Here’s one way to size up Pennsylvania Gov. Tom Wolf’s budget proposal for 2017-18: Take a look at what’s missing.
There’s no mention of the biggest threat to the state’s health: Public pension obligations. Wolf and Republican legislative leaders will be selling half a loaf if they gloss over future retirement debt yet again.
Pennsylvania Gov. Tom Wolf. Matt Rourke | AP Photo Here’s another pachyderm in the room: The Legislature’s renewed interest in passing HB/SB 76, which would replace the school property tax with increases in sales and income taxes. Of course, if the Legislature were to approve this massive restructuring of education funding, it would face a Wolf veto.
Third — and here’s why some of Wolf’s priorities will make it into the final budget — the governor has dropped his plea for broad-based increases in sales and income taxes to attack structural budget deficits. His previous attempts to do this — also raising funding for education and social services — energized his Democratic base but had no hope of swaying GOP legislative majorities or gaining widespread popular support.
Today the memory of blown budget deadlines seems distant. Wolf’s new conciliatory tone in budgeting reflects his hopes for re-election in 2018, but there’s also this: In an era of partisan sniping over just about everything, this budget looks like blueprint for getting things done, incorporating competing interests instead of taking prisoners.
In addition to backing off broad-based tax hikes, Wolf borrowed a plank from the Republican platform in proposing $2 billion in cost savings. He proposes to shutter a state prison in Pittsburgh, consolidate four health-related state departments, close several state health centers, cut $50 million in transportation aid to schools, cut tax credits by $100 million, and end a $30 million grant to Penn State’s veterinary school. Overall, school funding would increase by $200 million overall for K-12, early childhood classes and special education.
One likely flashpoint is Wolf’s plan to raise the state’s minimum wage from $7.25 to $12 an hour, which he says would generate $33.9 million in new personal income tax collections. That proposal is already being slammed by Republicans, but it sets the stage for compromise, to bring Pennsylvania’s minimum wage more in line with neighboring states.
Undeterred by previous setbacks, Wolf wants to raise nearly $300 million in new revenue with a severance tax on natural gas production — and idea that should have been tapped years ago to augment the state budget, instead of impact fees to offset the impact of fracking.
Charging municipalities $25 a head for state police coverage will be a tough sell, but the idea has been gaining traction. Wolf wants to use half of the the $63 million in new revenue generated to hire and train more state troopers to serve towns lacking their own police departments.
There’s more to Wolf’s agenda, including a requirement that any businesses receiving economic development grants remain in the state for at least eight years, or pay back the grant. He wants to extend the 6 percent sales tax to computer software services, commercial storage, and aircraft sales and services, and expand the state’s insurance premium tax. While those added costs might seem invisible to the average taxpayer, they inevitably raise business costs that are passed along to consumers.
Wolf’s third budget is a partisan plan wrapped in an olive branch — a good beginning instead of a series of non-starters. We still need to see action on pensions. The less time Wolf and GOP leaders spend arguing over year-to-year budget patches, the more time they can devote to pension reform, reducing the size of the Legislature, and taking on gerrymandering in time for the 2020 Census. That would make for a good year.
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