Late on Friday, July 8th, Governor Wolf signed a $45.5B budget based on a spend of $43B in state funding and about $2.5B in federal dollars. The budget is a 2.9% increase in spending from last year. The budget made a $2.1 billion deposit to the state’s Rainy Day Fund which now stands at $5 billion.
On a positive note, there are no tax increases.
Leading up to the budget negotiations, PACA staff worked on the following:
1. House Bill 471 - PTO legislature to offer a state gas tax rebate for the manufacture of concrete. There was an effort to advance the rebate through the Administrative Code. When negotiations broke down, which resulted in no Administrative Code for this budget cycle, we shifted to the Fiscal Code as the vehicle, but it was far too late to pull it off. We will continue our efforts through the fall session. Many thanks to Rep. Ryan Mackenzie for his assistance with this effort.
2. General Budget Contribution Toward Legacy Reclamation - We sent a letter Rep. Ryan Mackenzie to advance a contribution to the General Fund toward legacy reclamation. According to DEP Mining, the current noncoal reclamation cost sits at about $15M to $16M, but it will continue to increase due to future reclamation costs are based on prevailing wage rates. We hope to avoid the legacy costs that have passed to current permit holders, as we have observed from the coal industry. This is the second consecutive year that we were unable to find a solution. Many thanks to Rep. Ryan Mackenzie for his assistance with this effort.
3. Solution to overturning the Manganese proposed rulemaking - As you are aware, the manganese rulemaking must be implemented by September 26, 2022, otherwise it evaporates into thin air. The Governor’s Office reached out during the budget negotiations and asked for our support to strike Act 40 through the Administrative Code. Unfortunately, the final budget document did not include an Administrative Code and we assume that the manganese solution was a victim of negotiations between the General Assembly and the Governor.
Key Provisions of the Budget
1. Cutting the Corporate Net Income Tax - The state’s Corporate Net Income Tax (CNIT) will be cut from 9.99% to 8.99%, with an additional 0.5% reduction each year until the tax rate reaches 4.99% in 2031. Based on current state corporate tax rates, the full reduction takes PA from the highest CNIT in the country to the sixth lowest by 2031.
2. Environmental Programs - The budget calls for spending $640M in unspent federal COVID relief dollars for environmental programs falling under the Growing Greener III program. The largest share of this funding would fund grants for water, sewer, and stormwater infrastructure projects. Another $100M in federal funds will be used to rehabilitate and repair the state’s parks and forests.
3. Infrastructure / PSP - We reported that the Motor License Fund contribution to the PSP has been set at $500M which frees about $175M annually in state funding for construction projects. State Police will be able to hire 200 additional cades this year as part of the approved budget.
4. Tolling - As a result of court rulings and negotiations between the Governor and the General Assembly, the plan to charge tolls on nine bridges across Pennsylvania to fund their replacement is dead.
If you have any questions, please contact Peter Vlahos.
We wish to acknowledge and thank PACA staff members, Hank Butler and Josie Gaskey, for their instrumental role in PACA's advocacy outreach.