2015-16 State Budget Timeline

 

The historic 2015-16 budget impasse finally came to an end nine months after the constitutional deadline of June 30. Despite the Legislature sending several budget plans to the governor’s desk, the Wolf administration continued to hold out for approval on a multitude of tax increases to pay for increased spending. In March of 2016, with school districts struggling from lack of funding, the governor allowed a $30 billion, no tax increase budget to become law. While the General Appropriations bill was done, the budgetary battles between the Governor and Legislature continued into April with wrangling over enactment of the Fiscal Code -- an accompanying budget bill that specifies how certain funds are to be distributed. The timeline below gives an overview of the protracted 2015-16 budget process.

 

March 3, 2015:

Gov. Tom Wolf unveils his budget proposal for the 2015-16 fiscal year. The plan includes a number of tax increases to pay for nearly $5 billion in new state spending. The Wolf administration’s proposed changes to the Commonwealth’s tax structure include:

  • Increasing the Personal Income Tax to 3.7 percent. This equates to a 20 percent increase over the current rate.
  • Increasing the sales tax to 6.6 percent and expanding it to cover most goods and services. This equates to a 10 percent increase over the current rate.
  • Increasing the Bank Shares tax to 1.25 percent. This equates to a 40 percent increase over the current rate.
  • Enacting a 5 percent severance tax and 4.7 cents per mcf fee on the natural gas industry, which includes a nearly $3 price floor on the cost of gas and ignores market conditions. This would make the Commonwealth’s natural gas tax the highest in the nation.
  • Lowering the NOL deduction to $3 million or 12.5 percent taxable income.
  • Implementing unitary mandatory combined reporting.
  • Gradually reducing the corporate net income tax rate to 4.99 percent by 2018.

After a careful analysis of the governor’s budget plan, the PA Chamber issues a statement calling on lawmakers to address the growing pension crisis prior to discussing any new revenue options.


June 1, 2015:

The PA House of Representatives unanimously votes down the Wolf administration’s tax proposal by a vote of 193-0. The PA Chamber issues a statement applauding lawmakers for opposing the tax increase plan and calling on legislators to address the pension crisis.


June 30, 2015:

The General Assembly passes a budget that spends approximately $30.1 billion and does not increase any taxes. Along with the on-time budget, the General Assembly also passes a liquor privatization bill and a measure that would comprehensively reform the state’s public pension systems. The PA Chamber issues a statement congratulating the legislators for passing a responsible, no tax increase budget and also for voting in favor of historic liquor and pension reforms.


 

In a historic move, the governor vetoes the entire budget. The PA Chamber issues a statement expressing disappointment in the governor’s budget veto and his continued calls for tax increases.


July 2, 2015:

The governor vetoes the GOP-passed liquor privatization bill.


July 9, 2015:

The governor vetoes the GOP-passed pension reform bill. The PA Chamber issues a press release stating that the governor’s pension veto puts the Commonwealth’s fiscal future at risk.


Week of Aug. 10:

The governor presents legislative leaders with a pension reform plan that would institute a “stacked-hybrid” pension plan for future employees making $100,000 or more a year. The consensus is that this plan doesn’t cast nearly wide enough of a net to make any real change in the current, unsustainable system or generate real savings.


Aug. 25, 2015:

The House of Representatives fails to over-ride the governor’s budget veto.

 

 


Aug. 29, 2015:

Republican legislative leaders present the governor with a pension reform counter-proposal that more closely resembles the pension legislation the governor vetoed, in exchange for $400 million in additional education funding.


Sept. 16, 2015:

The governor rejects the legislative leaders’ counter-pension reform proposal. He modifies his “stacked-hybrid” pension plan to include any employee making $75,000 or more and proposes hiring a private manager to handle the day to day operations of the state’s liquor monopoly.


Sept. 28, 2015:

The House and Senate pass a stop-gap budget bill. This legislation would provide $11 billion (one-third of the funding that was approved in the budget bill the governor vetoed) in temporary funding to human service agencies and public schools throughout the state that are struggling without a flow of state dollars.


Sept. 29, 2015:

The governor vetoes the stop-gap budget. The PA Chamber issues a statement expressing disappointment in the governor’s continued calls for new and increased taxes and reiterates our position that comprehensive, substantial pension reform must be included in the final agreed-to budget.


Sept. 30, 2015:

Frustrated by the Wolf administration’s refusal to take broad based tax increases off the table and in an effort to move budget negotiations forward, Republican leaders in the House and Senate announce they will bring the governor’s tax bill up for a vote the following week.


Oct. 6:

The Wolf administration unveils a revised tax plan. This proposal would increase the Personal Income Tax to 3.57 percent – a 16 percent increase over the current rate. The plan would also institute a 3.5 percent severance tax plus 4.7 cent per mcf fee on the natural gas industry, on top of the continued collection of the impact tax.


Oct. 7, 2015:

The Wolf administration’s revised tax plan is voted down in the House by a vote of 127 to 73. The PA Chamber issues a statement applauding lawmakers for standing up against broad-based tax hikes.


Oct. 7, 2015:

The Wolf administration unveils a revised tax plan. This proposal would increase the Personal Income Tax to 3.57 percent – a 16 percent increase over the current rate. The plan would also institute a 3.5 percent severance tax plus 4.7 cent per mcf fee on the natural gas industry, on top of the continued collection of the impact tax.


Nov. 9, 2015:

The Wolf administration and legislative leaders announce a budget framework agreement that would have spent $30.8 billion and would have increased K-12 education funding by $350 million. The framework also included a proposal to reduce property taxes. This plan would have been paid for in part by an increase of the state sales tax from 6 percent to 7.25 percent. The compromise also included an agreement to include some form of liquor privatization and pension reform.


Late Nov.-Mid Dec.

The framework agreement falls apart following a failed Senate vote on a property tax elimination proposal and the administration, House and Senate are unable to agree on a tax increase package to pay for the proposed increase in spending under the framework agreement. An additional set back occurs when a vote in the House fails to garner enough support to pass the “hybrid” pension reform proposal.


Dec. 24, 2015

The General Assembly passes HB 1460, a general appropriations bill that spends $30.3 billion.

 

 

 

Dec. 29, 2015

The governor uses his line-item veto authority to blue line approximately $6 billion out of the budget bill. At the same time, he releases approximately 6 months worth of “emergency funding” to schools. Following the governor’s line-item veto, the PA Chamber issues a statement calling for a responsible final budget that addresses the pension crisis and privatizes the state’s antiquated liquor monopoly.


Feb. 9, 2016

With the 2015-16 budget impasse ongoing, the governor unveils his budget proposal for the 2016-17 fiscal year. His plan calls for $2.7 billion in tax increases and would spend $33.29 billion. He bases his proposal on hypothetical revenues for the 2015-16 fiscal year – which would require the legislature to enact $7.4 billion in additional supplemental revenues in 2015-16 in order to achieve a balanced budget in 2016-17. The PA Chamber issues a statement cautioning against tax and spend policies that don’t address the Commonwealth’s pension crisis.


Mar. 16, 2016

The House and Senate pass a supplemental budget bill that provides $7 billion in additional funding for the current year, bringing total state spending for the 2015-16 fiscal year to $30 billion -- a 3 percent increase over the previous year. The General Assembly also approves funding for the state-related universities (requiring a 2/3 bipartisan vote).


Mar. 23, 2016

The governor announces that he will let the General Appropriations bill become law (without signing the bill), bringing the 2015-16 budget impasse to an end. He also announces plans to veto the Fiscal Code, H.B. 1327. By vetoing the Fiscal Code, school districts lost out on $439 million in education funding that was appropriated in the bill – including additional money for basic education funding and reimbursements for school construction costs.


Mar. 25, 2016

The governor vetoes the Fiscal Code.

 

 

 

Mar. 28, 2016

The supplemental General Appropriations bill becomes law without the governor’s signature.

 


Apr. 13, 2016

By a veto-proof majority vote in both chambers, the House and Senate pass an updated Fiscal Code bill. House Bill 1589 contains borrowing to reimburse for school construction costs and the specifies that the governor must use the distribution formula that was approved last year by the Basic Education Funding Commission to allocate additional education funding laid out within the bill.


Apr. 22, 2016

The governor announces he will allow the Fiscal Code to become law without his signature.

 


Apr. 25, 2016

The Fiscal Code becomes law.


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