February 9, 2016

Gov. Wolf: Pennsylvania Is Facing A Fiscal Crisis That Must Be Solved

Gov. Tom Wolf Tuesday proposed a $32.7 billion General Fund budget along with a $2.7 billion (Republicans say $3.6 billion) increases in personal income, Sales, tobacco, Bank Shares, insurance premium taxes and a new severance tax on natural gas production.
In remarks before a joint session of the House and Senate, Gov. Wolf said--
“There are two paths we can take: we can fix our deficit and invest in education to move Pennsylvania forward or we can continue to embrace the failed status quo and cut $1 billion from education funding, cut hundreds of millions of dollars to essential social services and continue to stifle the Commonwealth's economic growth.
“If we do not act to end the era of deficit denial, one time fixes and budget gimmicks, the consequences will be billions of dollars in property tax hikes for Pennsylvanians and cuts to our schools and critical services for women, children, and seniors.
“Our education system, already threadbare after years of cuts and underfunding at the state level, will take a ruinous hit. More than 23,000 teachers, guidance and career counselors, special education aides and nurses will be laid off and yanked out of our schools. Tens of thousands of Pennsylvania children will lose access to early education that we know is key to  future success.”
Gov. Wolf called on lawmakers to return to the Capitol and send him the compromise budget that Republican leaders agreed to, then walked away from at the end of last year. That budget put responsibly addressed the structural budget deficit and began to restore previous cuts to our ailing school system and essential social services.
Gov. Wolf proposed these tax increases--
-- Natural Gas Severance Tax: 6.5 percent severance tax on natural gas raising an estimated $217.8 million [5 percent last year plus 4.7 cents per thousand cubic feet to volume];
-- Personal Income Tax: 3.07 to 3.4 percent  ($1.3 billion) – retroactive to Jan 1, 2016 [3.07 percent to 3.7 percent last year];
-- Sales Tax: Expanded to cover cable TV, movie tickets and digital downloads ($414 million) [last year increase 6.0 to 6.6 percent, plus an expansion of items taxed];
-- Bank Shares: Increased from .89 to .99 percent - effective Jan 1, 2016 ($39.2 million) [last year 0.89 to 1.25 percent increase];
-- Casino Tax: Tax on promotional play at casinos of eight percent;
-- Cigarette Tax: Increase $1/pack ($468 million) [same as last year];
-- Tobacco Taxes: 40 percent tax on tobacco products and e-cigarettes ($136 million) [same as last year]; and
-- Corporate Net Income Tax: No tax decrease as proposed last year.
-- Landfill Disposal Fees: Increase by $35 million to pay for the Department of Conservation and Natural Resources.
Gov. Wolf also proposed increasing the minimum wage to $10.15 per hour as he did last year.
Budget Secretary Randy Albright said at his budget briefing Gov. Wolf still supports the pension reform proposal in Senate Bill 1071 (Browne-R-Lehigh) and the liquor system reform provisions of  House Bill 1690 (Turzai-R-Allegheny).
Senate Republican Reaction
Senate President Pro Tempore Joe Scarnati (R-Jefferson):  “Gov. Wolf’s 2016-17 budget proposal is astounding.  He doubles down on his 2015-16 proposal to include even more runaway spending and massive taxes in this year’s proposal.  
“Because of his continued refusal to responsibly address cost drivers in desperate need of reform, his 2016-17 budget plan is actually even more harmful than last year.  Strong and effective leadership requires learning from past mistakes, not repeating the same errors.
“Our Commonwealth desperately needs a responsible budget that focuses on fiscal restraint and core priorities.  We cannot afford expansive spending on feel good programs that have little or no accountability.  It is clear from last year that Pennsylvanians certainly cannot afford Gov. Wolf’s colossal proposed tax increases, which simply don’t have the support in the General Assembly.”
Senate Majority Leader Jake Corman (R-Centre):  “If the governor is genuinely trying to sell this budget proposal as ‘new’ he really should have delivered this address last Tuesday on Groundhog Day. This retread budget proposal offers superficial changes to his sizable tax-and-spend plan that has already been soundly opposed by taxpayers.
“In asking for a $3.6 billion tax increase, it is appropriate that the governor delivered this proposal on ‘Fat Tuesday.’ After all, he's asking taxpayers to foot the bill to fatten state spending.
“The governor is doubling down on his failures to provide leadership on accomplishing a bipartisan budget agreement and is being disingenuous on the starting point for his
‘new’ proposal.
“The framework basis for his budget died the day that pension reform died after the governor failed to garner the support for his plans from within his own party. Now, the governor is asking for even more taxpayer money but he has yet to show that he has support for that plan.”
Senate Appropriations Committee Chair Pat Browne (R-Lehigh):  “It is important for us, as representatives of the people of Commonwealth, to enact a budget that will adequately fund our schools and provide financial support to vital programs and services.  However, we must do so in a fiscally responsible way. The Governor’s proposed massive spending increases are simply unsustainable and place too much burden on Pennsylvania families and job creators.”
Senate Majority Whip John Gordner (R-Columbia):  “As hard-working families continue to live within their means and small business owners struggle to stay on budget with expenses, Pennsylvania residents are asking their state government to do the same.  It is past time that Governor Wolf understands that taxpayers are not supportive of record tax increases and record spending increases.”
House Republican Reaction
House Majority Leader Dave Reed (R-Indiana County) offered the following reaction: “It is just not reality to think there is support for 15 new tax increases, including a retroactive increase in the Personal Income Tax, and just so he can spend more.
“Missing from the governor’s proposal is property tax reform, public pension reform, liquor privatization and spending accountability.
“What was even more loudly missing, though, is how the governor proposes to finish the last 13 percent of the current budget after he vetoed $6.3 billion. Before anyone asks for more taxes and more spending, shouldn’t we close out this year? Shouldn’t we finalize this year’s budget, then we can work together on the priorities for next year?
“We need to finish this year in a responsible way that meets the core functions of government and that taxpayers can actually afford.”
Click Here to watch the House Republicans comment on the Governor’s budget address.
Senate Democrat Reaction
Facing an unfinished 2015-16 budget with the need to reconcile a 2016-17 spending plan that has a looming $2 billion deficit, Gov. Tom Wolf was forced to focus his second state budget proposal on education and deficit reduction, according to Senate Democratic Leader Jay Costa (D-Allegheny).
"Lawmakers have choices to make about Pennsylvania's future; deal with tough issues up front or watch Pennsylvania wither as a consequence of self-inflicted fiscal wounds," Sen. Costa said. "We need to come together and negotiate a bipartisan budget with the governor that makes key investments in education and deals with a $2 billion structural deficit."
Wolf presented his $32.7 billion spending plan before a joint session of the General Assembly today. The plan uses the $30.8 billion yet-to-be-enacted budget agreement from last fall as the foundation for this year's plan.
For 2016-17, the governor calls for $200 million more in education funding, $50 million for special education and an additional $60 million in pre-K dollars. The budget also focuses on tackling the estimated $2 billion deficit in 2017 with a revenue enhancement package.
"It is incredibly frustrating to deal with issues year after year because there is no political will in the state House to finish the job it was sent to Harrisburg to do," Senate Minority Appropriations Chair Sen. Vincent J. Hughes (D-Philadelphia) said. "We need to complete the 2015-16 budget and get to work in dealing with those issues that are holding us back.
"Lawmakers can address the deficit and invest in education as a simple, direct approach that will pay dividends for years to come or they will have to explain why deep long-lasting cuts have to be made again."
In his speech, the governor painted a picture of Pennsylvania's landscape if there is continued inaction on adopting a reasonable forward-looking budget. He said property taxes will rise, human services will be stripped of funds and drug assistance programs for seniors would be slashed.
Senate Democratic Whip, Sen. Anthony H. Williams (D-Philadelphia) said it is unwise for Pennsylvania to continue to jump from one fiscal crisis to another and that a bipartisan budget is a necessity.
"The negotiated agreement that passed the Senate in December proved that a bipartisan budget could be crafted even in a very partisan environment," Sen. Williams said. "That spending plan included healthy education investments, support for job creation, human services, seniors and our most vulnerable.
"This budget plan makes lawmakers face up to the reality that if nothing is done to address the budget deficit than its growth will swamp all other initiatives," added Sen. Williams.
"The Senate worked with the governor in a bipartisan way to produce an accord last year that would have addressed many of Pennsylvania's most pressing issues," Sen. Hughes said, noting that the bipartisan budget passed the Senate 43-7.
House Democrat Reaction
House Democratic leaders said Gov. Tom Wolf's second budget address laid out in clear terms the choice legislators must make in dealing with the state's budget crisis.
“The governor was as honest as he could be about where Pennsylvania stands right now and the stark choice we face over the next few months," Democratic Leader Frank Dermody (D-Allegheny) said. "Simply put, it comes down to people or politics.
“As a legislature, are we going to be honest and transparent with the people of Pennsylvania and work together to solve the crisis we face? Or are we going to keep playing politics, ignore that crisis, and continue down the current path? Because eventually that path leads to repeating the devastating education and other cuts we've already experienced once, and will leave a shell of Pennsylvania for future generations.
"We are at a crossroads and need to make a choice," Rep. Dermody said. "House Democrats believe the clear choice is people over politics -- passing budgets that are balanced for real and that restore funding for our schools; fix the deficit; protect senior citizens, working families and the middle class; and move Pennsylvania forward. It's the only responsible choice."   
“The budgets of the past five years have been artificially balanced using a variety of gimmicks, such as paying just 10 months out of a 12-month bill, or borrowing from one program to pay for another, or using money that won't be available the following year," Democratic Appropriations Chairman Joe Markosek (D-Allegheny) said. "But that kind of budgeting doesn't come without a cost, and we can no longer push those costs down the road.
“Republicans might be able to find another round of gimmicks and tricks to artificially balance their latest plan. But even they admit behind closed doors that they have no answer for next year's budget and beyond, when Pennsylvania's structural deficit will balloon to more than $2.5 billion," Rep. Markosek said. "It's time for a reality check."
“Just this week, Republicans are moving a series of supplemental funding bills that promise money for corrections, hospital burn centers and child advocacy centers. Democrats support all of these things, but Republicans still haven't explained how they are going to pay for them, or what happens when their unbalanced budget runs out of money and we can't pay for programs that serve seniors, the disabled and children; rape crisis centers; or mental health services later on," Democratic Whip Mike Hanna (D-Centre) said. "We can't pass budgets piecemeal by picking winners and losers or by putting some Pennsylvanians at the beginning of the line and others at the end. That might make for good politics but it doesn't make for good governing."
"House Democrats agree with the governor," Dermody said. "We need to be putting people before politics to end the budget crisis, fund our schools, fix our deficit, protect our seniors, children and the middle class, and move Pennsylvania forward. Real governing is about more than just saying no. It's about being open, honest and transparent with the taxpayers about where we are, and then taking responsibility for doing what's necessary and right to make things better, not passing the buck year after year. Real governing is about putting people before politics."
Here are the major budget documents from the Governor’s Budget Office--
-- Click Here for the remainder of the documents
Wolf’s Budget Not As Reliant On Severance Tax