HARRISBURG — A determined Gov. Tom Wolf said Tuesday he won’t let up in pushing for changes in how Pennsylvania handles finances and funds public education that he proposed as a rookie governor a year ago.
In his second budget address, Wolf proposed a $33.3 billion budget for fiscal 2016-17 that provides a $200 million increase for basic education on top of an unrealized $377 million from this year and 5 percent increases for publicly supported universities and community colleges.
The budget includes proposed tax hikes of $2.7 billion to head off a projected $2 billion revenue deficit next year and to support education spending — a 6.5 percent state severance tax on natural gas production, a hike in the state personal income tax rate to 3.4 percent from 3.07 percent retroactive to Jan. 1, 2016, an expansion of the state sales tax base to include cable TV subscriptions and movie theater tickets, a new 8 percent tax on casinos for the free promotional offers they make to lure customers, an increase in the cigarette tax from $1.60 to $2.60 per pack and a 40 percent tax on electronic cigarettes.
Wolf said his budget is designed to address a fiscal crisis brought on by an increasing and unresolved revenue deficit. If this deficit is not addressed, it will lead to new and deep cuts in state education spending and human services and higher local school property taxes, he said.
“This deficit isn’t just a cloud hanging over Pennsylvania’s long-term future,” he said in a speech to a joint House-Senate session. “It is a time bomb, ticking away, right now.”
Wolf delivered a blunt address that criticized House Republican leaders for walking away from a compromise budget deal last December and urged lawmakers to find another job if they want to ignore fiscal reality.
House and Senate GOP leaders said they don’t like being lectured to by the governor.
House Speaker Mike Turzai, R-28, Pittsburgh, said the governor is an elitist and out of touch with hard-working people who don’t want to pay more taxes.
“We are not going to rubber-stamp higher taxes,” House Majority Leader Dave Reed, R-62, Indiana, said.
“The retread budget proposal offers superficial changes to his (Wolf’s) sizeable tax-and-spend plan that has already been soundly opposed by taxpayers,” Senate Majority Leader Jake Corman, R-34, Bellefonte, said.
The governor’s address was made while the budget for fiscal 2015-16 remains unfinished. After the budget compromise collapsed, Republican lawmakers sent Mr. Wolf a $30.3 billion budget which he said was not in balance. Mr. Wolf then used his veto power to shape a $23 billion budget that leaves this year’s funding incomplete for schools, the corrections department and other programs.
The compromise collapsed amid deep disagreement over increasing state taxes, erasing a state revenue deficit, reducing public pension benefits, privatizing the state liquor stores and providing school property tax relief.
Despite that, Wolf said that $30.8 billion revenue number should be the starting point for building next year’s budget. He said the new proposal is driven by mandated increases in human services ($800 million), pensions ($500 million), debt payments ($100 million) and corrections ($178 million). Yet, GOP legislative leaders have proclaimed that $30.8 billion deal dead.
The governor wants to replenish funds for state economic development programs that prepare sites for business locations and improve water and sewer lines and other infrastructure to support large retail and industrial projects.
Wolf’s budget includes these initiatives:
• Shift more support for the Department of Conservation and Natural Resources back to the taxpayer-supported General Fund to counter the impact of less gas revenue going to the Oil and Gas Lease Fund.
• Combat an epidemic of heroin and opioid use: $34 million.
• Restore Corbett-era cuts to county-run human services development fund: $28 million.
• Expand home and community care options for seniors: $92 million.
• Funding for three new state police cadet classes.
The House and Senate Appropriations Committees plan to launch hearings on the proposed budget Feb. 22.
State Rep. Mike Tobash, R-125, responded to Wolf’s plan, saying, “He didn’t mention his plans for finishing the current year’s budget. He did, however, mention the work my colleagues and I have done on the budget for the last year was full of gimmicks. With all due respect, the biggest gimmick I see is him holding up the $6 billion that’s already been collected from taxpayers, instead of releasing it to our education, corrections and agriculture communities.”