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Pennsylvania State Budget: A Rare Victory for All Sides

Every Pennsylvania state budget has its winners and losers.

Each year, June in the state Capitol is a time for negotiations between the majority and minority parties, along with the governor. They discuss where to spend money, where to cut and what to tax — if anything.

The rest of the summer often is the time when people are looking at the spending plan that passed and keeping score. Who won and who lost?

Last year — and into early this year — many of us saw the effects of the historic state budget impasse that lasted almost nine months. The fiscal year 2015-16 budget was unprecedented, and nobody in Pennsylvania wanted to see a repeat for the 2016-17 fiscal year that officially starts on July 1.

Fortunately, this year the budget was completed only two weeks past the constitutional deadline of June 30, and most observers viewed it as a compromise.

No matter the spending numbers, cuts or taxes, after the dust settles we can see who made out OK and, well, who is unhappy with the way things went. What is bad for one industry could be a boon for another entity.

The stakes on the budget document also are high for legislators who are up for reelection this year.

After going through a budget cycle that lasted well into March of the following year — after the governor had been obligated to introduce a spending plan for a new fiscal year  — it’s safe to say that most involved see a nearly on-time budget as a win for everyone in Pennsylvania. Throughout the state budget process, there was cautious optimism that this year would be different. It certainly was.

The signs of change started early.

In February, Gov. Tom Wolf proposed a $33.3 billion spending plan with a significant tax increase of around $2.7 billion to help close a structural deficit and provide more for education funding, among other issues. His proposal included increasing the personal income tax, expanding the sales and use taxes to products not already taxed, tobacco taxes, a Marcellus Shale tax and bank shares taxes.

This was not as ambitious as his first budget proposal in March 2015. Still, the Democratic governor’s proposed taxes and spending increases were met with criticism from Republicans in the Legislature.

Shortly after the June 30 deadline, the Legislature sent Wolf a plan that increased spending for higher education, K-12 education, and special and early education. While there were arguments that spending was increasing too much, ultimately the $31.6 billion package became law.

Instead of signing or vetoing the budget bill, the governor allowed it to become law without his signature after 10 days. This was largely due to the lack of a spending plan in place at that time, which some suggested was unconstitutional.

Shortly after, the Legislature completed a revenue package through a conference committee, along with a Fiscal Code and a Public School Code, all of which the governor signed. The budget was balanced largely through increases in tobacco taxes, digital downloads and applying the personal income tax to Pennsylvania Lottery winnings.

The Legislature avoided imposing broad-based taxes, but some observers were critical of the revenue plan. However, after a state budget cycle in which all sides came out losers, this one goes into the win column.

Only time will tell where the 2017-18 state budget process is headed.

Margaret Durkin