Gov. Wolf's Budget Proposal: 5 Things You Need To Know

HARRISBURG, PA — Gov. Tom Wolf unveiled the state's preliminary 2021-22 budget on Wednesday and the document immediately raised eyebrows. The governor is advocating a large personal income tax hike in the middle of the coronavirus outbreak, largely to pay for increased education subsidies for teacher salaries and other school district costs.

Here's what you need to know about Wolf's $37.8 billion spending plan:

Not everyone would see their state income taxes rise.

Wolf wants to raise the income tax from 3.07 percent to 4.49 percent - a huge increase, but only for the state's top wage earners.

"It actually reduces the tax burden on Pennsylvania families earning $84,000 or less," Wolf explained in his budget address on Wednesday. "It also proposes a major tax reduction for Pennsylvania businesses."

The proposal increases the allowances for tax forgiveness to $15,000 for single filers, $30,000 for married filers and $10,000 allowance for each dependent. Filers with incomes at or below those thresholds will receive 100 percent tax forgiveness.

The percentage of tax forgiveness declines by 1 percentage point for each $500 above the threshold for 100 percent forgiveness. For example, families with two children making less than $84,000 will receive a tax cut while a family of four making $50,000 will have their taxes eliminated.

Republicans hate the budget proposal.

Wolf, a Democrat, and the Republican-controlled House and Senate have to agree on an ultimate spending plan. Given the GOP reaction to it, that won't happen immediately.

"The budget Gov. Wolf is presenting is completely unsustainable, totally irresponsible and absolutely crippling to the state’s economy," said Senate President Pro Tempore Jake Corman of Centre County. "Now is not the time to ask Pennsylvanians to send more of their hard-earned
dollars to Harrisburg."

Senate Majority Leader Kim Ward of Westmoreland County agreed. The budget plan, she said, is "full of massive tax increases and massive spending. I find it tone deaf to what is happening here in Pennsylvania, while our economy is in shambles, to raise taxes and put more of those
restrictions on those who are employing others."

Democrats are embracing the plan.

"It's time Pennsylvania invests in its residents, who have sacrificed so much over the last 11 months," state Sen. Wayne Fontana of Allegheny County. "The proposal makes critical investments in health and safety, workforce development, education and small businesses. It reflects the uniqueness of this challenging time."

Said state Rep. Kevin Boyle: "The he best part of (Wolf's) proposed budget is (more than) $1.5 billion more for public education. While serious cash, it is an investment for our future. Funds dedicated to education now will deliver economic growth and prosperity in the future."

Teachers love the budget proposal.

Wolf's budget plan would provide more than a $1.3 billion increased investment in basic
education funding; a $200 million increase for special education; $25 million more for Pre-K Counts and $5 million more for Head Start. Additionally, it would increase the minimum teacher salary from $18,500 to $45,000.

“We commend the governor for his ongoing commitment to public education,” said Rich Askey, president of the Pennsylvania State Education Association, which represents about 178,000 active and retired educators and school employees, student teachers, higher education staff and health care workers.

“There is nothing more important than investing in our schools and students. Gov. Wolf has been a leader on these issues, and PSEA looks forward to a continued partnership with him and lawmakers from both parties to ensure our students are successful and our schools are fairly
funded."

Business organizations have strong objections to the budget proposal.

The Pennsylvania Chamber of Business & Industry condemned Wolf's plan.

"The governor’s budget proposal this year comes at a hard time for everyone. The pandemic has brought the Commonwealth to a crossroads," chamber president and CEO Gene Barr said.

"Many of the policies recently outlined by the governor as among his top legislative priorities for the year – including a $15 an hour mandated minimum wage increase; an additional tax on the natural gas industry; and implementing unitary combined reporting - will only increase the cost of doing business in the state and make the Commonwealth less competitive overall," chamber president and CEO Gene Barr said.

Barr also is no fan of the proposed increase in education funding.

"It’s disheartening that in addition to those anti-business proposals, the governor called for a nearly 50 percent increase to the state’s personal income tax, driven by his desire to exorbitantly raise state education spending. It’s worth noting that Pennsylvania ranks 9th among states in per pupil spend and 10th when it comes to the average salaries of public school teachers."

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