On Tuesday, March 7, Governor Josh Shapiro delivered his first budget address, outlining his proposal for 2023-24 state spending and setting the stage for legislative debate in the coming months. The annual budget address is an opportunity to hear from the governor what his priorities and policy initiatives are for the coming year. The event is particularly important for a new governor, as it is his first opportunity to publicly announce the administration’s plans as it transitions from campaigning to governing.

Overall, Governor Shapiro’s proposal would increase spending 8% over last year to $44.5 billion. There are several elements of the proposed budget that are of interest to the trucking industry.

Motor License Fund

Because the trucking industry pays almost 40% of the highway and bridge taxes in Pennsylvania, PMTA supports ensuring that these funds are spent in the most efficient and effective way to benefit the commonwealth’s transportation infrastructure. As a result, PMTA has long supported ending the diversion of Motor License Fund revenue to the PA State Police, while still ensuring that our partners in law enforcement receive the support that they need from other sources.

The issue has been debated in Harrisburg for many years. The 2022-23 budget reduced the State Police allocation from the Motor License Fund by $175 million to $500 million, with further reductions anticipated over time. However, Governor Shapiro’s proposed budget addresses this issue in a new way.

The budget proposal would create a new Public Safety and Protection Fund to reduce the State Police’s reliance on the Motor License Fund by $100 million per year until 2027-28, when Motor License Fund commitments would reach $0. Other sources for State Police funding in the Public Safety and Protection Fund would be directed from the motor vehicle sales tax and tobacco and liquor taxes, in addition to other smaller fund transfers.

As proposed, the resulting Motor License Fund revenues over the next five years will provide the full matching requirements for additional federal funding for highways and bridges made available by the federal Infrastructure Investment and Jobs Act.

The Governor has not proposed changes to state diesel or gas tax rates.

State Police Funding

The creation of the roughly $1 billion Public Safety and Protection Fund, as proposed, would fund four new trooper cadet classes in the coming year to train 384 new troopers. The plan would also allocate $20 million for State Police vehicle and helicopter replacements and equipment upgrades.  

Marijuana Legalization

Governor Shapiro’s proposed budget anticipates legalization of adult-use cannabis with a 20% wholesale tax imposed on it. As proposed, this would generate $28 million in the first year, increasing to $250 million by 2027-28. See PMTA’s article and link to complete ATRI’s survey on marijuana legalization here.  

Corporate Net Income Tax

The proposed budget continues the step-down enacted in 2022 of the Corporate Net Income (CNI) Tax from 9.99% to 4.99% by 2031 (which began in 2023 with a reduction to 8.99%). Though Shapiro expressed support for accelerating the reduction of the CNI during the campaign, an acceleration was not proposed in this budget. The governor instead stated his willingness to work with the legislature on this.

Workforce Development

The governor’s proposal calls for increased funding for existing workforce development programs, including career and technical education and apprenticeships through the Department of Labor and Industry. It also calls for two new programs, including $3 million for Foundations in Industry through the Department of Community and Economic Development to increase apprenticeships and pre-apprenticeship programs and $3.5 million for the Schools-to-Work program to help the Department of Labor and Industry support partnerships between career and technical education students and employers.

Labor Law Compliance Resources

The proposed budget increases Department of Labor and Industry funding by $1.28 million to hire additional labor law compliance investigators to investigate more cases, permit more strategic enforcement of current labor laws, and provide additional education on these issues to businesses.

The Governor’s proposed budget will be debated by the legislature over the coming months, with the state senate and house Appropriations Committees each scheduling hearings to consider the agency’s budgets. PMTA will monitor these discussions for impacts to the trucking industry. The state budget must be completed and signed by the Governor by midnight on June 30.