HARRISBURG — Though the state heads into the final month of its fiscal year in strong financial shape, there’s been little talk at the Capitol about using this opportunity to cut taxes, lawmakers said Friday.
Through April, the state’s revenue had beaten projections by $828.5 million, according to the Revenue Department.
Both Republican leaders in the state House and Senate and Democratic Gov. Tom Wolf have indicated they think the state’s tax windfall should be put into a Rainy Day Fund.
Last July, the state made a $22 million deposit into that fund, the first contribution to the fund in almost a decade.
“After taking care of our mandatory expenses and investments in schools and other critical services, I believe we should even consider putting all surplus revenue in the Rainy Day Fund,” Wolf said earlier this month. “We have the opportunity to protect the commonwealth and taxpayers from future economic downturns and I look forward to engaging with the General Assembly on achieving this shared goal.”
A small number of lawmakers say that rather than hoard the money, the state should use it to help cut taxes.
State Rep. Frank Burns, D-Cambria County, announced Wednesday, that he thinks the state should use this opportunity cut the gas tax paid by motorists. Pennsylvania motorists pay more tax per-gallon of gas than drivers in any other state, according to The Tax Foundation.
The Tax Foundation, a Washington, D.C.-based think tank focusing on state and federal tax policies, estimates that Pennsylvania drivers pay 58.7 cents per gallon in state gas tax. California, where the state gas tax is 56 cents per gallon, is the only other state that collects more than 50 cents per gallon in state gas tax.
Burns said that when Wolf took office, the governor sought to increase taxes to help balance the state budget.
Burns said that since the Legislature was not in session this week, he hasn’t gotten feedback from other lawmakers about the tax cut idea. But he thinks the idea resonates with constituents.
“Gas costs more than $3 a gallon,” he said Friday. “People are hurting.”
Lawmakers return to the Capitol June 3 to begin the final press to pass a state budget before June 30, the end of the state’s fiscal year.
Burns said that he’s not sold on the idea of putting money in the Rainy Day Fund because there’s nothing to stop lawmakers from raiding that fund whenever they feel like it.
Burns said that while he’s calling for the gas tax cut, he’d welcome any move that cuts taxes if there’s another that seems to do the same thing and gets more momentum.
State Rep. Aaron Bernstine, R-Lawrence County, agreed that the state should use its stronger financial position to cut taxes.
“Revenue numbers are up because of the Trump economy and we’ve kept state spending increases under the rate of inflation,” Bernstine said. “My preference would be that we should return the money to the taxpayers.”
Bernstine said there’s little indication that there’s going to be widespread support for a state tax cut.
State Rep. Kurt Masser, R-Northumberland County, said that using the state’s strong budget position to make a substantial deposit into the Rainy Day Fund makes more sense than cutting taxes now.
“That’s more prudent,” he said. “It’s only been one good year. If we get three, then maybe we can look at cutting taxes.”
Masser said that saving the money will help prepare the state in the event of another economic downturn.
State Rep. Brad Roae, R-Crawford County, said that conservative lawmakers are going to have their hands full fighting to keep spending in check as lobbying groups point to the state’s better-than-expected tax revenue as evidence that spending could be increased for programs.
“The top priority of fiscal conservatives like me will be a tax cut,” he said. “Some legislators who enjoy spending other people’s money will want to spend 100 percent of the extra money. The compromise position may end up being putting it in the reserve fund.”