June 22, 2016
Karen Langley and Angela Couloumbis
HARRISBURG — In a shift that could ease the path to a budget deal, Gov. Wolf said Tuesday that he will no longer seek a hike in the state’s personal income or sales tax to raise new revenue.
Instead, the governor told a Pittsburgh radio station, he believes he can achieve his priorities without raising the two taxes that hit Pennsylvanians the hardest in their wallets.
“I’m not asking for a sales tax increase or a personal income tax increase,” Mr. Wolf said on KDKA-AM, barely a week before the July 1 budget deadline. “I think we can do all this — a balanced budget, the increase in education and the heroin initiatives — without a broad-based tax increase.”
Such a tax hike had long been a pillar of Mr. Wolf’s plan to boost funding for schools. But his remarks signaled the first public acknowledgment that he is softening a stance he held throughout his 18 months in office, one that fueled acrimony with the Republican-led legislature and last year’s historic budget impasse.
“It’s about realism,” said Terry Madonna, a political analyst and professor at Franklin & Marshall College. “He’s not going to get a general tax hike. That’s been evident. If you draw one conclusion from last year’s budget battle, it’s that the Pennsylvania legislature is not going to pass an income and/or a sales tax hike at the moment.”
Backing away from a tax plan does not resolve all differences between the two sides. But it takes off the table Mr. Wolf’s request for a politically volatile vote that Republicans were dead-set against.
At his second budget proposal in February, Mr. Wolf was still was advocating for an increase in the so-called “broad-based” taxes as a way to raise revenue to close a state budget gap and provide new money for public schools. He called for raising the personal income tax rate from 3.07 percent to 3.4 percent.
Not only has he abandoned that, but Mr. Wolf also has scaled back on his education funding request. The Democratic governor said Tuesday he would accept an increase of just $250 million in the main K-12 education budget line — about $100 million less than he first proposed. He also wants lawmakers to approve $34 million to help treat people who use heroin or abuse opioid medications.
The governor and legislative leaders have said that their talks are going well. There has been little visible evidence of a progress toward a deal as the July 1 deadline approaches, but the past few weeks have brought signs of collaboration, including Mr. Wolf’s decision to approve a change in wine sales laws that GOP leaders hailed as a major step toward their goal of privatizing the state-controlled liquor system.
Jeff Sheridan, a spokesman for Mr. Wolf, said Tuesday that conversations on a revenue package include talk about new tobacco taxes and proposals to expand gambling in the state. He said the governor is continuing to emphasize a need to close the state’s budget gap with “sustainable, recurring revenue.”
House Majority Leader Dave Reed, R-Indiana, said Tuesday that budget negotiations “are progressing,” and that his caucus is “very happy” that Wolf backed away from his sales or income tax proposals. Mr. Reed said both sides are working on alternative revenue proposals.
He noted that the legislature recently passed a liquor modernization bill that could raise as much as $150 million, and that the House was working on a proposal to legalize online gaming in Pennsylvania.
A vote on that gambling bill could come as early as this week, House Republican spokesman Steve Miskin said.
He said Mr. Wolf’s announcement was consistent with their talks.
“I think it’s a realization by the administration that the votes don’t exist for a broad-based tax increase,” said Mr. Miskin, who added: “It’s part of the governor seeing reality and working with the legislature to put together a real and responsible budget.”
Thomas Baldino, a professor of political science at Wilkes University, said Mr. Wolf’s move showed pragmatism — and that the legislature will have to follow suit.
“They have to be realistic,” he said. “They have to be pragmatic. Either we shut down parts of the government and don’t raise any taxes, or you have to find revenue sources.”