When Pennsylvania voters elected a Democratic governor while increasing the Republican majority in the Legislature last November, they sent a mixed message to Harrisburg.

But they didn't vote for a government that does nothing as the state nears the one-month mark without a budget, Gov. Tom Wolf told members of the Rotary Club of York Wednesday.

"Pennsylvanians voted for a divided government. They didn't vote for a dysfunctional government," he said during a speech at the Yorktowne Hotel.

Wolf, a Mount Wolf native and a former businessman, received a standing ovation from the friendly hometown crowd, which overflowed the hotel's ballroom.

The Wolf lineage in the Rotary clubs runs deep. The governor's father, Bill Wolf, joined the club in 1948 and is still a member, said Marsha Bornt, the club's president.

"Bill Wolf is our longest-standing member of our club," she said, noting he served as club president in the 1960s.

Before the younger Wolf addressed the crowd, he was presented with an honorary membership to the local Rotary. As a businessman, he previously held status as a full member of the club.

Crossroads: During his speech, Wolf touted his $33.8 billion budget plan, which has been met with opposition by Republicans. In June, Wolf vetoed a Republican-crafted budget, setting off a stalemate.

Wolf said Pennsylvania is at a fork in the road and has to make a big decision about which path to take.

One path leads to an unsustainable future where the state continues doing what's it's been doing in terms of funding education, property taxes and not addressing its structural deficit. The other path, the one Wolf wants to lead the state down, reforms property taxes, provides more dollars for eduction and manages its finances in a way so that its credit rating increases, he said.

Under Wolf's proposal, the added funding would come from a severance tax, projected to raise $1 billion the first year it's implemented, on the gas industry drilling in the Marcellus Shale region. Some of the additional revenue would continue to go to things, such as local recreational initiatives, funded by impact fees charged to gas companies.

The highest amount in impact fees collected by the state in one year was $225 million, Wolf said.

"We have to fund it (education) with a reasonable and responsible severance tax," he said. "We have to understand we're the only state without a severance tax."

Properly funding education, Wolf said, is key in ensuring the state has a bright future and youth who receive a good education likely won't end up in the criminal justice system, which would save the state money down the road.

"We have to make sure every kid in Pennsylvania gets that education," he said.

Other issues: Property tax reform, which under Wolf's budget would direct $3.8 billion in relief for property owners, is also needed to replace the antiquated system the state now operates under in order to make municipalities, such as York City, more sustainable, the governor said.

Wolf has called for increasing and expanding sales tax to lower property taxes.

Addressing the state's fiscal house, Wolf said lawmakers must fill the structural deficit, something his budget does.

The Independent Fiscal Office put the deficit at $1.2 billion but Wolf's administration says it remains closer to $2.3 billion.

Wolf said a rash of five credit downgrades over the last five years is costing taxpayers an extra $139 million yearly in financing costs.

Response: Republican state Sen. Scott Wagner, R-Spring Garden Township, said Wolf's speech was a "good sales pitch."

"But he didn't talk about the elephant in the room: the pension crisis," said Wagner, who attended the luncheon.

Reforming the public pension system would cut down costs that could be directed to education, he said.

Municipalities in the state had a combined $6.7 billion in underfunded pension liabilities in 2013, the most recent data available, according to the state Auditor General's Office.

The state's pension system, which is used by most state and school employees, has an estimated $53 billion in long-term debt.

During the campaign, Wolf said most municipal pension plans are financially healthy and that a "significant minority are substantially underfunded."

But in May, Wolf named Eugene DePasquale, the state auditor general who formerly represented York City in the House, to head a task force to come up with recommendations to improve pension systems.

— Reach Greg Gross at

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