Senator Scott Martin E-Newsletter

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Senate Passes 2022-23 State Budget that Cuts Taxes, Funds Essential Services

The Senate approved a $45.2 billion General Fund Budget for Fiscal Year 2022-23 that meets the needs of Pennsylvanians today without creating multi-billion-dollar budget deficits in the future. Senate Bill 1100 was sent to the governor for enactment.

The $45.2 billion budget, which also includes federal American Rescue Plan Act (ARPA) funds, represents a 2.9% increase over the previous year’s spending – and $500 million less than Gov. Tom Wolf’s original budget request.

Tax Cuts to Attract Employers and Residents

The budget agreement does not include any broad-based tax increases and is structured in a way to minimize the risk of tax increases in the years ahead.

In fact, the budget actually cuts the Corporate Net Income tax rate from 9.99% to 8.99% and creates a phased reduction to 4.99% by 2031, moves designed to attract employers and residents to Pennsylvania.

The reduction in corporate net income taxes will spur economic growth and competitiveness and bring more job investments into Pennsylvania over the next decade, helping to reverse a migratory trend that’s undermined our state’s prosperity for many years.

Other changes also ensure out-of-state companies that do business in Pennsylvania pay the proper amount of taxes; modernize expense deductions for small businesses, allowing small business owners more flexibility and tax planning opportunities; and provide tax incentives for small businesses to grow and invest in Pennsylvania.

Protecting Taxpayers in Future Years

As important as the economic boost provided by this plan, which will have a projected ending balance of $3.6 billion, the 2022-23 budget includes a $2.1 billion transfer to the Rainy Day Fund, bringing the total balance to nearly $5 billion.

These fiscally responsible steps are critical because many economic indicators are showing a risk of a recession on the horizon. Most recently, Pennsylvania’s Independent Fiscal Office estimated a 60% chance of economic stagnation or a “growth recession” happening, and a 30% chance of a recession.

Supporting Education

As the Senate Education Chairman, I am happy to announce that the budget includes a $525 million increase for Basic Education Funding, a $100 million increase for Special Education funding; funding increases that will help school districts in the 13th Senatorial District that have long-waited for full implementation of the Fair Funding Formula.

The $45.2 billion budget, which also includes federal American Rescue Plan Act (ARPA) funds, represents a 2.9% increase over the previous year’s spending – and $500 million less than Gov. Tom Wolf’s original budget request.

The budget also boosts the Education Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC) programs by a combined $125 million to ensure more students can learn in the educational environment that best suits their needs, especially for the 70,000 families of recent years that were denied opportunities to best meet their children’s needs because of program caps.

Funding is also dedicated in this year’s budget to ensure our students are safe and secure with a historic commitment of $100 million in funding for School Safety and Security Grants for every school district in Pennsylvania.  In addition, another $100 million in funding is being dedicated to Mental Health grants for schools.  The Ready to Learn Block Grant Program also received a $100 million dollar commitment.

In addition, several of the proposals I have spearheaded also passed as part of the budget, including rolling back the administration’s charter school regulatory reforms that should have been legislated, closing a scoring loophole for the Keystone Exams that limit graduation options for students impacted by COVID-19 shutdowns, and expanding career training for cosmetologists and barbers. 

Clean Streams

An important section of the budget included the creation of the Clean Streams Fund that Senators Yaw, Laughlin and myself introduced through Senate Bill 832.  The fund uses $220 million from the American Rescue Plan to clean up rivers and streams damaged by decades of non-point source pollution, including agricultural runoff, abandoned mine drainage and stormwater management in developed areas.

Without a regulatory permit, and without any ratepayers or user fees to support them, the burden of protecting our local streams and creeks from non-point sources falls on individual farmers and landowners. However, the impacts of non-point pollution as well as the benefits of its clean-up are felt by all Pennsylvanians.

Long-Term Care, Housing and Workforce Development

Building on our efforts last year to help address the serious financial challenges of our nursing homes and long-term care providers, this budget includes $150 million for costs related to nursing home staffing, $250 million in ARPA funding for long-term living programs and $20 million for supplementary payments to personal care homes.

Inflation is driving up the cost of everything, including housing, both owned and rented, and this budget directs $540 million in ARPA funding to help our most vulnerable and low-income residents by funding affordable housing construction programs, offering additional home repair assistance and bolstering the Low Income Home Energy Assistance Program and the Property Tax/Rent Rebate Program.

The budget also includes $5 million for workforce development to assist unemployed and underemployed individuals to gain job skills in order to help lift themselves and their families up the economic ladder. 

Other Highlights of the New Budget

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