Gov. Wolf proposes $33B budget for election year

Gearing up for a re-election bid this year, Gov. Tom Wolf today delivered his latest budget proposal to the General Assembly, a $32.9 billion spending plan that relies on new revenue from a severance tax on natural-gas drilling.

Wolf’s proposal would increase state spending by nearly $1 billion over the current budget. However, it does not include any broad-based tax increases. Wolf is count instead on an improving economy to help generate additional revenue.

The York County Democrat has proposed a severance tax in each of his four budgets as governor, but he has been rebuffed each time by the Republican-controlled General Assembly. This year, Wolf said he wants to tie the tax to the price of natural gas, beginning at 4 cents per thousand cubic feet if the price is below $3.

The severance tax rate would increase up to 7 cents per thousand cubic feet if gas is above $6. The administration hopes to generate about $250 million from the tax in the coming fiscal year.

Expanded gambling, including new mini-casinos that will begin opening around the state, also is expected to pump new revenue into state coffers.

Wolf is hoping to cut the state’s corporate net income tax over the next few years, dropping it from 9.99 percent to 7.99 percent by 2022-23. The first proposed change would occur in 2019-2020 with a move down to 9.49 percent.

The governor also wants to boost the state’s minimum wage to $12 per hour from $7.25 per hour, which the administration believes would save about $700 million in entitlement costs, and charge local governments a $25 per capita fee if they rely on the state police because they lack a local police force. Both are items Wolf has pushed for in the past.

Wolf’s plan calls for $120 million more for basic and special education in K-12 schools, another $40 million for early education funding and $25 million more for career and technical education and the State System of Higher Education. Part of his education plans also includes $50 million to be invested in a new workforce development initiative the administration is calling PAsmart.

The 2018-19 budget has a big chunk of new spending dedicated to funding the state’s two public-sector pension systems. Those contributions will increase by $275 million this year.

Wolf also he will continue to look for ways to cut government costs by streamlining operations. Among other things, the administration has consolidated some agencies, including criminal justice functions, as well as restructured its human resources and IT services for executive agencies.

Jason Scott
Jason Scott covers state government, real estate and construction, media and marketing, and Dauphin and Cumberland counties. Have a tip or question for him? Email him at jscott@cpbj.com.

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