Wolf unveils 2016-17 budget plan

Greg Gross
  • Gov. Tom Wolf is proposing a $33.3 billion spending package.
  • He seeks an additional $200 million in basic education spending.
  • Would increase the personal income tax from 3.07 to 3.4 percent and would slightly expand the sales tax.

Gov. Tom Wolf proposed a budget Tuesday that was slightly less ambitious than the first spending plan he presented as governor last year.

"This will not be an ordinary governor's budget," Wolf started off his address to a joint session of the House and Senate, alluding to the ongoing 2015-16 fiscal year state budget impasse.

The fiscal year 2016-17 package includes $2.2 billion in new spending, for a total of $33.3 billion, and would increase the personal income tax and slightly expand sales tax. That is a two-year increase of $4.3 billion, or 14 percent, from the last full-year, enacted budget.

There is, however, a glaring omission from the proposal Wolf presented Tuesday. The Mount Wolf Democrat is not seeking the $3.2 billion school property tax relief plan that he proposed last year.

The administration continues to support property tax relief efforts, budget secretary Randy Albright noted when he briefed the media before Wolf's address.

There are numerous efforts in the General Assembly to reduce or eliminate school property taxes.

Like last year, Wolf seeks increased state education funding and wants to fill a deficit that he said is hurting Pennsylvania's ability to borrow money.

Deficit: The General Assembly must address the $2 billion structural deficit before it balloons, Wolf drove home during his address numerous times.

"This deficit isn't just a cloud hanging over Pennsylvania's long-term future. It's a time bomb, and it's ticking away, right now, even as I speak," Wolf told a joint session of the House and Senate. "If it explodes — if the people in this chamber, if you allow it to explode — then Pennsylvania will experience a fiscal catastrophe the likes of which we have never seen."

Billions of dollars for prisons, hospitals and schools remain in limbo, and the governor warned that schools will lay off thousands of teachers, the state's social services safety net will be shredded and local governments will raise taxes.

To cover the increased spending and growing expenses, Wolf also wants to increase revenue by raising the state personal income tax and other taxes.

Taxes: Wolf wants the projected $2.7 billion tax increase to close a long-term deficit that has damaged Pennsylvania's credit rating and to boost aid to public school systems that have among the nation's biggest funding gaps between wealthy and poor districts. Big increases in pension obligations, human services and prisons are also helping drive the increase.

Wolf is proposing an 11 increase to the personal income tax rate, taking it from 3.07 percent to 3.4 percent, and making it retroactive to the start of 2016, to raise $1.4 billion. The plan would also impose a new 8 percent tax on promotional plays at casinos to generate $51 million.

He also wants to expand the state sales tax to include digital downloads, cable television and movie theater tickets to generate $415 million. Expanding the sale tax brings Pennsylvania more in line with surrounding states, Albright said.

The tax levied on cigarettes would increase by $1 to $2.60 a pack and all other tobacco products, including the now-tax-free electronic cigarettes, would fall under a 40 percent tax, according to budget documents. Combined, they would generate an added $604 million.

Once again Wolf is seeking a severance tax on natural gas drillers to generate $218 million. The tax would be 6.5 percent, and drillers would receive a tax credit for what they pay in impact fees, which would remain in place.

Spending: Included in the spending package is $1.6 billion in mandated expenditures that range from $100 million in debt obligations to $800 million for human resources.

Wolf continued to stick to his campaign promise of increasing funding to school districts, as he asked for an additional $565 million for schools, taking the total to $6.3 billion. That would be a 10 percent increase over the past two years.

Basic education would get a $200 million, or 3.3 percent, boost, special education would see a $50 million, or 4.6 percent, increase, and pre-kindergarten programs would get a $60 million, or 30.5 percent, increase, under Wolf's plan.

Funds would be directed to the districts using a bipartisan fair funding formula. Lawmakers agreed to the formula last year but Wolf drew the ire of York County Republicans when he opted to use a different formula that first restored funding to districts he said saw cuts during former Republican Gov. Tom Corbett's administration.

Wolf continues to seek $377 million in additional basic education spending this year. That was part of an agreement between Wolf, the Senate and House Democrats to settle the 2015-16 budget impasse. But the deal fell apart shortly before Christmas.

Wolf also proposed increasing the minimum wage from $7.25 to $10.15 an hour, according to budget documents. Raising the minimum wage would also generate an added $60 million in tax revenue.

The fiscal year ends June 30.

The Associated Press contributed to this report.

— Reach Greg Gross at ggross@yorkdispatch.com.