Pennsylvania House Democrats advanced a slate of tax cuts and credits, including two that Gov. Josh Shapiro touted in his March 7 budget address, that are likely to become bargaining chips in this month’s budget negotiations.
The House Finance Committee approved legislation to enact Shapiro’s proposed $2,500 tax credit for new teachers, nurses and police officers, and the elimination of taxes on cell phone service, which Shapiro said would save consumers about $124 million a year.
The committee also approved bills to create a child care tax credit for working parents, and a state version of the federal tax break for low- and moderate-income families.
The bills, which passed along party lines in the committee, will now go to the House floor, where Democrats have a one-vote majority, for a full vote.
Republicans on the Finance Committee said that while they support the tax cuts and credits in principle, several said they had unanswered questions about how each of the bills would affect the state’s fiscal outlook.
“I realize everyone thinks that we have plenty of money for this year and we probably do. But my concern is years down the line,” said Rep. Jack Rader, R-Monroe.
“Each of these bills takes a lot of money and revenue. I’m concerned about those and I’d like to have some kind of guesstimate on how we would replace that money,” Rader added.
Responding to the Republicans’ concern about the loss of revenue, Rep. Malcolm Kenyatta, D-Philadelphia, noted that he didn’t hear concerns about lost revenue in years past when the Republican-controlled Legislature created business tax credits.
“We never said how we’re going to get the money then. But every single time in this building, when it’s time to do something for hardworking Pennsylvanians, now everybody is telling me about how we can’t find the money,” Kenyatta said.
Finance Committee Chairperson Steve Samuelson, D-Northampton, said he recognized the Republicans’ concerns about balancing the tax cuts and credits with spending reductions, but said that the proposals would give the House an active role in budget bargaining.
“I realize there are 24 days of budget negotiations ahead of us. We’re putting some proposals forward that could benefit working Pennsylvanians and can benefit Pennsylvania,” Samuelson said, referring to the looming June 30 deadline to pass a new state spending plan.
The Finance Committee votes came a day after House Democrats proposed – and passed – a $903 million increase over Shapiro’s $44.4 billion budget proposal that included significant additional funding for K-12 and special education, state universities, student aid, school maintenance and repair, and job training and career and technical education.
It would also boost funding for community and economic development, the Whole Home Repair program established last year, and child care services and assistance.
House Republicans said the Democrats’ proposal went beyond Shapiro’s budget, which GOP lawmakers called a good starting point for negotiations, even though they warned that it would leave Pennsylvania unprepared for difficult economic times ahead.
The tax credit for teachers, nurses and police officers in House Bill 1249 was designed to help address a workforce shortage in those critical public service professions.
Rep. Keith Greiner, R-Lancaster, criticized the legislation for “picking winners and losers,” noting that employers in many sectors struggle to hire and retain enough workers. He also questioned its constitutionality, noting that tax exemptions or special tax provisions are limited to age, disability, infirmity or poverty.
In his budget address, Shaprio said the elimination of the 6% sales tax and 5% gross receipts tax on cell phone service would provide immediate tax relief for consumers, who increasingly rely on cell phones and smartphones as their primary means of communication and internet access. If the legislation becomes law, it would take effect Jan. 1.
The child care tax credit legislation would gradually increase the amount that Pennsylvania taxpayers who pay for child care in order to work can claim on their state income tax.
The child care tax credit was established in 2022 as part of the state budget. It allows taxpayers who are eligible for the federal child care tax credit to claim 30% of the federal credit on their state income tax. The legislation advanced Tuesday would increase the amount 5% a year until it reaches 50% in 2027.
In a hearing on Monday, Laura Manion, president of the Chester County Chamber of Business and Industry, told the committee that the legislation has support from 55 local chambers of commerce around the state.
Manion said child care, with a national average cost ranging from $11,000 to $29,000 a year, is unaffordable for many families and is a barrier stopping many low and middle income women from joining or returning to the workforce.
Taxpayers who receive the federal Earned Income Tax Credit would be able to claim 25% of that amount as a credit on their state income taxes. Rep. Christina Sappey, D-Chester, said.
Pennsylvania is in the minority of states that do not have a state EITC, which would provide an additional tax break for workers who do not qualify for other social safety net benefits.
Samuelson said the credit would have a fiscal impact of $233 million in the first year. The average federal credit is about $1,800, so the state credit would mean an additional $450 credit for those who qualify.
Originally published at www.penncapital-star.com,by Peter Hall
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