Pennsylvania State Budget

Wolf Truth Squad: Tax Hikes on Working Families

OCTOBER 2, 2015

As noted yesterday, the Pennsylvania House of Representative has scheduled a vote on Gov. Tom Wolf's latest tax proposal for Wednesday, October 7.

If you follow Gov. Wolf on Facebook, you've probably seen a slew of taxpayer-funded memes, arguing for a budget that includes a "severance tax for education. That's not what this tax plan does.

The severance tax would generate only $99 million in the first year—only 5 percent of total new revenue. In 2016-17, the severance tax—after replacing “impact fee revenues”—would generate only $353 million, or slightly more than 10 percent of the total in new taxes.

In contrast, the overwhelming majority of revenue in Wolf’s tax plan comes from income and sales tax increases—yet you won't find one mention of these things on his Facebook page.

Wolf would raise the income tax by 14 percent, and impose the sales tax on basic cable TV, dry cleaning, amusement and recreation, and other personal services. These taxes would be borne directly by working families.

  • In 2015-16 Wolf would take $1.8 billion more from taxpayers—77 percent via income and sales tax.
  • In 2015-16 Wolf's tax increase would yield a $3.2 billion net increase—74 percent from income and sales tax.


You can read more about this tax plan in our latest policy memo.

Governor Wolf and his special interest allies are already calling lawmakers to pressure them to vote for higher taxes They need to hear from you too.

Join us in telling your legislators and Gov. Wolf—No New Taxes!

posted by NATHAN BENEFIELD | 11:30 AM | Comments

Wolf Veto = $11 Million Bill for Taxpayers

SEPTEMBER 30, 2015

School districts have borrowed $346 million—and taxpayers will pay to pay up to $11 million in interest payments—as a result of Gov. Wolf’s budget vetoes, according to a report from Auditor General Eugene DePasquale.

DePasquale noted that this borrowing is due to the lack of tax dollars flowing out of Harrisburg—despite the fact the state is certainly still taking money from taxpayers.

At the press conference announcing these findings, Sen. Scott Wagner stood up to say he’s tired of taking blame for Gov. Wolf’s actions. That is, the House and Senate passed a budget—and subsequently passed a temporary funding plan—but Gov. Wolf’s vetoes denied funding for schools and social services.

Sen. Wagner is right. The only person to blame for schools having to borrow money is Gov. Tom Wolf, who vetoed the original budget in its entirety—rather than using the line-item veto as previous governors have done—and the temporary stop-gap measure.

Wolf says his vetoes are about education funding, but are they really?

Education spending is already at an all-time high, while Pennsylvania ranks among the highest spending states. The Republican-passed budget would have increased aid to public schools by another $350 million (and $1.4 billion more than four years ago).

Republicans even offered Gov. Wolf $300 million above that total.

Gov. Wolf thinks that’s not enough, and continues to cling to his demand for higher taxes on working families.

But there can be no doubt, Wolf is the only reason schools are struggling to make payroll.

posted by NATHAN BENEFIELD | 02:10 PM | Comments

Fresh Start, or Stale Policies of Decades Past?

SEPTEMBER 30, 2015

At the beginning of 2015, we heard a lot about a "fresh start" for Pennsylvania. But nine months later, it's difficult to identify anything fresh about Gov. Wolf's tax, borrow and spend plan.

In fact, Philadelphia Daily News columnist John Baer pointed out that every Pennsylvania governor since the 1970s has raised taxes. Reading that, I naturally thought, “Yeah, well maybe we should stop doing that.”

Some Democrats argue that tax increases are part of responsible governing, noting that every governor elected since the '70s - Milton Shapp, Dick Thornburgh, Bob Casey, Tom Ridge, Ed Rendell, Tom Corbett - raised taxes (the argument is Corbett's fuels-tax hike for $2.3 billion in road and bridge repairs counts).

But Republicans say maybe that's the problem. Maybe the state's economy would be better with lower taxes.

Nate Benefield, of the conservative Commonwealth Foundation, makes the case against raising taxes: "Overall, our tax burden has gone up, and yet we have stagnant growth, among the slowest in the country."

Pennsylvania's ranking in state and local tax burden, according to the respected D.C.-based Tax Foundation, is 10th heaviest among states and third heaviest among the most populous states, behind New York and California.

In other words, for 45 years Pennsylvania politicians have been raising taxes—resulting in anemic job growth, income growth and population growth.

Ironically,Gov. Tom Wolf suggests his $4.6 billion, $1,400 per family of four tax increase represents a new way of doing things in Harrisburg. Raising taxes to historic highs, while rejecting real pension reform or liquor privatization, isn't fresh or innovative. It's the same thing we’ve been doing for decades.

It’s time we stop repeating the same failed mistakes of the past.

posted by NATHAN BENEFIELD | 10:10 AM | Comments

Who Will Vote to Raise Your Taxes?

SEPTEMBER 29, 2015

Republican leadership in the General Assembly has announced they will allow a floor vote on a budget proposal that has the massive tax increases Gov. Wolf and government union leaders desire—if Democrats secure enough votes to pass it.

That’s a big “if.” Not only would every Democrat have to vote for the tax hike—and some Democrats have already expressed concerns—they would also need 18 Republicans in the House and six in the Senate to vote for their tax-and-spend budget.

Consider the gauntlet thrown down. Those who favor massive tax increases on working families would have to make their case publicly and defend their policy desires. In any event, CF will continue to expose the truth about what the Union/Wolf tax plan would mean for Pennsylvania taxpayers, businesses and families.

We know lawmakers are going to hear from special interests clamoring to take and spend more of your hard-earned money. But they need to hear from families like yours who would pay the bill.

Join us in telling your legislators and Gov. Wolf—No New Taxes!

posted by NATHAN BENEFIELD | 10:27 AM | Comments

Wolf's "Loser" & "Phony-Baloney" Proposals

SEPTEMBER 23, 2015

Last week, Gov. Wolf unveiled new, bad policy ideas—to slightly adjust a misguided pension proposal, and to propose a private manager to a government run liquor monopoly. 

But just as it was with the fabled wardrobe-challenged emperor, we aren't the only ones who have seen through the Governor's new clothes. Editorial boards across Pennsylvania have pointed out Wolf's new proposals are transparent and immaterial.

Lehigh Valley Live writes (emphasis added)

Instead of offering a real compromise, Wolf dredged up what can only be called Reform Lite — privatizing the management of the liquor system (but not the ownership or the workforce). He also came down in price on his hybrid pension proposal, saying that the earnings of new state employees over $75,000 would be shifted to a defined-contribution pension plan (down from his earlier ceiling of $100,000).

Non-starters, both.

Leasing the Liquor Control Board's management function to a private firm 10 to 25 years, as Wolf proposes, is worse than doing nothing, because it would prevent conversion to a market-driven system during that time. Nothing in Wolf's offer would greatly increase service or selection, or reduce prices. The unionized sales force would stay in place. So would the number of stores. Wolf's idea to extend beer and wine sales to convenience stores and restaurants is tepid at best, and pits government against private enterprise.

The Pittsburgh Post-Gazette adds (emphasis mine):

The plan is a loser. It privatizes nothing. What’s worse is that by projecting an aura of private operation it could perpetuate Pennsylvania’s antiquated system for far longer. The state needs to get out of the liquor business, once and for all, as soon as possible, without the use of Tom Wolf’s smoke and mirrors.

The Bucks County Courier Times editorializes (emphasis mine): 

Now that we’ve gotten an unvarnished look at those “historic” reforms, here’s our take: phony-baloney “reforms” that create the appearance of movement for a Democratic governor locked in a budget impasse with Republican legislative leaders. 

Lastly, Lancaster Online pans the proposal, urging Wolf to look to real liquor store privatization:

Forget his proposal last week to offer a long-term lease to manage the state liquor stores; private firms would bid on a contract to manage the system, which would stay under state ownership.

If Gov. Wolf can make a deal with Republican leaders that would make good on his promise to boost  funding for Pennsylvania’s public schools, he should  choose our children over the unions that oppose privatizing our state-owned liquor stores. If he fails to do so, he could lose the support of those who elected him because they’re rightly frustrated with the human costs of the ongoing budget impasse.

Gov. Wolf may have trotted out new clothes last week, but they don't cover up the bad policies he started with.

posted by NATHAN BENEFIELD | 11:38 AM | Comments

Audio: A Path of Compromise

SEPTEMBER 21, 2015

Refusing to abandon his demands for the highest tax increase in state history, Gov. Wolf continues to fuel a budget impasse that has left human-services agencies and schools without critical funding.

CF’s Matt Brouillette was on WPHT with Dom Giordano to discuss the “path of compromise” that requires actual compromise from Gov. Wolf.

“While Governor Wolf is going to need to tell his government union supporters we have to do something on the pension front and it’s time for us to get government out of the booze business, Republicans are also going to have to go to their own business interests and say we need to stop these subsidies, whether it’s to the film industry or the horse racing industry, money that the taxpayers should not be supporting these crony capitalists.”

Matt justifies the Republican lawmakers’ plan to pass individual funding bills for schools and state agencies already agreed upon by the legislature and Gov. Wolf–which includes 274 of approximately 400 line-items.

Despite this, Matt anticipates the budget battle “would likely go past Thanksgiving, into the Christmas time, because it does not seem that Gov. Wolf, at this point, is giving up on his demands for the highest taxes in the country.”

Click here or listen below to hear more. 

The Dom Giordano Show airs every weekday from 9 am to 12 pm. 

Follow Commonwealth Foundation’s SoundCloud stream for more of our audio content.

And for mobile listening, get the SoundCloud iPhone and Android apps.

posted by JONATHAN REGINELLA | 00:31 PM | Comments

New Wolf Offer, Same Bad Policy

SEPTEMBER 17, 2015

Yesterday, 28 days after receiving a budget compromise proposal from legislative Republicans, Gov. Wolf rejected that offer and issued his own plan—hiring a private contractor to manage the government liquor system and slightly modifying his earlier pension proposal.

While Governor Wolf’s proposals are significant, and new to the current budget debate, they represent bad public policy.


  • Wolf’s plan to hire a private manager to run the liquor system replaces a government-run monopoly with a government monopoly run by a private company. In contrast to Wolf’s comments that he doesn’t want to “give this away to a crony,” that is precisely what this plan would do.
  • Consumers will not see better selection, prices, or service.
    • This plan doesn’t provide consumers new choices or true competition
    • This plan retains the one-size-fits all model that Pennsylvania consumers have come to hate—and drive to other states to avoid.
  • Wolf’s proposal doesn’t end the conflict of interest of government controlling and promoting the sale of alcohol.
    • It doesn’t change the fact that we having a single entity (or one person) choosing what products can and cannot be sold in Pennsylvania—which has resulted in rampant corruption and bribery.
  • The idea that wine in groceries and restaurants are “to be negotiated” means he isn’t offering the most basic reform consumers want to see.

Consumers will only see better selection, prices, and service when the government gets out of the wholesale business and allows competition, not monopoly, in wholesale and retail wine and spirits sales.  


  • Wolf’s stacked hybrid pension plan doesn’t offer meaningful reform. It is subject to the same political manipulations that plague the current pension system—increasing benefits and delaying contributions, kicking the can down the road.
    • The salary threshold could be adjusted at any point (Wolf proposed putting salary above $75,000 in a defined-contribution account, vs. his proposal of $100,000 a month ago) cutting into any “savings.”
    • While several states have created hybrid pension plans (part defined contribution, part defined benefit), no one has implemented a stacked hybrid.
  • Wolf’s $3 billion pension obligation (PO) bond proposal should be a nonstarter.
    • PO bonds have been historic failures—almost every city or state that has used pension obligation bonds have seen larger deficits after the bond issues. This includes in Philadelphia and Pittsburgh—where Mayor Peduto spoke out against Wolf’s bond proposal.
    • Wolf’s projected “savings” in reduced pension contributions don't include the interest payments on those bonds.
    • Ratings agencies have cautioned that pension bonds would result in bond rating downgrades.
  • Anti-spiking and revenue neutral option 4 reforms are good, commonsense reforms that protect taxpayers. Wolf should be applauded for supporting these reforms, and almost no one would disagree these are necessary changes.
  • The risk sharing for current employees is a good reform—but the $2 billion “savings” only occurs if the pension funds earn 6.5% instead of the projection 7.5%, an investment return that would create tens of billions in additional costs versus current projections.
  • Reducing Wall Street Investment fees is another good idea—SERS and PSERS have exorbitant costs—but Wolf has indicated he can do this administratively, with no legislation needed. This doesn’t need to be part of a “deal." 

posted by NATHAN BENEFIELD | 09:44 AM | Comments

Free the Budget Hostages

SEPTEMBER 15, 2015

This week, lawmakers are expected to vote for a “stop-gap budget”—funding state services and programs for a few months, while continuing to negotiate a budget compromise.

Yet, some politicians oppose even this measure and want to keep holding children and social service agencies hostage to their demands for higher taxes. Ironically, this opposition comes on the heels on House Democrats requesting, and receiving, an advance on the funding for payroll they expect to get whenever a budget is passed.

This hypocrisy—“money for me, but none for thee”—shows exactly why we need to fix the budgetary process.

More than a stop-gap budget, lawmakers need to adopt real reforms that prevent this practice—frequently used by former Gov. Rendell—of holding funding for schools until lawmakers meet the demands for higher taxes. As we pointed out in a recent op-ed, legislation has been introduced that would prevent these budget breakdowns from happening again:

One possibility is a bill introduced by Rep. Dan Truitt to ensure important government services remain open during the impasse. Separate legislation sponsored by Sen. Ryan Aument and Rep. Dave Hickernell would ensure school districts receive funding if summer break ends before the stalemate.

Alleviating the temporary pressure and freeing the hostages would allow for honest budget discussion and compromise.  

This starts with dropping any pretense of higher sales and income taxes on working families. Clearly, there is zero appetite for raising income and sales taxes on working Pennsylvanians. Even if you question the vote on Wolf’s tax plans on June 1 (which failed 0-193), the fact remains that to this day NO House Democrat has even introduced the Governor’s sales and income tax increase proposals.

No one—except Gov. Wolf—really supports increasing taxes by more than $4 billion this year and $8 billion next year. If we accept that such broad-based tax increases are simply untenable, then they must be off the negotiating table entirely.

Furthermore, imposing a new and higher severance tax on natural gas will not even come close to covering the spending sought by Governor Wolf.

In order for both sides to leave the negotiating table satisfied, they must be willing to cut the current subsidies to their favored special interests.

Governor Wolf will need to inform his government union supporters that he will trade liquor privatization (complete divestiture of the wholesale and retail business) and pension reform (401k-type plans for all new hires and legislators) for more money for education. 

The Republican legislature will need to inform their business supporters that they are cutting their subsidies (approaching $1 billion) to the film industry, the horseracing industry, and many other business interests that enjoy selective tax benefits and handouts.

A compromise will be found only when both sides are willing to surrender some of the demands of their preferred special interests. We should never negotiate the taxpayers’ interests with hostage-takers.


Audio: Budget Impasse Debate

SEPTEMBER 10, 2015

With the state budget impasse in its third month, funding for critical things such as education and social services remains in question. 

CF’s Elizabeth Stelle spoke with WHYY’s Marty Moss-Coane and opposite Keystone Research Center’s Stephen Herzenberg regarding the impasse and why a compromise has not been reached in Harrisburg.

Among the key points at issue in the budget discussion have been education funding, Wolf's proposed severance tax, pension reform, and liquor privatization.  

While Gov. Wolf claims to have made concessions on everything, his “compromise” contains most of his original plans to hike taxes on hardworking Pennsylvanians. And despite the legislature's offer to meet in the middle, the governor continues to push for income and sales tax increases.  

Click here or listen below to hear Elizabeth explain what can be done to pass a taxpayer-friendly and fiscally responsible budget.    

Radio Times with Marty Moss-Coane airs weekdays 10-11 a.m. and 11-noon.

Follow Commonwealth Foundation’s SoundCloud stream for more of our audio content.

For mobile listening, get the SoundCloud iPhone and Android apps.

posted by JONATHAN REGINELLA | 10:12 AM | Comments

Audio: Is Gov. Wolf Taking Hostages?


Gov. Wolf still refuses to back down from his budget demands–which include the largest tax hike in Pennsylvania’s history. Not only would this add an additional $1,425 in taxes on every family of four, but it would also cripple small, family-owned businesses.

As the budget impasse continues, CF’s Nate Benefield spoke with WNPV’s George Toth about the latest developments.

Nate explains that the hold up in negotiations is the result of Gov. Wolf’s unwillingness to compromise on his proposed tax increase and expansion of taxable goods and services. “He is still demanding his variety of tax increases…income tax increase, sales tax increase, expanding it to different services from nursing care to day care to accounting services," Nate says.

The House Republican leadership has offered Gov. Wolf a $400 million increase in education funding in exchange for much-needed pension reform. Two weeks after this offer was made, Gov. Wolf has still not responded.

The silence from Gov. Wolf’s camp means schools and social service organizations continue to operate without crucial state funding. Nate elaborates, saying, “It seems like he’s using social service agencies and school children who are not getting any funding right now as pawns in this political debate."

Click here or listen below to hear more.

Regarding Your Money with George Toth airs Tuesdays from 11:10am-noon.

Follow Commonwealth Foundation’s SoundCloud stream for more of our audio content.

For mobile listening, get the SoundCloud iPhone and Android apps.

posted by JONATHAN REGINELLA | 03:35 PM | Comments

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