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We are cautiously optimistic about the $34.1 billion budget plan unveiled by Democratic Gov. Tom Wolf on Tuesday, not just for its spending priorities but for the initial support it received from the other side of the aisle.
As the Associated Press put it, “Wolf’s first term was marked by long, drawn-out budget fights with Republican lawmakers,” due to early budgets “which carried multibillion-dollar tax increases.”
This plan appears to reflect the newly reelected Wolf’s “shift in strategy to the realities of negotiating with big Republican majorities,” the AP added.
It’s also a tacit acknowledgement of some other tough realities, including rising borrowing costs, a ballooning retirement-age population and a static working-age population, the AP also noted.
Put another way, Pennsylvania can ill afford large tax increases that fall disproportionately on the overwhelmed pool of people who are still working.
Researchers with Penn State Harrisburg’s Pennsylvania State Data Center predict that there will be 38 elderly dependent persons for every working age person in Pennsylvania by 2030.
While that will no doubt create opportunities in the healthcare and aging services fields, it portends trouble for the state’s beleaguered tax base.
With that in mind, we are supportive of Wolf’s proposal to increase education funding and worker training. You can read more about the potential local impact in Mark Guydish’s story which appears in the front of this section.
We need a strong, educated workforce not just to boost industry but to increase productivity and support the tax base. Wolf’s plan also would provide incentives to community college students who remain in Pennsylvania.
Great. Back to the original question: How are we going to pay for all of this?
Wolf is seeking authorization for another $1.9 billion in new spending, or nearly 6 percent, but without a tax increase.
The governor does have a plan. He is counting on a solid 3 percent increase in tax collections, hundreds of millions of dollars from surplus money already appropriated, as well as higher assessments on Medicaid providers and a fee on municipalities that rely only on state troopers to provide police coverage, the AP noted.
For this budget cycle, maybe that will work.
Longer term, we are mindful of the warnings offered by Senate President Pro Tempore Joe Scarnati, R-Jefferson, who cautioned that tax collections are not keeping pace with the growth in spending.
“We can’t generate enough revenue to meet these expenditures, and we’ve got to bring this into balance,” Scarnati said. “You can’t grow revenues at 1.5 to 2 percent and have expenditures at 4 to 5 percent, it just doesn’t add up.”
“The trick here is really prioritizing the tax dollars that we have … and I think we can do that by June 30,” Scarnati said, referencing the end of the state’s fiscal year.
At a time when the nation is reeling from the effects of a costly federal government shutdown, the last thing Pennsylvania needs is another acrimonious and disruptive budget battle.
It’s heartening that Wolf and the GOP look poised to find common ground this time around.
There’s one other elephant in the room, though.
Separate from the budget process, Wolf last week unveiled a proposal to create a massive infrastructure plan funded by a “modest” $300 million per year severance tax on the gas industry.
As we said then, the likelihood of getting such a tax passed by this legislature is dubious. Pinning such needed repairs on it is a questionable gambit.
— Times Leader