What to expect in 2018 gubernatorial election year

All eyes during the 2018 gubernatorial election in Pennsylvania could be on two men from York County.

Republican state Sen. Scott Wagner, a York County businessman who was elected to state office as a write-in candidate, could end up facing incumbent Democratic Gov. Tom Wolf in the general election in November.

Wagner, of course, first has to overcome several GOP challengers, including House Speaker Mike Turzai, businessman Paul Mango and attorney Laura Ellsworth.

Regardless of who is facing Wolf, election years in which the balance of political power could shift dramatically have a way of overshadowing regular government business.

Local political observers expect 2018 to be no different in Harrisburg, where all state representatives and half of the state senators are on the ballot. Federal midterm elections also are set for 2018 in which Republicans and Democrats will fight for control of the U.S. Congress.

Franklin & Marshall College pollster and political analyst G. Terry Madonna expects a “slim” calendar for legislative session days in Harrisburg because of the election.

The annual state budget will be top of mind, as usual, but don’t expect much else to get done, he said. “I don’t see a big reform or revolutionary year for legislative successes.”

The big victory in 2017, according to business leaders, was a state pension reform plan that had been debated for years. While that plan focuses primarily on future state and public school hires and not the current unfunded liability, it is still reform, said Gene Barr, president and CEO of the Pennsylvania Chamber of Business and Industry. “For us, that’s the standout.”

The pension plan should help spread out future financial risk for the state, which is important, he said.

If recent budget history is any indication, the Republican-controlled General Assembly will not be eager to raise broad-based taxes next year, Madonna said. But even niche tax hikes may be a tough pill for many lawmakers to swallow to generate revenue, unless it’s more money coming from sin taxes like alcohol and cigarette sales, or expanded gambling.

Final resolution on the most recent state budget was not reached until late October, nearly four months after the last budget expired.

Officials turned to expanded casino-style gambling to generate revenue after other tax plans failed to garner enough support. Barr pointed to those failed tax hikes, including a proposed sales tax on warehouse services, as wins for business. 

That said, Madonna expects a modest budget proposal from Wolf this winter. However, that budget will likely propose yet again a severance tax proposal on natural-gas drilling, he added. “I would be stunned if he doesn’t do a shale tax. He doesn’t lose anything by doing it.”

More government reforms could also be in the mix as the Wolf administration has been active in agency consolidation efforts to curb government spending. 

Mike Manzo, senior vice president for governmental relations at Triad Strategies, a Harrisburg-based public affairs firm, said he expects continued talk of property tax elimination or reduction bills in 2018.

Will Pennsylvania take a broader look at state taxes, including potential changes in corporate net income tax or personal income tax rates?

Some lawmakers would like to have that discussion, as would businesses eager to see the state’s CNI rate cut from 9.99 percent. But because of the election, the natural inclination for lawmakers in 2018 will be to spend as little time at the state Capitol as possible, Manzo said.

Next year will be more about highlighting accomplishments of the past two years, including liquor reforms that loosened longstanding restrictions on alcohol sales and implementing a medical marijuana program.

But depending on the state’s revenue picture next year, Manzo said he expects Wolf might again push to cash in on future profits from the Pennsylvania Liquor Control Board. 

If the U.S. Supreme Court overturns the federal law that bans sports betting in most states, which is possible next year, Pennsylvania could find itself with another source of revenue each year. 

With the Three Mile Island Nuclear Station in Dauphin County facing closure in 2019, it’s also possible that 2018 legislative talks will include regulatory policies that are more favorable to the nuclear industry.

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