The National Association of State Budget Officers (NASBO) is the instrument through which the states collectively advance their budget policies and practices, by acting as the chief financial adviser to our nation’s governors.
The NASBO report for the fiscal 2016 year, which may be found at www.nasbo.org, shows net increases in taxes for 16 states, while 12 governors project a net decrease in taxes and fees for the same time period. A dozen states actually proposed a decrease in personal income taxes. Pennsylvania can lay claim to the largest increase in taxes and fees, proposing $4.6 billion in taxes and fees for the upcoming year. To the tax payer, that comes down to a state income tax increase to 3.49%, up from 3.07% and an accompanying sales tax increase on everyday purchases from the current 6% to 7.25%.
Much of the budget pain can track back to the costs associated with the Affordable Care Act (ACA). But earlier in 2015, when Governor Tom Wolf adopted Medicaid expansion in Pennsylvanian, our State took significant step towards budget rejuvenation. Expansion is expected to benefit as many as 605,000 Pennsylvanians and generate $626 million in savings, according to the D.C. based bipartisan National Employment Law project. By expanding Medicaid under ACA, working adults earning up to 138 % of the federal poverty line will qualify for Medicaid, the cost of which will be covered by the federal government through 2016. The federal government will cover 90% of the costs from 2020 onward.
If you combine this “fed cost share” with an increase in Pennsylvania’s minimum wage, even more health care savings could inure to the worker. According to estimates by the Center for American Progress and the Institute for Research on Labor and Employment, the proposed wage of $10.10 an hour combined with the Medicaid expansion for low income working adults is expected to generate up to $231.5 million for the State budget.
That is, while these low income workers wages rise, the workers will be shifted from traditional Medicaid plans (borne by the State) to the Medicaid expansion plan with a higher cost percentage borne by the federal government. The State saves money by raising the minimum wage.
What’s more, these workers will have access to affordable healthcare for themselves and their families. That’s a Win-Win.
Susan Dardes is an attorney and life long resident of Bucks County, an individual member of BCWAC and a former Executive Board member of A Woman’s Place.