Gov. Wolf's budget plan focuses on Pennsylvania's middle class, education
March 3, 2015 11:17 PM
Matt Rourke/Associated Press
In higher education, Gov. Tom Wolf proposes increasing funding for the State System of Higher Education by $45 million.
By Karen Langley / Post-Gazette Harrisburg Bureau
HARRISBURG — Gov. Tom Wolf on Tuesday had his first chance to propose a comprehensive plan for Pennsylvania state government, and he went big.
His budget proposal for the upcoming fiscal year would raise the state sales tax rate and the personal income tax rate. It would provide billions of dollars in relief from school district property taxes. It would overcome a projected $2 billion revenue shortfall to propose hundreds of millions of additional dollars in education funding.
And it would raise the minimum wage, loosen restrictions on state wine and liquor sales, and change how the assets of the state and public school employee retirement systems are managed.
“There is no doubt this is by far the most ambitious agenda that any governor’s had in recent history, because of the comprehensive nature of it,” said Terry Madonna, a Franklin & Marshall College professor and pollster. “The difficulty with it is, it’s a package. If you start to pull it apart, then can it sustain?”
With the numbers finally public, the Republicans who control the state Senate and House said the plan is simply too big. Senate President Pro Tem Joe Scarnati, R-Jefferson, called it “the most massive tax-and-spend plan in recent history of the Commonwealth.”
“The problem with this budget is it’s not based in reality,” said Senate Majority Leader Jake Corman, R-Centre. “We’re not going to start with a $33 billion budget and start negotiating from there.”
The governor’s fellow Democrats lauded his proposal for its boldness.
“I want to thank the governor for not going small with his first budget proposal,” said Sen. Vincent Hughes of Philadelphia, the ranking Democrat on the Appropriations Committee.
Mr. Wolf, a Democrat who unseated Republican Gov. Tom Corbett in the November election, described his proposal as an effort to rebuild the middle class by investing in schools, attracting solid jobs and making government more efficient.
“It’s time to do something different, and work together to get the state back on track,” Mr. Wolf said in his address. “Our budget should be as bold and ambitious as Pennsylvania has been over the past 300 years.”
Much of the increase in personal income taxes next year would be used to offset the property taxes assessed by school districts, and Mr. Wolf said his full proposal would reduce the total tax burden on “average, middle-class families.” The property tax proposal would cut in half the property taxes of the average homeowner, leaving that person with more than an additional $1,000 each year, the governor said.
Nearly 30 percent of senior households — 270,000 in total — would have their school property taxes eliminated, the administration said. The governor also proposed a rent rebate, capped at $500, for renters who have $50,000 or less in household income.
Mr. Wolf noted that his property tax plan has much in common with one that had been proposed by the House Republican leader, Dave Reed. Mr. Reed later said he was encouraged that the governor had made a proposal about property taxes, though he said Republicans want to use every dollar of new revenue to reduce local taxes.
The governor campaigned on increasing state funding for education, targeting the losses public schools experienced when federal stimulus money ran out. He called Tuesday for increasing the main K-12 funding line by $400 million, or 7 percent, and special education funding by $100 million, or 9.6 percent. He proposed using $120 million to enroll 14,000 additional children in pre-kindergarten programs.
The administration described the increases as part of a four-year goal of increasing funding for pre-kindergarten through high school by $2 billion. That goal would be possible, according to budget materials, because of the severance tax Mr. Wolf has proposed for natural gas drilling.
“Our state is never going to get stronger as long as we make our schools weaker,” Mr. Wolf said in his speech. “That is why the very first thing my budget does is to restore the $1 billion in cuts to public education that occurred under the previous administration.”
In higher education, Mr. Wolf proposed increasing funding for the State System of Higher Education by $45 million, or 11 percent, and funding for community colleges by $15 million, or 7 percent. At the same time, he asked the state universities and community colleges to freeze tuition for the next academic year.
He called for boosting Penn State University’s funding by $49.6 million and the University of Pittsburgh’s funding by $14.9 million, according to the Department of Education.
In presenting its budget, the administration noted that Pennsylvania faces mandated spending increases of more than $1.6 billion, with $900 million of that in human service and $500 million in pension costs.
Republicans have called for the state to make changes to its state and school worker retirement plans beyond those enacted in 2010. On Tuesday, Mr. Corman, the Senate Republican leader, said policymakers need to address pension costs.
On pensions, Mr. Wolf proposed refinancing $3 billion of the debt of the Public School Employees’ Retirement System while changing investment strategies to reduce management fees. His proposal holds that changes to the state wine and liquor stores — such as adding Sunday hours and choosing convenient locations for the shops — would boost profits enough to pay the debt service on the pension bond.
The governor reiterated his call for reducing the corporate net income tax from 9.99 percent, one of the highest rates in the nation, to 5.99 percent, a rate the administration said would be 14th-lowest. His plan would reduce the rate to 4.99 percent in another two years.
But he also would require companies to file a single tax return that accounts for all subsidiaries, a practice known as mandatory combined reporting, with the intention of learning if corporations are sheltering income out of state.
Gene Barr, president and CEO of the Pennsylvania Chamber of Business and Industry, commended the proposal to lower the corporate net income tax but said he has “serious concerns” about the breadth of the tax proposal.
Mr. Wolf also called for the state to raise its minimum wage to $10.10 per hour, the rate for which Democrats have advocated, from $7.25.
Smokers would pay $1 more per pack of cigarettes under Mr. Wolf’s proposal, a change estimated to raise $358 million.
The governor also called for funding four classes of Pennsylvania state troopers, a total of 350 cadets.
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