Gone is the governor who had ambitious plans to overhaul Pennsylvania’s tax structure and pump billions more into the state treasury to fix deficits and public school funding disparities. Gov. Tom Wolf, a Democrat running for a second term, doesn’t talk about that anymore.
“Who’s talking about raising taxes?” he questioned a TV reporter last month who asked Wolf about the prospect of raising taxes this year.
Actually, Wolf does still talk about raising one tax: on Pennsylvania’s booming natural gas industry, a tax that is politically popular and, according to the state’s Independent Fiscal Office, one that would largely be paid by out-of-state customers.
Otherwise, a governor who once challenged members of the Republican-controlled Legislature in a 2016 budget speech to confront the state’s ticking fiscal time bomb or “find another job” now touts his efforts to save money and stresses the importance of focusing on areas of bipartisan agreement.
Taxes? He’s not talking about it.
As Wolf shifts from governing to the campaign trail, he has secured roughly half of the education money he had initially set out as a goal — $2 billion over four years — and suggests he has dealt for good with an entrenched post-recession deficit he inherited.
Republican lawmakers, meanwhile, rejected nearly every tax increase Wolf sought, although Wolf, to some degree, now takes credit for taxes on sales and income, the state’s two biggest sources of income, staying put.
“The tax when I got here, the personal income tax, was 3.07 percent. It’s still 3.07. The sales tax was 6. It’s still 6,” he told reporters.
Told of his comments, House Republicans — the most forceful anti-tax votes in the Capitol in Wolf’s first term — didn’t seem too surprised.
“It certainly wasn’t from lack of trying on his part,” said House Majority Whip Brian Cutler, R-Lancaster.
As a candidate in 2014, Wolf revealed a plan to increase income taxes by billions of dollars on higher earners to boost the state’s share of public school spending to 50 percent. That, in theory, would slash school property taxes, dollar-for-dollar.
The campaign of then-Republican Gov. Tom Corbett pounced quickly.
Corbett’s campaign swiftly aired a series of TV ads, including one in which it accused Wolf of planning to raise middle-class income taxes.
Corbett’s campaign officials later credited the ads with helping to narrow the polls in the campaign’s final weeks, although Wolf still whipped the unpopular Republican governor by 10 percentage points.
As governor in 2015 and 2016, Wolf proposed multibillion-dollar tax increases, including taxes on income and sales, and Republicans ultimately rejected nearly all of it. Meanwhile, efforts to overhaul Pennsylvania’s school property tax system stalled in the Legislature.
Instead, Republican lawmakers agreed to raise cigarette taxes by $1 per pack and passed a grab bag of smaller, targeted tax increases.
Wolf, for his part, signed off on Republican proposals to borrow heavily to bail out a massive one-time cash shortfall last year and acceded to lawmakers’ desire for an aggressive casino gambling expansion. The tax package and that now adds up to a roughly $1 billion annual revenue boost.
Asked whether a second-term Tom Wolf will need a budget-balancing tax increase, Wolf flatly said “no.”
“This year we will have paid all bills, we will have paid them fully, and we’ll still have a balanced budget,” Wolf said.
Wolf has said there is still work to be done, for instance, on shifting the school-funding burden off property taxes. And it is questionable whether Pennsylvania state government really is past deficits.
But Wolf’s timing is good.
He is running for re-election at a time when analysts are projecting two straight years of solid revenue gains, the strongest two-year period of growth since the recession a decade ago.
Matthew Knittel, director of the Independent Fiscal Office, credits tight labor markets translating into wage growth and stronger consumer spending. Also helping is the federal tax-cutting law and Wolf’s efforts at cost containment, such as shuttering a prison, Knittel said.
Wolf also can campaign on the fact that taxes, broadly speaking, did not go up, and Republicans acknowledge that they may have helped Wolf — if inadvertently — by blocking them.
“The fact that he’s running on it proves that that may be the case,” Cutler said. “But, look, it was the right political decision and I’m glad the governor finally came to see that.”