Wolf's budget may need a big push

HARRISBURG - Though Gov. Wolf has been working behind the scenes for weeks on his first budget blueprint for the state, legislators and others say his real work is only just beginning.

Wolf is scheduled to unveil his multibillion-dollar spending plan at 11:30 a.m. Tuesday before a joint session of the legislature. By all accounts, it will contain several bold - and controversial - proposals, including a package of tax increases and new taxes at levels that haven't been seen in years.

Delivering the speech might be the easiest part. Persuading the Republican-led legislature, and a possibly skeptical public, to support it will be the heavier lift for the newly elected Democratic governor.

"They are going to have to do a huge sales pitch," political analyst and pollster G. Terry Madonna said of the Wolf administration. "I think you are going to see a major promotional effort to convince people that this agenda is in the long-term interest of the state. It wouldn't shock me to see commercials."

Already, Republicans who control both legislative chambers have expressed concerns about some of the ideas Wolf plans to outline in his speech. Topping the list is a plan to raise both the state's personal-income tax and the sales tax, in part to help finance a massive property-tax relief program for every municipality in the state.

The income tax currently is 3.07 percent, and Wolf is expected to ask that it be raised to about 3.7 percent. The sales tax is now 6 percent and would rise to 6.6 percent under the governor's budget plan. It would also be extended to certain professional services that currently are exempt.

Philadelphia imposes an additional 2 percent on top of the 6 percent sales tax, but it was not immediately clear Monday whether Wolf's proposed increase would apply to the city.

Money generated from those tax increases would be used, in part, to finance an aggressive property-tax relief proposal for every municipality in the state - although under the plan, Philadelphia would get wage-tax relief.

Josh Shapiro, a Montgomery County commissioner who is close to Wolf and was briefed on some of the budget details, said wage-tax rates would decrease for both city residents and nonresidents who work in Philadelphia.

Residents would see their wage-tax rate reduced from 3.92 percent to 3.48 percent, and nonresidents from 3.49 percent to 3.11 percent.

Madonna called the property tax "the most hated tax in the state." He said Wolf's plan has a good chance of resonating with voters as well as many Republican legislators who for years have attempted to push through property-tax relief plans.

Other pieces of Wolf's plan will face resistance in a legislature that has made no secret of its distaste for tax increases.

Wolf has already announced that he wants a new 5 percent tax on natural gas drilling to fund substantial increases for public schools. That tax would replace the current impact fee, which was authored by Republicans and signed into law by Wolf's Republican predecessor, Tom Corbett.

The governor is also looking to raise taxes on cigarettes by roughly $1 per pack, although Philadelphia, with its recently approved $2-per-pack hike, will likely be exempt, according to sources familiar with some of the budget's details.

Although Wolf's proposed spending plan is already being described by supporters as nearly unprecedented in scope, some of his predecessors have tried getting similar proposals through the legislature - although not all at once, as Wolf is proposing.

Gov. Ed Rendell, for instance, proposed broadening (while lowering) the sales tax and increasing taxes on cigarettes, cigars, and smokeless tobacco, and was unable to generate enough support for either.

Still, Rendell and several governors before him were able, in their first year in office, to sway the legislature to approve raising the personal-income tax, which Madonna said could bode well for Wolf.

Sen. Jay Costa (D., Allegheny), who was briefed by the Wolf administration on the details of the budget Sunday night, acknowledged Monday that it will be challenging to reach a compromise on the budget.

But he said he believed Wolf's Tuesday budget address will make for a "pretty significant day."

"We expect it to be comprehensive and bold, and will address some of the things the people have asked for," Costa told reporters. "We have an obligation to help the governor sell the budget."

Property-tax relief statewide (in Philadelphia, wage-tax reductions instead).

Income-tax rate rise from 3.07% to 3.7%.

Sales tax rise from 6% to 6.6%.

5% tax on natural gas drilling to finance increased public-school funding.

Cigarette tax increases by roughly $1 per pack. (Phila., with its recently approved $2-per-pack hike, will likely be exempt.)

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