There are signs of progress in Pennsylvania’s budget standoff. On November 9, the Governor’s office and Legislature signaled potential agreement on an outline to resolve the ongoing budget impasse. At the core of the current negotiations is a sales tax rate hike from the current 6% to 7.25%, which is expected to raise $2 billion. The increased revenue will be exclusively earmarked for property tax reduction on a dollar-for-dollar basis. Tax dollars from casino revenue that currently go to property tax reductions will be committed to the pension system. In turn, Governor Wolf gets an increase of $400 million for education funding to public schools and special education.
Governor Wolf’s original budget proposals of a severance tax on the oil and gas industry and an increase in the personal income tax are not part of the current proposed budget framework. A number of legislators expressed confidence that a deal can be reached before Thanksgiving, assuming there is agreement on details. But, as usual, the budget details are scant at this stage in the negotiations. Stay tuned for updates on the budget and how it may impact your business or industry.