By State Senator Scott Martin
Although Pennsylvania’s financial position appears to be strong in the current fiscal year, the commonwealth’s budgetary outlook in future years is not nearly so rosy.
In November, the nonpartisan Independent Fiscal Office forecast structural imbalances in the state budget of between $1.5 billion and $3.1 billion every year from 2024 through 2028.
We shouldn’t wait until the bill comes due to tackle these significant challenges. If we kick the can further down the road, it will be too late to avoid the worst of the consequences.
Thankfully, there are some painless steps we can take now to address our looming financial uncertainty. The surest way to create a more sustainable future for Pennsylvania is by supporting pro-growth policies that unleash our commonwealth’s full economic potential.
That process starts with eliminating barriers to economic growth.
Last month, the state Senate took a strong step toward making Pennsylvania more job-friendly by approving a proposed state constitutional amendment that would cut through the reams of government red tape that often tie up numerous economic development projects.
The amendment boils down to one simple question: Should the power to impose regulations be vested in local elected officials who are accountable to the people they serve, or to unelected bureaucrats who are accountable only to their governor?
If the proposed amendment is approved by the state House of Representatives, the measure would give voters the final say on whether lawmakers should be able to overturn onerous government regulations that chase away jobs and investment.
The Wolf administration’s pursuit of its Regional Greenhouse Gas Initiative carbon tax was a perfect example of government overreach that smothers jobs and new investment. We cannot expect job creators to invest in Pennsylvania if we routinely threaten them with higher costs to do business.
Similarly, continuing Pennsylvania’s planned phase-down of the corporate net income tax rate would send a strong signal that our commonwealth is open for business. The cut in this rate was hailed by job creators as the key to encouraging business and job growth in Pennsylvania. The scheduled reduction in the corporate net income tax rate is projected to bring us from one of the highest employer tax rates in the country to one of the lowest by 2031.
There is ample reason to believe the continued reduction in the corporate net income tax rate will continue with bipartisan support. On a recent Pennsylvania Cable Network call-in show, state Senate Democratic Leader Jay Costa and I both cited the importance of cutting the corporate net income tax rate to support our ongoing efforts to create and retain quality jobs in Pennsylvania.
While we continue to explore other avenues to make our state more competitive, it is important to make sure our own financial house is in order. That means ensuring we have sufficient reserves to weather a potential downturn in the economy, to minimize the needs for service cuts or tax increases.
Over the past two years, state Senate Republicans led the charge to build up the state’s “rainy day fund.” Our reserves were essentially depleted as recently as 2018. Today, we have a fund balance of more than $5 billion. This puts our total budgetary reserves close to the national average, which not only helps us deal with unforeseen financial difficulties, but also has the potential to improve our bond rating and reduce long-term borrowing costs.
While we try to create more homegrown job opportunities statewide, we must also prioritize efforts to train our citizens to meet the needs of today’s job creators. This includes ensuring Pennsylvanians can access vocational programs, career and technical education, and other job-training systems to broaden their employment options.
We have seen the value of targeted workforce development locally, particularly in terms of meeting job training needs in populations that suffer from high unemployment and underemployment.
Tec Centro, which has campuses in both Lancaster and Berks counties, is a prime example of how we can connect job seekers to in-demand careers. I recently visited the Berks campus and was extremely impressed by the work there to provide critical skills training to unemployed and underemployed residents, which will ensure that more Pennsylvanians can achieve self-sufficiency and financial independence.
Individually, each of these priorities will make a positive impact on the financial health of our commonwealth. Taken together, these measures represent a cohesive strategy to meet the needs of Pennsylvania and its citizens and ensure more prosperous communities for many years to come.
State Senator Scott Martin is from Lancaster County and is Chair of the Appropriations Committee.
The views expressed here are those of the author and not necessarily those of the Susquehanna Valley Center.
Nothing contained here should be considered as an attempt to aid or hinder the passage of any legislation.
This first appeared on LNP on February 28, 2023.