State Sen. Gene Yaw on Friday discussed Gov. Tom Wolf's $37.8 billion budget for 2021-22 that includes an 11 percent increase in spending, a minimum wage increase and a personal income tax increase.
Yaw, R-23, was the guest speaker for the Greater Susquehanna Valley Chamber of Commerce's Rise and Shine governmental affairs committee meeting via Zoom on Friday. Yaw said those increases are not what the struggling people of the Commonwealth need in the midst of a global pandemic.
"From my perspective, is this the right time for a tax increase?" said Yaw, the chair of the Rural Pennsylvania Committee. "We are coming out of a one-year shutdown. We're trying to get businesses started and back on their feet. I just think, in my opinion, it's not the right time for a budget like this."
The biggest change is Wolf's proposal to increase the personal income tax rate from 3.07 percent to 4.49 percent, a move that the administration projects will increase school funding by almost $2 billion. Wolf is calling on the General Assembly to cushion that tax increase by providing exemptions for lower-wage earners.
The school funding plan is just part of the governor’s proposal. He’s also renewed his repeated calls for the General Assembly to add a tax on drilling and he’s proposed increasing the state’s minimum wage to $12 an hour. Pennsylvania is the only state in the northeast that still uses the federal minimum wage of $7.25 an hour, which was last changed in 2009.
"The assumption is if you raise the wage that much, you'll get a lot of the money back in taxes," said Yaw, adding, "We're going to give people a higher minimum wage but we're going to take a lot of it back (through personal income tax)?"
Bob Garrett, the president/CEO of the GSV Chamber, said the chamber's current position is raising the minimum wage "right now is a bad idea." The minimum wage should be realistic and should match the federal minimum wage so all counties and states have "an equal playing field," he said.
"From a chamber perspective, there are big sections that have been hurt by COVID-19 and they've lost employment and income," said Garrett. "Rather than raising the minimum wage, it's time to be sophisticated and go to the data and figure out how to get assistance to day care centers (and other businesses) and the people who work there?"
One of the strategies is keeping tax revenue local and investments in the workforce by training new skills so they can get better paying jobs, said Garrett.
Yaw said education, health and human services and corrections take up the majority of the expenditures in any budget. Only 1 percent goes into economic development — even debt services is at 3 percent, he said.
He noted that "education funding works out very well" with the new plan. Cyber and charter school reforms are also on the table, he said.
Wolf’s plan would change the way charters are paid for teaching special education students and it would use a uniform tuition rate for all cyber charter schools. It's a plan Wolf says will save local school districts $280 million.
Committee Chair Malcolm Derk told Yaw it is was a privilege to have him on Friday's panel.
"Sen. Yaw has been an advocate for the chamber year after year, a regular participant in our legislative affairs work," said Derk.
John Finnerty contributed to this report.