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Wolf still seeking to raise income tax, impose tax on shale-gas drilling


Post Date: 08 Oct 2015    Viewed: 552

House Republicans will proceed with a historic vote Wednesday enabling Democratic Gov. Tom Wolf to test support for a tax plan that would increase the personal income tax from 3.07 to 3.57 percent and impose a tax on natural gas drilling.

The vote could extend, or bring to a close, a 99-day budget stalemate, said House Majority Leader David Reed, who doubts Wolf has the votes. Schools are not receiving state funding and human service providers are not being paid.

Wolf made key concessions by withdrawing his proposal to raise the sales and cigarette taxes. He stuck by a campaign pledge to levy an extraction tax on shale-gas drillers. He reduced his two-year revenue plan from $5 billion to $3.7 billion.

Wolf altered his proposed property tax reduction for homeowners of all ages. He instead would expand state property tax relief for seniors, people with disabilities and veterans.

A tax increase is needed to close a structural deficit of more than $2 billion and boost education spending, Wolf said.

“Pennsylvania needs critical revenue to fix our structural budget deficit without gimmicks,” he said. “We need to make sure oil and gas companies pay their fair share so we can restore the drastic cuts made to education, and seniors and disabled households desperately need relief from skyrocketing property taxes that resulted from underfunding education.”

But Reed said, “At some point, we have to vote someone off the island. At this point, if that is a broad-based tax increase, so be it.”

Reed said he's not sure whether Wolf is giving up on “broad-based property tax relief for working families,” but Republican members will not.

Reed said the governor's office told him it has secured 84 Democratic votes and that the overall votes needed are there to pass the measure put forth by Rep. Joe Markosek, D-Monroeville.

That means 18 GOP lawmakers would have agreed to vote with the Democrats, though Reed is skeptical that any Republicans will vote for an income tax increase unless every cent goes toward property tax reduction — something not in Wolf's plan.

“We are working to garner support,” said Jeffery Sheridan, Wolf's spokesman. He said no one in the office “communicated vote totals to Leader Reed.”

House Republican spokesman Stephen Miskin said an administration official informed Reed by text message.

Asked whether all Democrats support Wolf's plan, Rep. Dwight Evans, D-Philadelphia, a key Wolf backer, said: “It'll be there.”

A summary of Wolf's plan, released Tuesday, shows the governor will seek a tax on gas drilling at 3.5 percent, plus 4.7 cents per cubic feet. The so-called 2012 “impact fee” to defray municipal and state costs of drilling would remain in place.

Originally, Wolf sought $1 billion from the severance tax for education, but the tax would bring in $389 million during 2016-17, the first full year, Sheridan said. The price of natural gas has dropped dramatically since the 2014 campaign.

Under Wolf's plan, property taxes would be eliminated for 216,344 seniors, bringing the total to 282,878 under the state's tax relief/rebate program. Nearly 31,000 more households with disabled residents would get school district property tax relief, bringing the total to 48,439.

Despite the inclusion of tax relief for seniors, “it is still not likely to pass,” said G. Terry Madonna, a political science professor at Franklin & Marshall College in Lancaster. Tax relief for seniors is an inducement, he said, but it may not be enough.

On Saturday, the number of days in this budget impasse will exceed the 101-day total of 2009 under ex-Gov. Ed Rendell.

Even if Wolf and the Republican-led legislature strike a deal soon, it typically takes more than a week to craft language, print legislation and work it through both chambers.

Wolf in March wanted to increase the state's 6 percent sales tax to 6.6 percent, and broaden its base with new items. In September, an administration negotiating proposal showed no increase in the sales tax but still an extension of applicable items.

Republican leaders repeatedly have stated their objection to any broad-based tax increase.

“I think they are inching ever so closely together, but I don't think either side is ready to throw in,” said Madonna. 


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