Despite an ongoing budget fight with the Pennsylvania Legislature, Gov. Tom Wolf said Tuesday that the state’s crisis is not about politics, but rather math.
The state is facing a $2 billion budget deficit that is neither a Democratic fact nor a Republican fact, just a fact, Wolf said in presenting his proposed 2016-17 spending plan.
“This deficit isn’t just a cloud hanging over Pennsylvania’s long-term future. It is a time bomb, ticking away, right now, even as I speak,” said Wolf in his budget address. “If it explodes – if the people in this chamber allow it to explode – then Pennsylvania will experience a fiscal catastrophe the likes of which we have never seen.”
Wolf presented next year’s proposed budget that includes nearly $3 billion in additional revenue through a series of tax hikes. He’s also proposing increasing education spending by about 22 percent.
Republicans are objecting to the Democratic governor’s tough budget address in which he told lawmakers they’d helped make Pennsylvania’s finances a ticking time bomb, and to deal with it responsibly or find a new job.
Republican House Speaker Mike Turzai said Wolf’s tone was unstatesmanlike and petulant. But House Democratic leader Frank Dermody said “the truth hurts.”
Top Republicans also say they’re committed to dealing with the deficit without raising taxes, and say that Wolf’s proposal includes billions in extra spending.
The governor’s budget fight with GOP lawmakers is seven months deep into the current fiscal year, without a full-year spending plan in place.
Here are some of the highlights of the governor’s proposed spending plan.
THE BIG PICTURE
– Increases spending through the state’s main bank account to nearly $33.3 billion. That is a two-year increase of $4.3 billion, or 14 percent, from the last full-year, enacted budget.
– Raises taxes by nearly $3 billion on income, sales, natural gas drilling, insurance premiums, banks and tobacco.
– Does not revive a $3.2 billion school property tax relief plan he proposed last year as part of an effort to shift burden of public school funding away from local school districts.
– Income: Increases rate 11 percent, to 3.4 percent from the current 3.07 percent, to raise $1.4 billion. Effective Jan. 1, 2016.
– Sales: Keeps rate at 6 percent, but eliminates exemptions on basic cable TV, movie theater tickets and digital downloads to raise $415 million. Effective April 1, 2016.
– Cigarettes: Raises per-pack tax to $2.60, from $1.60, to raise $468 million. Effective April 1, 2016. Extends a 40 percent wholesale tax to sales of cigars, loose tobacco, smokeless tobacco and electronic cigarettes to generate $136 million. Effective May 1, 2016; for loose tobacco, effective July 1, 2016.
– Natural gas: Imposes a new tax on natural-gas production – 6.5 percent of value – to generate $218 million. Effective Jan. 1, 2016.
– Insurance premiums: Imposes a surcharge of 0.5 percent of premiums to fire, property and casualty insurance to generate $101 million. Effective Jan. 1, 2016.
– Casino gambling: Imposes new 8 percent tax on promotional plays at casinos to generate $51 million. Effective Jan. 1, 2016.
– Banks: Raises rate of shares tax on bank and trust companies to 0.99 percent, from 0.89 percent, to generate $39 million. Effective Jan. 1, 2016.
– Tax forgiveness: Expands eligibility limits to families of four making up to $36,400, for a tax expenditure of $83 million. The current limit is $34,250. Effective Jan. 1, 2016.
– Increases aid for public school operations and instruction by $565 million, a two-year increase of 10 percent to $6.3 billion.
– Increases early-childhood education funding by $90 million, an increase of 54 percent to $256 million.
– Increases special education funding by $70 million, a 6.5 percent increase, to $1.15 billion.
– Increases aid to higher education, including state system universities, state-related universities, student grants and community colleges, by 5 percent to $1.7 billion.
– Education: Grows 22 percent over two years, to $12.9 billion.
– Human services: Grows 12 percent over two years, to $12.7 billion.
– Corrections: Grows 22 percent over two years, to $2.6 billion.
Wolf’s complete budget address is available on the governor’s website.