Pennsylvania aims to spur economy with newly enacted state budget

Pennsylvania Gov. Josh Shapiro on July 11 signed into law an almost $47.6 billion state budget for fiscal year 2024-25 that includes important measures to strengthen the state’s economy.

“Pennsylvania is the only state in the nation with a divided legislature — and I’m proud that we came together with leaders in both chambers and both parties to show that we can do big things together to make Pennsylvanians’ lives better,” Shapiro said on Thursday. “I’m proud to sign this budget into law.”

The Democratic governor, the narrowly Democratic-controlled state House, and the Republican-led Pennsylvania Senate came together on the $47.59 billion spending plan, which contains historic investments in economic development, workforce development, and public transit and infrastructure, while also cutting costs and reducing taxes, among other provisions.

While the budget total is $740 million less than what Shapiro proposed in February, Senate Republicans are satisfied with several aspects of the bill.

The new law allocates $740 million to the state’s Rainy Day Fund, which is one of their key priorities, and contains provisions to continue phasing out the Corporate Net Income Tax, previously one of the highest in the nation and one which businesses see as a major barrier to expansion.

State Senate President Pro Tempore Kim Ward (R-39), Majority Leader Joe Pittman (R-41), and State Senate Appropriations Committee Chairman Scott Martin (R-13) say this is a fiscally responsible state budget that will create new job opportunities for state residents and includes zero new taxes.

“I am thankful we reached a budget agreement that recognizes the need to address Pennsylvania’s economic and demographic challenges in the years ahead,” said Martin.

The state’s FY 2024-25 budget also includes important components of the Grow PA post-secondary education and career preparation plan championed by Senate Republicans. Under the plan, Grow PA scholarships of $5,000 will be available to students enrolled in high-demand education programs if they agree to live and work in these industries in Pennsylvania after graduation.

“In addition to making our state more competitive for job growth, the budget’s Grow PA plan will help young people train for high-demand careers while taking on less debt and providing a strong incentive for them to put down roots here in our commonwealth,” Martin said.

Pennsylvania Sen. Greg Rothman (R-34) commended the budget for addressing the elimination of Pennsylvania’s Startup Penalty, which many out-of-state businesses have said prevents them from relocating to the commonwealth.

“When a business creates jobs, it requires investment, which often means losses,” Rothman said. “Pennsylvania’s punitive tax treatment of those losses crushes entrepreneurship and discourages businesses from coming to Pennsylvania.”

“This year’s budget eliminates the PA Startup Penalty by incrementally, over four years, allowing businesses to carry forward more losses,” he added. “This important change allows businesses to survive while they work hard to get off the ground, keeping jobs and opportunities in the commonwealth.”

Rothman said that another important component of the budget addresses Pennsylvania’s costly permit delays, establishing third-party permit review, accountability for permit review timelines, and a transparent permit tracking system.

“These changes, all steps in the right direction, send a message to hard-working Pennsylvanians and job-creators everywhere that Pennsylvania is hungry for opportunity,” said the congressman.

Pennsylvania House Democratic Leadership said last night that the budget delivers a win for all Pennsylvanians and builds a better future for residents and businesses.

“We cut taxes and costs for working families and we delivered more money to create jobs on Main Streets across the commonwealth,” the leaders said in a statement. “We took a solid step forward with the passage of this budget, but we also recognize we have a massive surplus and could have taken a giant leap forward to cut more costs and help more working families.”

Some House Republicans, however, found the budget fiscally irresponsible.

Pennsylvania House Rep. Martin Causer (R-67), leader of the state House Republican Caucus, said he voted against the state budget because it increases spending by $2.7 billion over the prior fiscal year and spends well beyond what the GOP anticipates collecting in revenue over the next 12 months.

“That means dipping into the state’s reserves to balance the budget, and when the reserves run out, we will all be faced with a tax hike,” said Causer.

And while there are elements of the plan he supported, such as investments in critical access hospitals, schools, and higher education institutions, Causer said lawmakers “simply must do more to ensure the commonwealth is living within its means.”

State Rep. Doyle Heffley (R-122) agreed, saying the FY 2024-25 budget spends far too much taxpayer money and continues the dangerous trend of operating in a structural deficit.

“We’re funding recurring programs with one-time funds, risking the depletion of the surplus and Rainy Day Fund that we’ve built up as a buffer for economic emergencies,” said Heffley. “We can all agree that Pennsylvania taxpayers deserve a timely budget that ensures every penny is spent effectively.”

Business leaders found positive aspects in the new budget, including Luke Bernstein, president and CEO of the Pennsylvania Chamber of Business and Industry, who said it takes important steps to make Pennsylvania more competitive and includes several key legislative priorities that the chamber supports, such as eliminating the Startup Penalty, modernizing the permitting process, and advancing workforce initiatives.

“These provisions will help attract new economic opportunities, expedite project approvals so that businesses can grow and create jobs, help employers address workforce challenges, and equip Pennsylvanians with the skills needed for the future,” said Bernstein.

Donald F. Smith, Jr., president of the Regional Industrial Development Corporation in Pittsburgh, said the new budget will put the state “back in the game” in economic development, thanks to a $500 million allocation to the Pennsylvania Strategic Investments to Enhance Sites Program (PA SITES) program, which provides grant funding to eligible applicants to develop competitive sites for businesses to relocate or expand within the commonwealth.

“These critical investments will not only help enhance economic vitality across the commonwealth, bringing companies and jobs to PA, but research shows that it can generate state revenues that more than pay back the investment,” Smith said. “This funding will help PA provide the sites and buildings needed to attract and retain new jobs.”

The new budget also continues responsible development and use of Pennsylvania’s natural gas resources, according to David Callahan, president of the Marcellus Shale Coalition.

“Important steps were taken on reforming the state’s permitting process, funding the Oil and Gas Program in the Department of Environmental Protection, and establishing a policy framework for carbon capture and sequestration,” said Callahan. “We applaud legislators for advancing policies that help promote a strong and sustainable energy future for the commonwealth.”

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