Gov. Wolf’s Pa. budget includes bold proposals. Now it requires bold action. | Editorial

Gov. Tom Wolf’s budget — and the response it has generated — presents a somewhat jarring déjà vu to budgets of the recent past. On Wolf’s side, he has put forth bold plans to hike education funding, support environmental spending, give tax cuts to some families, and hike the state income tax for others.

Republican lawmakers responded by immediately calling the budget a nonstarter.

Bad enough that this performance is so predictable during normal times. But following a year of economic devastation due to the pandemic, it’s a particular disappointment. Lawmakers are missing the opportunity presented by the pandemic to throw out the old partisan and unproductive script and look at things differently.

Contrary to expectations that this proposal would be a decimated shadow of past budgets, the new $37.8 billion general fund budget represents an 11% increase over last year’s. That increase comes from a combination of new taxes, reallocating revenues, and federal dollars.

The elements of Gov. Wolf’s budget are indeed bold. Any proposal to increase income taxes in the midst of a recession takes guts. The hike in personal income tax from 3.07% to 4.49% is targeted to higher-income families (and will also impact businesses) and is coupled with tax cuts for working families hit hardest by the pandemic.

» READ MORE: GOP pans Wolf proposal to hike taxes on top earners

Bringing in new revenue — in the form of increasing taxes on better-off Pennsylvanians and the gas industry, as well as legalizing and taxing marijuana — is an economic imperative for recovery. The pandemic exposed the weak underbelly of the commonwealth’s, and the nation’s, social safety net, public health infrastructure, and capacity to provide high-quality education for all.

Moves include a $1.35 billion increase in basic education funding. The budget also includes a $25 million increase for Pre-K Counts and increases for Head Start and Special Education, among others.

Another notable proposal would provide overdue reforms to the Charter School Law, adjusting the way cyber charters get funded to include a flat per student rate of $9,500 per year. Cyber schools who do not have expenses tied to brick-and-mortar structures have benefited unduly from the lack of meaningful charter-funding reform. This change alone represents $229 million in savings to districts.

Wolf also proposes to alter the state’s education tax credit program, lowering the administrative dollars organizations can set aside, freeing up an additional $36 million in student scholarships.

Wolf additionally wants to redirect $199 million in slots revenues that currently benefit the Race Horse Development Trust Fund to provide financial assistance to higher-education students in state-owned universities and colleges. Since 2004, the $3 billion the horse-race industry has gotten has had little impact on its decline.

Finally, Wolf wants a severance tax on the natural gas industry to fund workforce development programs. He has unsuccessfully proposed this in every one of his budgets.

Having bold proposals is not enough. Wolf needs to be bold in his approach to getting his proposals past the finish line. With two years left in his term, Wolf must show a willingness to spend political capital and use all levers at his disposal to play hardball.

There is a parallel between the moment Wolf finds himself in and the one faced by President Joe Biden, who is battling Republicans who want a smaller coronavirus relief package than he is proposing. The White House issued a statement that “[Biden] will not settle for a package that fails to meet the moment.” Senate Democrats then voted to start a budget reconciliation process that would allow the relief package to pass without Republican votes.

Wolf is in a tougher position than Biden because his party is the minority in the General Assembly. But he can still flex some muscle.

For example: Without a severance tax, Wolf’s budget starts with a $300 million annual hole. The natural gas industry has had devastating impacts on the environment. If a severance tax fails, Wolf’s administration should explore options like slowing new permits, or stop issuing them.

Gov. Wolf is right to start the process with a call for unity around a budget that meets the moment. But he should also have a clear plan B. It will be no comfort for struggling families in Pennsylvania that the administration’s starting position was bold if it ends up falling short.