an additional $4 billion.

Additional updates regarding the budget will be provided as progress on a final agreement is reached.

Contact us with questions regarding the Pennsylvania State Budget and visit our State and Local Tax blog for other articles about the PA Budget.

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