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Gov. Wolf wants to increase state spending by $1B

| Tuesday, Feb. 6, 2018, 8:09 a.m.
Pennsylvania Gov. Tom Wolf
Nate Smallwood | Tribune-Review
Pennsylvania Gov. Tom Wolf

HARRISBURG — Democratic Gov. Tom Wolf's election-year budget plan unveiled Tuesday will renew battles with the Republican-controlled Legislature over imposing a tax on Marcellus shale natural gas and increasing the minimum wage.

Wolf's budget plan, his fourth and final first-term proposal, would boost spending by about $1 billion, or 3 percent, to $33 billion for the fiscal year beginning July 1. The higher spending would go toward public schools, skills training, pension obligations, prison costs and social services for children, the elderly and disabled.

The budget holds the line or delivers small increases for many services and agencies.

Wolf, who is seeking a second term in November's election, will count on an improving fiscal picture — potentially aided by December's federal tax overhaul law — to pave a smoother budget process after three years dominated by protracted partisan stalemates over how to plug gaping deficits.

In an 18-minute speech to a joint session of the state House and Senate in the Capitol, Wolf, who briefly donned a Philadelphia Eagles cap, rattled off a list of his perceived accomplishments in office. But he also nodded to his battles with the Legislature's huge Republican majorities, which have rejected billions of dollars in tax increases sought by Wolf and forced him to adopt more austerity in budget-making.

“Sometimes, we've worked our way to a compromise. Sometimes, I've been forced to move forward on my own,” Wolf said. “We still have a lot of work to do.”

Wolf will not seek an increase in sales or income taxes, but the new budget plan would rely on about $250 million from a new Marcellus shale tax — Wolf's fourth straight attempt to impose one — and $100 million in savings in human services programs that administration officials say would come from reduced demand because of an increase in the minimum wage.

Wolf wants to raise the minimum wage to $12 an hour, which would be the nation's highest state-level wage in 2018, up from the federal minimum of $7.25.

Republicans quickly pushed back on Wolf's proposal for a Marcellus shale tax and a $1 billion spending increase.

House Majority Leader Dave Reed, R-Indiana, said he likes the idea of Wolf's proposal for more money for computer and industrial education, but he also said Wolf's spending proposal — made to look smaller by moving some Medicaid costs out of the state's main bank account — contains questionable components that will lead to tax increases.

Senate Majority Leader Jake Corman, R-Centre, said he's disappointed Wolf didn't propose more money for state related universities — like his hometown Penn State — and community colleges, but also said he doesn't expect the budget to get any new sources of money.

“We will have to roll up our sleeves and reduce the spend,” Corman said.

Three weeks of budget hearings begin Feb. 20.

Wolf now projects no deficit next year, although independent analysts have cast doubt on the administration's contention that Pennsylvania's entrenched post-recession deficit is gone. Wolf's proposal comes on the heels of a budget agreement last fall that relied heavily on borrowing and other one-time cash maneuvers to backfill Pennsylvania's biggest shortfall since the recession.

Wolf's budget projects a big expansion of lottery games, approved by lawmakers last October, to allow keno and virtual sports games in bars and lottery games online.

Wolf also will make a second request for municipalities to start paying a $25 per-person fee for the free state police coverage they receive, a total of $63 million a year. Like a Marcellus Shale tax and a minimum wage increase, the state police fee has been blocked by Republican lawmakers. In the meantime, the state police budget still will rely heavily on highway construction and safety dollars paid by motorists.

Imposing a natural gas tax, Wolf told lawmakers, would put Pennsylvania on par with other major gas-producing states whose severance taxes are largely footed by out-of-state consumers.

“When we fill up our cars or heat our homes, we're paying for Alaska's schools or Texas' roads,” Wolf said. “And I don't know about you, but I don't remember ever getting a thank you note from any of the taxpayers in either Texas or Alaska.”

Wolf will seek a big increase for programs to help high schools and colleges teach high-demand computer and industrial skills. That, he said, would “help make Pennsylvania a better place to learn, a better place to work and a better place to do business.

Wolf touted Philadelphia and Pittsburgh landing on the short list for Amazon's second headquarters and said businesses don't come to states that don't invest in schools, skills training and transportation infrastructure.

“We're doing all of these things, and I am hopeful Amazon will come here, build here and expand here,” the governor said.

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