NORRISTOWN >> Gov. Tom Wolf’s fiscal 2016 budget proposal aggressively proposes tax increases to address structural budget shortfalls caused by the failure of Wolf and the Legislature to reach an agreement on the fiscal 2015 budget.
The largest tax hike would increase the personal income tax from 3.07 percent to 3.4 percent. The 11 percent tax hike would raise $1.4 billion in new state revenue.
The state sales tax would remain at 6 percent but exemptions for movie theater tickets, digital downloads and basic cable TV would be eliminated. The changes would raise $415 million in new revenue.
The tax on cigarettes would go up $1 to $2.60 per pack and raise $468 million. The 40 percent wholesale tax on cigars, loose tobacco, smokeless tobacco and electronic cigarettes would raise $136 million.
A new tax on natural gas production, 6.5 percent of value, would generate $218 million in tax revenue.
A new surcharge on the insurance premiums for fire, property and casualty insurance, 0.5 percent, would raise $101 million.
A new 8 percent tax on promotional casino gambling plays at casinos would generate $51 million. Promotional plays are the coupons distributed by casinos to attract new customers with free plays.
A 0.1 percent increase, from 0.89 percent to 0.99 percent, in the shares tax on bank and trust companies would raise $39 million.
An increase in the eligibility limits for tax forgiveness for families would amount to a $83 million tax expenditure. The eligibility limit would increase from $34,250 to $36,400.
The various tax proposals have different dates when they would take effect in the next year.
“This crisis is not about politics at all. This is about math. Pennsylvania now faces a $2 billion budget deficit,” Gov. Wolf said Tuesday in his budget address. “That’s not a Democratic fact or a Republican fact. It’s just a fact.
“It’s a fact supported by Standard and Poor’s – an independent rating agency,” Wolf said. “They have done the math. And they agree: Pennsylvania faces a massive structural deficit that will only continue to grow if we fail to address it responsibly.”
Legislators’ reactions to the governor’s proposals broke down along party lines.
State Rep. Stephen McCarter, D-154th Dist., said the budget proposal “comes at a time when we still are without a budget for the previous fiscal year.”
“Far too many of my colleagues are satisfied with the status quo. They have buried their head in the sand and refuse to budge on issues that a majority of Pennsylvanians want, such as increased education funding and a restoration of the cuts our health and human service providers saw during the previous administration,” McCarter said in an email. “Frankly, another year of the status quo will send our state down a path to ruin.
“We cannot continue down this path. The credit downgrades and the overcrowded classrooms and the lack of essential human services are only digging Pennsylvania into a deeper and deeper quagmire. We have a responsibility to balance our budget, close the structural deficit that has been steadily growing due to smoke and mirrors budgets and properly fund the essential services that Pennsylvanians need.”
State Rep. Tim Briggs, D-149th Dist., also supported Wolf.
“I agree with Gov. Wolf’s position that we need to put people over politics. We need to adequately fund our schools. We need to support seniors, veterans and our most vulnerable while also addressing our structural deficit,” Briggs said in an email. “A budget needs to be done comprehensively, and it needs to be done now because ignoring the current crisis will only make things worse.”
On the Republican side of the aisle, state Sen. Bob Mensch, R-24th Dist., complained the 2016 budget proposal “includes $3.6 billion in new or increased taxes.”
“The governor spent some of his time expressing his concern over the increase of property taxes and how it will impact Pennsylvanians,” Mensch said in an email release. “Yet he vetoed three pension reform bills, which would have resulted in direct property tax relief, and did not propose a single solution on how to address the issue. Instead, he demanded a 7.8 percent increase in state spending along with a $3.6 billion tax increase. He clearly isn’t concerned about taxpayers.”
In an email release, state Rep. Tom Quigley, R-146th Dist., said, “Most offensive of all is the PIT (personal income tax) increase, especially because it would be retroactive to Jan. 1, Gov. Wolf wants to hand Pennsylvania residents a bill for time they have already worked while, at the same time, eliminating services they need. I am amazed.”
The overall state budget would increase to nearly $33.3 billion, a two-year increase of $4.3 billion from the last, full-year enacted budget. Wolf and the legislature have failed to enact Wolf’s proposed, fiscal 2015 budget, which was supposed to be adopted by a July 1, 2015 budget deadline.
The fiscal 2016 budget proposal would increase education spending for public school operations and instruction by $565 million, a two-year increase of 10 percent. Early childhood education spending would increase by $90 million to $256 million, an increase of 54 percent. Higher education spending given to the state system universities, state-related universities, community colleges and student grants would increase by 5 percent to $1.7 billion.
Contact Carl Rotenberg at 267-907-6137 (c) and 484-679-8476.