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Pennsylvania Budget Secretary Defends Spending Plan, Minimum Wage Hike

(The Center Square) – Pennsylvania Budget Secretary Jen Swails spent three hours defending Gov. Tom Wolf’s spending plan – a proposal many Republicans criticize as lofty and unrealistic – before the House Appropriations Committee this week.

The meeting concluded three weeks of hearings with different state agencies over how Wolf’s $37.8 billion proposal, partly funded by a 46% personal income tax increase on the top third of earners, would be spent. The governor’s concurrent call to raise the minimum wage to $15 an hour over the next seven years percolated to the surface of the hearing often.

At times, lawmakers quizzed Swails on the cost of goods – like bacon, a McDonalds cheeseburger or a tank of gas – in 2009, the last time the state raised the minimum wage, to prove how much less buying power the current $7.25 rate provides. Other times, lawmakers pressed the secretary on why small businesses should pay more personal income taxes amid the economic strain of the pandemic.

Image courtesy of the Pennsylvania House Republican Caucus

Each time, Swails repeated Wolf’s priorities in a matter-of-fact tone that appeared to disarm some members.

“The proposal the governor has presented would not raise taxes or would reduce taxes for 67% of residents,” she said. “Those small businesses would be treated no differently than if they were a family of four making less than $84,000 or more than $100,00. It’s based on your income. Not where you work.”

The administration says the expanded tax forgiveness that’s built into the proposed tax increase would eliminate taxes for a family of four making less than $50,000. The same family making $84,000 would see no change in the amount they pay, while those with incomes exceeding $100,000 would pay the higher rate of 4.49%.

Swails went on to explain that Pennsylvania’s minimum wage earners often rely on other social supports, like Medical Assistance, to survive, calling them the “working core.”

“Every state around us has raised the minimum wage,” she said. “To think that if you’re a large company or a small business that someone’s hour of work is not worth more than $7.25 is crazy when you’re talking about 2021.”

Wolf said raising the state’s minimum wage would lift 1.1 million residents out of poverty, but Republicans worry the increase may kill jobs and close more small businesses.

The Congressional Budget Office said last month that a federal minimum wage of $15 an hour would eliminate 1.4 million jobs. The Senate stripped the provision out of the president’s American Rescue Plan this week as concerns grew among moderate Democrats about the impact of such a large, sudden increase. 

In Pennsylvania, Republicans in the Senate as recently as 2019 favored a plan to raise the minimum wage to $9.50 by 2022, but it never gained traction in the House. The pandemic has zapped any appetite the GOP-controlled Legislature may have had on the issue.

The Independent Fiscal Office said last month during its own budget hearing that raising the minimum wage would increase economic growth, but come at an unknown cost to employers. 

Revenue Secretary Dan Hassell also said the governor’s PIT plan would lessen the tax burden for 400,000 small business owners and he downplayed the idea that raising the minimum wage would force layoffs and other job losses.

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