Wolf calls Pa. finances ‘time bomb,’ GOP dismisses call for $2.7b tax hike as fantasy

Gov. Tom Wolf warned lawmakers on Tuesday that Pennsylvania’s finances are a ticking time bomb amid a record-long budget gridlock, sending them a spending proposal for the coming fiscal year with no full plan in place for the fiscal year that began back in July.

The first-term Democrat delivered an approximately $33.3 billion plan for 2016-17 to the Republican-controlled Legislature as he tries again to break down resistance to a multibillion-dollar tax increase that has held up passage of a budget for the current year.

Wolf delivered his message in a blunt, 25-minute speech that prompted objections from most Republicans, but allies said Wolf delivered the message that people need to hear about the state government’s crisis.

Billions of dollars for prisons, hospitals and schools remain in limbo and, without a state tax increase to close a massive deficit, the governor warned that schools will lay off thousands of teachers, the state’s social services safety net will spring huge holes and local governments will raise taxes.

“This deficit isn’t just a cloud hanging over Pennsylvania’s long-term future. It’s a time bomb, and it’s ticking away, right now, even as I speak,” Wolf told a joint session of the House and Senate. “If it explodes — if the people in this chamber, if you allow it to explode — then Pennsylvania will experience a fiscal catastrophe the likes of which we have never seen.”

He urged lawmakers to “take on the crisis we are facing” or find another job.

Top Republicans said they are committed to dealing with the deficit, but they are aiming to do it without raising taxes, and they said Wolf’s new proposal includes billions in extra spending and extra taxes that are not necessary to close a deficit estimated at $1.8 billion next year by the Legislature’s independent fiscal agency.

House Majority Leader Dave Reed, R-Indiana, said when Wolf returns from “Fantasyland or Neverland or wherever he is” that Republicans will be ready to work with him.

House Speaker Mike Turzai, R-Allegheny, called the governor’s tone “unstatesmanlike, unprofessional, I hate to say it, but even petulant.” House Minority Leader Frank Dermody, D-Allegheny, responded that “the truth hurts.”

The only other state with such budget gridlock is Illinois, where first-term Republican Gov. Bruce Rauner is battling the Legislature’s Democratic majorities.

Wolf’s spending proposal amounts to a two-year, 14 percent increase.

Wolf wants the projected $2.7 billion tax increase to close a long-term deficit that has damaged Pennsylvania’s credit rating and to boost aid to public school systems that have among the nation’s biggest funding gaps between wealthy and poor districts. Big increases for pension obligations, human services and prisons are also helping drive the increase.

Wolf would seek an 11 percent increase in the state income tax to 3.4 percent, plus new taxes on natural gas production, casino gambling and insurance premiums. He also would expand the sales tax to include movie tickets and basic cable television service, and increase taxes on cigarettes by a $1 to $2.60 per pack.

“This fiscal crisis didn’t appear from out of nowhere,” Wolf told lawmakers. “This was no act of God. We are in a hole we dug ourselves, right here in Harrisburg.”

Republicans, who have amassed their largest legislative majorities in decades, have agreed to boost spending on public schools, although not by the amount Wolf has sought. But with legislative elections looming this fall, House Republicans blocked a tax increase even after the governor made concessions on GOP policy priorities.

Negotiations have been further complicated by the competing priorities of House and Senate Republicans.

Part of Wolf’s objective has been to erase Republicans’ deep, budget-balancing cuts in aid to schools in 2011-12, the brunt of which was borne by the state’s poorest school districts.