Business leaders and stakeholders around the state are offering mostly praise for the $45.2 billion 2022-2023 Pennsylvania General Appropriations Budget, which was passed by the state legislature and then signed by the governor on July 8.
The budget, which includes federal American Rescue Plan Act (ARPA) funds, represents a 2.9% increase over the previous year’s spending, but is $500 million less than Gov. Tom Wolf’s original budget.
The feature of the budget that has garnered the most praise from business leaders is the fact that it cuts the Corporate Net Income (CNI) tax rate from 9.99% to 8.99% and creates a phased reduction to 4.99%.
“This tax change will greatly benefit our small business and agribusiness communities, helping them leverage additional funds to invest in expansion, improvements, and technology upgrades, said Jim Gerlach, president and CEO of the Greater Reading Chamber Alliance, adding that it “will send a clear signal that Pa. is truly ‘Open for Business.’”
The Pennsylvania Chamber of Commerce also spoke in favor of the change, saying that the state’s business community has long advocated for a reduction to improve the state’s overall competitiveness and economic climate.
For decades, Pennsylvania’s CNIT rate, which at 9.99 percent was the highest flat rate in the country, served as a barrier to growth, said PA Chamber President and CEO Luke Bernstein.
“This monumental tax reform package is a giant step towards making Pennsylvania more competitive,” he said
Gerlach also applauded the use of the ARPA funds.
“We are very pleased to see $42 million of American Rescue Plan funds go to paying down outstanding debt in the Workers’ Compensation Security Fund which will ensure the Unemployment Compensation Tax levied on businesses will not be increased due to COVID related job loss,” he said.
The budget also provides increases in the Education Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC) on top of an $850 million increase for K-12 school districts with $225 million earmarked for the 100 neediest school districts.
The leadership of Pennsylvania’s State System of Higher Education said the budget would have a positive impact on higher education, as well.
“We are incredibly appreciative of the governor and General Assembly for this historic investment in the 90,000 students that our PASSHE universities serve,” said Cynthia Shapira, chair of the PASSHE board of governors. “This unprecedented additional funding recognizes that state system universities have kept their promises to the state with a redesign that is delivering positive results for our commonwealth and more opportunities for our students.
The 2022-23 state budget invests $552.5 million in PASSHE, a $75 million increase from $477.5 million in the 2021-22 fiscal year. Shapira said this is the largest single-year increase PASSHE has received from the state and will benefit students by allowing the state system to hold tuition flat for the fourth consecutive year, despite inflation.
Additionally, the budget provides $125 million in one-time ARPA funding to support system redesign. In total, the budget invests $677.5 million in the state-owned university system and its students.
Those in senior care also praised the budget.
LeadingAge PA, an association representing more than 360 senior services providers, said they will benefit from funding provided by the 2022-23 budget.
The budget provides a 17.5% rate increase in direct aid to nursing homes, which it said is the first across-the-board Medicaid funding increase in nearly a decade. This Medicaid funding increase is effective Jan. 1, 2023, with over $131 million in American Rescue Plan Act funding also included to help bridge the gap.
“These historic steps come at a time when long-term care providers continue to battle unprecedented challenges due to the pandemic,” said LeadingAge PA President and CEO Garry Pezzano.
“Pennsylvania’s long-term care providers have struggled for too long with dwindling resources that threaten to severely limit the aging population’s access to care,” Pezzano said. “Pennsylvanians deserve the best long-term care system in America. Today, we took an important step toward achieving that goal.”
Not all organizations were happy with the budget, however, the Delaware River Basin Commission (DRBC) expressed disappointment that it did not get the funding it was promised.
The Governor’s initial budget proposal to fully fund the DRBC with more than $893,000, however, legislative negotiations cut funding to $217,000, the same level that Pennsylvania has been funding the commission at since 2014.
“Full share funding to the Delaware River Basin Commission from each of the basin states is a major priority of the Coalition because the Commission is a key player in the proper management of the Watershed” said Kelly Knutson, director of the Coalition for the Delaware River Watershed. “With full support of all the basin states, the DRBC would have the staffing and programming support necessary to effectively monitor water quality and make informed decisions on river flow management.”