Promising Revenue Growth Could Ease Budget Cuts But Big Corporate Tax Cuts Spell Trouble

Even Governor Has Concerns About House Bill to Cut Corporate Taxes by Nearly $1 Billion This week brought some good news on the state revenue front, but it also brought some long-term worries as the Pennsylvania House voted to approve major business tax cuts over the decade. If signed into law, this bill will weaken Pennsylvania's economy and result in a long-term erosion to the quality of our schools, colleges, and health care. First, the good news. Pennsylvania’s Independent Fiscal Office (IFO) in a report this week predicted stronger state revenues based on an improving economy. This would give the General Assembly as much as $800 million to restore cuts proposed by the Governor. This is clearly good news, but both the Corbett administration and legislative leaders are already dampening expectations about the scale of funding restorations. Click here to read more about that. Rally at the Capitol: Hundreds will rally at the State Capitol at 11 a.m. on May 7 to call on lawmakers to enact a budget that works for Pennsylvania families. Learn more. Now, the troubling news. The House gave the green light this week to a bill making nearly $1 billion worth of corporate tax cuts by the end of the decade. House Bill 2150 does not close the Delaware loophole that large multi-state companies use to avoid paying state taxes, but it will mean major cuts to education and human services down the road and a tax shift onto individual taxpayers. And it comes with no commitment from businesses to put Pennsylvanians back to work. Twenty-three Democrats joined most Republicans in support of House Bill 2150, while two Republicans joined 56 Democrats to vote against the bill. The overall vote was 129-58. The bill is so costly that even Governor Corbett's administration has voiced concerns about it. Revenue Secretary Dan Meuser told Capitolwire this week: "And frankly, in a period when revenues are sensitive and budget challenges are great, the timing is not right to enter into a new program in tax reform that can create uncertainty, the governor is very interested in a perhaps larger more comprehensive tax reform bill, possibly next year if the timing is right. Hopefully it is and we will have a stronger economy and revenues are more stable.” Most Pennsylvanians support closing corporate tax loopholes to level the playing field for all businesses and boost the state's economy. But lawmakers need to act cautiously and responsibly. House Bill 2150 takes the wrong approach. It would ensure budget shortfalls, major service cuts and higher local taxes for years to come.Learn more about House Bill 2150 here. Come to the State Capitol Monday. Add your voice to the growing chorus in Harrisburg urging lawmakers to restore cuts to schools, health services and help for people with disabilities and struggling families. Join advocates from across Pennsylvania at 11 a.m. Monday, May 7 for a rally in the Main Rotunda of the State Capitol to call on lawmakers and the Governor to enact a budget that works for Pennsylvania families and our economy. Learn more about this event.

The Pennsylvania Budget and Policy Center is a non-partisan policy research project that provides independent, credible analysis on state tax, budget and related policy matters, with attention to the impact of current or proposed policies on working families.