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Pennsylvania Gov. Tom Wolf and House and Senate lawmakers continue to grapple with how to balance the state’s books more than 90 days past the budget due date. The state’s fiscal year started July 1, but policymakers have yet to agree on a fiscal path forward that manages the state’s $2.3 billion deficit. 

The House voted this week against a new tax plan proposed by the governor, which, he said, provided an “opportunity to move forward and away from the failed status quo.” Conservative members of the legislature (who control the House and Senate) support a “no new taxes” solution and instead want to privatize state-run wine and liquor stores and reduce pension spending to close the gap.  The governor’s latest tax proposal was seen as an attempt to gain some conservative support for a revenue solution as he abandoned his plan to broaden the sales tax base and pared back his proposed new severance tax on natural gas extraction.   The centerpiece of his proposal was an increase in the state’s personal income tax rate from 3.07 to 3.57 paired with an increase in a tax forgiveness credit.  According to an ITEP analysis, the income tax changes would have held the state’s lowest income residents harmless while the rest of the hike was spread evenly across the income distribution. 

The Pennsylvania Budget and Policy Center notes that there is now more (and harder) work to be done:  “The weight of responsibility for guiding us to the budget Pennsylvania needs now rests more heavily than ever with the legislative majority, including with the members who, at various times, have expressed support for a severance tax, increased education funding and more investment in human services. Today they voted no. That was the easy part. The hard part will be getting to yes, to a vote for a responsible budget that invests in Pennsylvania’s schools, communities and future.”

Pennsylvania already has the sixth most unfair state tax structure in the country, so while there is harder work ahead for policymakers there are certainly clear options available that both raise money and increase the overall fairness of the state’s tax structure.