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Wolf Seeks Cuts, Revenues To Plug $3B Budget Gap

Gov. Tom Wolf speaks at a press conference saying more than 700,000 additional Pennsylvanians enrolled in his Medicaid expansion plan on Thursday, Feb. 2, 2017.

Gov. Tom Wolf asked lawmakers Tuesday to help fill a $3 billion projected deficit by imposing a tax on Marcellus Shale natural gas production and signing off on potentially touchy cuts in spending, including transportation aid to schools.

The Democratic governor also wants to charge local governments that rely solely on state police for law enforcement coverage and lease the huge Pennsylvania Farm Show Complex in Harrisburg in expectation of a $200 million upfront payment.

His requests to the Republican-controlled Legislature come on top of a slew of efficiency measures the governor rolled out Tuesday, including the gamble that he can save huge sums off the rising cost of health care for the poor.

"Our commonwealth has been operating with a structural deficit for a long time," Wolf said. "That means Harrisburg has been living beyond its means. Households can't do that, and neither can we."

He called his proposal a "responsible solution to our deficit challenge and a different approach from the way things have been done in Harrisburg for almost a generation."

Wolf is also asking lawmakers to approve an increase in the minimum wage to $12 an hour, counting on the resulting higher tax receipts to help balance the budget.

The plan would seek $1 billion in tax increases, including what the administration views as loopholes in taxes on sales, corporate profits and insurance premiums. The Marcellus Shale drilling tax has been blocked by Republican lawmakers for nearly a decade, in favor of a lower per-well fee that largely benefits drilling communities.

Wolf's plan also touts a $2 billion grab bag in spending cuts, efficiency steps and revenue sources that do not involve raising taxes.

All told, Wolf's $32.3 billion spending plan would seek $1 billion in new spending, or 3.2 percent more, including $230 million needed to plug holes on the current year's books. The plan is for the 2017-18 fiscal year that starts next July 1.

It would include $200 million more for public schools, special education and early childhood education. It would maintain services for the vulnerable, and fund caregiver help and day services for another 2,000 people with intellectual disabilities or autism. However, it would cut $50 million from school transportation aid because of lower fuel costs, slash tax credits and try to push grant programs onto unidentified outside sources of money. It also would eliminate an approximately $30 million grant to the University of Pennsylvania's veterinary school.

State government would rely on fewer employees and consolidate agencies and functions.

The proposal starts a process of negotiation with the Republican-controlled Legislature that is supposed to result in a budget by the end of June. In the background is fear in the Capitol that Wolf and Republican lawmakers are headed for the kind of months-long stalemate that marked Wolf's first budget.