Wolf Campaigns for Nation’s Biggest Tax Hike

Member Group : PA Manufacturers' Assn.

Two weeks after the June 30 budget deadline, Governor Tom Wolf is on the road pitching the budget plan he first unveiled in early March. He’s standing by his plan despite a series of embarrassing setbacks: zero votes for his budget in the House when it was brought to the floor in early June; an independent fiscal analysis that shows everyone will pay higher taxes under his budget, despite his claims to the contrary; and now a study by a bipartisan association of budget officials that shows the Wolf plan taxes more and spends more than any budget plan in the nation. No other state, in fact, even comes close.

The Wolf budget would increase taxes by $4.55 billion in FY 2015-16, higher than the budget proposals in the 49 other states combined, according to a recent report by the National Association of State Budget Officers (NASBO) in Washington D.C. His proposed spending is far beyond that of any other state when accounting for the size of the budget in comparison to population. The comparison includes notorious tax-and-spend states like New York and California. On paper, the governor’s plan to increase spending by $4.77 billion trails only New York at $7.49 billion and California at $5.31 billion, but it easily trumps when you factor in the relative sizes of the budgets. The budget proposed by New York Governor Andrew Cuomo this year, for example, was $141 billion. In contrast, The Pennsylvania General Assembly approved a $30.1 billion on the June 30 fiscal deadline, a three percent increase over last fiscal year.

The NASBO report further notes that Wolf’s plan has no controls built in to manage spending growth, other than minor revenue related adjustments. Explosive increases in spending are a certainty if his budget is approved.

NASBO is as nonpartisan a group as any group can be. It’s funded by the budget offices, which include both Republican and Democratic Administrations, of all the states, including Pennsylvania.

As his house of cards begins to call, the governor has teamed up with America Works USA, an affiliate of the Democratic Governors Association, in a TV and radio blitz, attacking Republican lawmakers. In addition, news reports indicate that he has planted the seed for a newly formed political action committee, "Rebuild Pennsylvania," condemning the Republicans and their budget plan.

One common theme is that the Republican budget amounts to little more than a handout to oil and gas drillers, presumably because it doesn’t include the severance tax on drillers the governor is asking for. The ads don’t mention, of course, the impact fee drillers pay – essentially a tax that has delivered nearly $1 billion to local communities since 2012 and additional billions in corporate taxes, sales taxes, and personal income taxes up and down the industry stream.

The governor’s actions have exasperated lawmakers and business leaders. Speaker of the House Mike Turzai (R-Allegheny) said the governor is promoting, "a far left agenda."

Judging by the governor’s actions and not his words, it’s clear Speaker Turzai is correct. He vetoed three budget related bills opposed by public sector unions and liberal special interests: the General Assembly-approved budget itself, a no-tax plan; the measure that would privatize liquor sales; the pension reform bill, which would cut spending through some modest changes to the retirement packages of current employees, and bring future hires under a defined contribution plan, more like the 401(k) style plans in use in the private sector.

He even went on to reference the credit downgrading as a reason to enact his proposed tax hikes; all while sitting on a pension bill that would have inevitably upgraded our financial solvency. The governor talks instead of structural deficits, more education funding, and tax cuts for the poor and the middle class. Time has exposed all of his arguments.

"If Governor Wolf doesn’t like the budget the General Assembly approved, he needs to show he has the votes to pass a different plan," PMA President David N. Taylor said, "Having lost the House vote on his tax plan by 0-193, the governor needs to reevaluate the political realities he is operating under."

In March, the governor insisted the structural deficit was $2.5 billion. A month ago, he lowered that estimate, agreeing to start negotiations with lawmakers using a $1.2 billion deficit figure given the higher than anticipated revenue collections at the end of the fiscal year. The General Assembly approved a spending plan (for the fifth year in a row with no tax increases) that covered that agreed-to amount.

But suddenly that number appears to be changing again. "He (the governor) is starting to talk $2 to $3 billion in structural deficit in the meetings again," said one source close to the budget talks.

The governor says, without telling the entire story, that we need more for education funding and that Pennsylvania is 48th in per pupil spending. However, the budget he vetoed increased education spending to the tune of $300 million, keeping us in the top ten of per pupil spending nationwide. In the ranking of 48th, local tax dollars are not factored into the equation.

"The unions started on the line about how poor our education funding is four years ago, and unfortunately there wasn’t enough push back at the time to refute it," one business leader said.

His third argument that the poor and the middle class will see an overall tax decrease with an increase in sales and personal income tax traded for a minimal reduction in property taxes comes up short as well. An analysis by the Independent Fiscal Office shows that everyone’s taxes would increase under the governor’s plan.

On Monday, a meeting between Republican leaders and the governor saw little progress in budget talks. Lawmakers said the governor is still insisting on his broad scale tax increases. This, while the 0-193 vote on June 2 on the House floor shows he has, well, zero support for his tax and spend package. Exasperating.

There will obviously be more in the weeks and months to come – stay tuned.

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