Feb. 16, 2021

HARRISBURG – Today the House Appropriations Committee held its first day of budget hearings. The committee heard from the Department of Revenue, the Independent Fiscal Office (IFO) and the Department of Aging. Here are the key takeaways from the day:

The governor’s $7 billion Personal Income Tax (PIT) increase is an unconstitutional progressive tax:

• Article 8, Section 1 of the Pennsylvania Constitution states, “All taxes shall be uniform, upon the same class of subjects…” While Revenue Secretary Dan Hassel did his best to dodge the question of whether or not the governor’s PIT proposal would qualify as a progressive tax, he did finally concede that “Pennsylvania cannot enact a progressive tax.”
• The governor’s PIT increase on middle class families would result in 100 different effective tax rates. By definition this is a progressive tax and unconstitutional under Pennsylvania’s uniformity clause.
• Even the governor admits, in his letter to the People of Pennsylvania accompanying his budget, that “This budget focuses on making our state tax system more progressive.”

The governor’s budget creates a non-sensical definition of poverty:

• The governor attempts to skirt the uniformity clause by taking the current special tax provision for poverty and turning it on its head. The special tax provision for poverty is a program that has enjoyed bipartisan support for many years, as it appropriately targets relief to our state’s most needy. The governor’s proposal would upend the definition of poverty and include a family of four earning up to almost 400% of the federal poverty level (capping out at $100,000).
• When pressed multiple times to provide a definition of poverty, Hassel refused to provide a definition, as he would have had to admit that the governor’s proposal is a middle class progressive tax increase masquerading as a poverty program.

The Department of Revenue and Independent Fiscal Office are miles apart on the revenue estimates:

• Matthew Knittel, director of the Independent Fiscal Office, testified that the IFO is projecting revenues for the 2020-21 fiscal year to be $950 million higher than the Department of Revenue’s estimate and $350 million higher for the 2021-22 fiscal year.

Vulnerable seniors are being left behind:
• Despite the fact that 88% of those who have died from COVID-19 in Pennsylvania were over the age of 65, Aging Secretary Robert Torres testified that he was not consulted on the development or expansion of the administration’s vaccine distribution plan. He also testified that the Department of Aging was not consulted on the administration’s order that COVID positive patients be admitted back into nursing homes.
• Torres testified that there has been an 80% increase in Older Adult Protective Services reports of need, yet the governor’s budget cuts funding for these programs by nearly $1 million.

Quote from Chairman Saylor:

“Not only is the governor’s proposed Personal Income Tax increase unconstitutional, it is absolutely absurd for the governor to try to increase taxes on middle class families and small businesses at a time like this,” said House Appropriations Chairman Stan Saylor (R- York) following today’s hearings. “I was also shocked to hear that our seniors continue to be an afterthought for this administration, especially as we know that seniors are most at risk under COVID-19. To not include the state’s Aging secretary in the development of the governor’s vaccine distribution plan is mind boggling.”

Appropriations Committee
House Republican Caucus
Pennsylvania House of Representatives