In budget mire, far apart

HARRISBURG - Almost since the day he took office, Gov. Wolf has said he's not accustomed to Harrisburg's dysfunction.

He'll have a tough time repeating that line after last week.

After days of intense lobbying - and months of painstaking negotiations - the state House on Wednesday soundly rejected Wolf's long-standing call for tax hikes to increase education funding.

His proposal fell 29 votes short: Republicans united against it. Nine of Wolf's fellow Democrats joined them.

The budget now is more than 100 days overdue - the longest impasse in more than a decade. And the question becomes whether the first-term governor has enough political capital to pass a spending plan anywhere close to what he envisioned before the stalemate - or if the standoff will jeopardize his ability to achieve any of his priorities with a solidly Republican legislature.

"These are precedent-setting negotiations," said Thomas Baldino, a political science professor at Wilkes University. "This is going to set the tone for the rest of whatever remains in this year, and for the succeeding years in his administration."

By Friday, it was unclear how Wolf and GOP legislators would approach renewed budget talks - or when they would begin. None were scheduled.

After Wednesday's vote, House Majority Leader Dave Reed (R., Ind.) said only that he hoped the two sides could sit down "soon."

Whenever negotiations start, the parties will have to confront an ideological divide that has shown few signs of closing. They will also be racing to prevent more financial pain for the schools, counties, and social-service nonprofits that for months have been waiting for much-needed state aid.

Political observers were hard-pressed to figure out how Wolf, fresh off a public drubbing, would be able to persuade Republicans to budge an inch.

"I just don't see, at this point, that he has very much leverage," said J. Wesley Leckrone, political scientist at Widener University.

If he agreed, Wolf didn't show it. Minutes after the vote, he signaled he would not back off his call for tax hikes, and he portrayed the defeat as a step forward.

"We made real progress today," he said.

The governor's signature proposal calls for increasing the personal income tax, from 3.07 percent to 3.57 percent, and sending the new revenue to Pennsylvania schools. He also wants a 3.5 percent tax on natural gas drillers, on top of an existing "impact fee" they already pay.

Republicans have steadily opposed raising income taxes. They pointed to the House vote as proof that Wolf cannot muster support for his plan and should abandon it.

Drew Crompton, the Senate's top Republican lawyer, said the governor's comments after the vote suggest "he is disregarding the letter and the spirit" of the legislature's actions, and may have hurt the chances for real progress.

"We are not looking for a fight, but philosophically, we are in a much different place than he is," Crompton said. Even if the two sides got together behind closed doors to negotiate, he added, "I don't know what we would talk about at this point."

Because of that, Crompton said, GOP Senate leaders are seriously considering launching "quiet diplomacy" efforts with Democrats to begin carving out a deal. Despite controlling both chambers, Republicans would need Democrats to cross the aisle if they hope to overcome a veto from Wolf.

Such a maneuver would not necessarily exclude the governor from budget negotiations, but it could sideline him - and send the message that Republicans will treat administration officials as benchwarmers.

Wolf was warned by Reed months ago that if the stalemate persisted, it could spiral into "a race" to see who could woo members of the opposite party first, according to people familiar with the discussion but not authorized to publicly discuss it.

Political observers said both sides may have little incentive to give in.

Wolf campaigned on the need to bolster education funding, Leckrone noted, and it's unlikely he'll be able to pass a tax increase to support that agenda next year, when every state representative and half the senators are up for reelection.

"Your political capital is always highest in the first part of your administration," he said.

Republicans, meanwhile, won't want to have to explain on the campaign trail why they voted to raise taxes.

Baldino also said the GOP "has to be aware that . . . what this demonstrated is that [Wolf] must concede to them at some point," he said.

Wolf did appear to back off, at least temporarily, from his demand to increase the state sales tax.

Also left unresolved are the Republicans' proposed budget priorities - including privatizing the liquor system and enacting some measure of public-pension reform. Such measures would provide a one-time infusion of revenue that could go toward schools.

But Wolf has long signaled that he would prefer a more permanent funding source.

Bill DeWeese, the former Democratic House speaker, said he believed Wolf's proposals were dramatically different than recent spending plans that have come out of Harrisburg.

"Both in scope and in unrelenting idealism, this new governor was attempting to catapult the commonwealth into a new era," said DeWeese, who, after serving a prison term for corruption, now lobbies for unions.

Baldino said shooting for the moon may be part of why Wolf has encountered such significant resistance.

"I think he took a calculated gamble," he said, "and turned out it was the wrong gamble."