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By Giulia Carbonaro
Senior Reporter
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Pennsylvania State Senate Minority Leader Jay Costa, a Democrat, is proposing to return some of the state budget surplus to residents in the form of a "one-time lump sum payment," according to local media.
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Less than a month away from the June 30 deadline by which Pennsylvania officials must adopt the final budget for the fiscal year 2024/25, Costa told WHTM's This Week in Pennsylvania on Friday that the state is "well-positioned resource-wise" and is likely to have more than $800 million in surplus for this fiscal year.
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"We have a month before the June 30 deadline arrives," he told the television channel. "I think resource-wise we're well positioned in Pennsylvania with better than a $14 billion budget surplus, but also this year we're seeing that, now that we're moving into June, we're probably going to have $800 million excess surplus just for this fiscal year."
He added: "We're well-positioned to make investment, we'll be thoughtful and figuring out ways in which we can return some of that money to Pennsylvania taxpayers."
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Newsweek contacted Costa's Forest Hills office for comment by phone call on Monday morning outside of working hours and left a message.
"Through May, fiscal year-to-date General Fund collections total $41.8 billion, which is $825.7 million, or 2.0 percent, above our estimate," a representative of Pennsylvania Department of Revenue told Newsweek. "Given there is only one month to go in the current fiscal year, we expect that we will finish the fiscal year with a sizable surplus."
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Asked about his Republican colleagues' idea to use that $14 billion surplus to reduce the state's personal income tax from 3.07 percent to 2.8 percent, Costa said he recognized that that was an option to consider, but another potentially better suited option would be to return it in the form of a "one-time lump sum payment" to residents.
"If we provide maybe a one-time lump sum payment back to folks they can immediately put it back into the economy," he said. "Or we can look at something similar to what we did before with the child and dependent care tax credit program," he added.
Overall, Costa said that these options could be "more appropriate" and "more impactful," but must be "coupled with investments" in education and employment.
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These investments will "generate tax resources" and "will allow the program to move forward and be able to generate revenues to pay for itself." While admitting Pennsylvania needs to be made more tax friendly, Costa said that the focus should be on the state's business tax cap.
Governor Josh Shapiro had promised that older residents would receive more financial help in 2024 after he signed Act 7 of 2023. The law expanded the Property Tax/Rent Rebate (PTRR) to provide a larger tax cut for Pennsylvania seniors. The maximum rebate amounted to $1,000 compared to 2023's $650.
Republicans in the state oppose more spending. State Representative Tim O'Neal wrote an opinion piece on Sunday accusing Shapiro, a Democrat, of pushing forward a budget proposal that "calls for outrageous spending increases that would set Pennsylvania on a path towards massive tax hikes in just a few years."
He added: "Now is the time to pass historic tax cuts for ALL Pennsylvanians."
Newsweek contacted O'Neal's Washington office for comment by phone on Monday morning outside of regular working hours and left a message.
Update 06/13/24, 5:55 a.m. ET: This article was updated with a comment from the Pennsylvania Department of Revenue.
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