Minimum wage hike debated as state budget hearings begin

HARRISBURG, Pa. -- A proposal to raise Pennsylvania's minimum wage to $12 is attached to Governor Tom Wolf's $32.3 billion budget plan. It also expects to be one of the more challenging tasks in getting Republican opponents to sign off.

Public hearings for the House and Senate Appropriations Committees began Tuesday and will run through next Wednesday, dissecting all parts of the governor's proposal. It's a unique budget plan for the Democrat, who unlike his previous two budget proposals, nixed any broad-base tax increases, like sales and income tax.

"We are looking at a Republican-style budget proposal from a Democratic governor," said Democratic Appropriations chairman Joe Markosek (D-Allegheny). "That's not normal."

However, Wolf's plan to raise the minimum wage statewide to $12, up from the federal minimum $7.25, turned a few heads at a hearing Tuesday in front of the state's Independent Fiscal Office.

"We hear suggestions that a minimum wage increase would boost economy and increase state tax revenues. I really have to question that," said Rep. Sue Helm (R-Dauphin, Lebanon).

Wolf's budget office expects a wage hike to generate approximately $95 million in revenue for the 2017-18 fiscal year, but Matthew Knittle, director of Pennsylvania's IFO, admitted some uncertainty with those figures. He says those figures are based on where the money is coming from: corporate profits or sales of consumer goods.

The IFO estimated a $12 minimum wage would impact more than 1 million Pennsylvanians.

"Lost wages means less money to spend on services and goods, and that drives our economy," said Rep. Maria Donatucci (D-Philadelphia, Delaware).

Pennsylvania is one of 20 states nationwide which remains at the federal minimum $7.25 wage. However, a rise to $12 could negatively impact Pennsylvania workers, as noted by the Independent Fiscal Office in 2015. The IFO previously released a study when Gov. Wolf proposed a statewide minimum wage to $10.10 an hour, which determined that potential minimum wage rise would result in 31,000 fewer jobs by 2017.

Knittle said the IFO had not yet studied the potential impacts of Wolf's $12 wage hike proposal.

Rep. Seth Grove (R-York) asked Knittle if, when the analysis is done, to also look at the cost a wage hike would have on non-profits and how many could potentially close, as well as a rise in property taxes in school districts.

"I would like to see the cost-side to businesses," Grove said. "How much is loss of profit or higher consumer costs?"

Budget hearings will take place at the state Capitol through next Wednesday, March 1.