Déjà vu All Over Again

Governor Wolf addressed the joint session of the Pennsylvania legislature today to outline his priorities for the 2016-2017 fiscal year.  With large portions of the 2015-2016 budget still incomplete, the Governor’s address took a unique tone at the outset: “Under ordinary circumstances, I would outline my 2016-17 proposal, a proposal full of ideas to move our Commonwealth forward… but I can’t give that speech.  Not under these circumstances.”

The Governor took the opportunity to lay blame squarely at the feet of the legislature for the ongoing impasse, calling out House Republicans for blocking his $30.8 billion budget proposal that would have required a broad-based tax increase.

However, ultimately, the details of the budget plan for the upcoming year looked very similar to last year’s proposal.  The $33.2 billion proposal increases funding for human services and education while also meeting pension obligations for public employees. Revenue estimates put 2015-2016 spending at $30.87 billion, meaning the proposal offers a spending increase of $2.33 billion.

To pay for the massive spending plan, the proposal also includes myriad taxes, including an increase on insurance premiums tax and bank shares tax.  It also introduces a severance tax on Marcellus Shale gas extraction at 6.5%, a proposal that was central to Gov. Wolf’s campaign for Governor.  The plan also broadens the sales and tax to include recreational items, increases the cigarette and tobacco tax, and requires an 11% increase in the personal income tax (PIT) from 3.07% to 3.4%.

The plan was met with sharp criticism by Republican leaders in the House and Senate, particularly after the jabs that the Governor took to those caucuses during his address.  The legislature will not conduct budget hearings through the spring with Cabinet departments, culminating with a legislative vehicle in late spring.