On June 30, Republican lawmakers failed to pass a balanced budget. The Republican budget would lead to a $3 billion deficit by 2016-2017. As we’ve seen over the past four years, this only leads to more credit downgrades and fiscal crises that get kicked down the road to hard-working taxpayers.
Despite suggestions by Gene Barr in a recent op-ed (CDT Saturday), Gov. Tom Wolf is committed to fixing Pennsylvania’s economy. He continues to fight for the key goals on which he was elected: to fund schools through a common-sense severance tax, to reduce property taxes and to eliminate the deficit.
Cuts to education over the past four years resulted in ballooning class sizes, fewer teachers and the elimination of vital programs. We can get Pennsylvania’s struggling schools back on track by passing a common-sense severance tax to help fund them — an idea with bipartisan support.
The governor’s proposal is based on West Virginia's model, and it is expected to generate more than a billion dollars in 2017. Wolf’s plan calls for the vast majority of this revenue to go toward education.
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The severance tax will help increase the state’s share of education funding from 35 to 50 percent, shifting the burden off the backs of homeowners. Additionally, Wolf has proposed a property tax relief plan totaling more than $4 billion. Under this plan, which targets areas with the highest tax rates, more than 300 school districts will maximize their homestead exemptions and apply additional relief to millage rate reductions for all properties, including small businesses. The governor's plan also goes further than any other to limit a school district's ability to raise property taxes, ensuring this historic relief package is not reversible down the road.
Wolf's budget also grows our economy. It calls for a cut to the corporate net income tax from 9.99 percent to 4.99 percent within three years, which will flip Pennsylvania's ranking from the second highest to the fourth lowest in the nation, and a final phase-out of the capital stock and franchise tax. The governor has also proposed closing the “Delaware loophole” to make the tax system fairer for all businesses.
Manufacturing is at the heart of our economy in Pennsylvania, and Wolf’s budget establishes a "Made in Pennsylvania Job Creation Program" that will award tax credits to manufacturing companies that create good-paying, middle-class jobs. Additionally, it provides $5 million to the state's industrial resource centers to leverage our research universities to advance manufacturing technology and commercialization.
Wolf’s budget expands industry workforce partnerships with the state, enhances specialized technical training at public postsecondary schools, and builds on job-linked literacy programs and vocational rehabilitation programs that help people with disabilities. Pennsylvania's educational and job training systems are too often disconnected from the state's economy and employers struggle to find talent locally as a result. Wolf is committed to meeting these challenges.
Finally, the governor’s pension proposal actually addresses the unfunded liability, which exists because Harrisburg politicians have underfunded the plan for more than 15 years. His plan will save $10 billion and put us back on track to make our payments as laid out in the bipartisan Act 120. In the short term, over five years, the governor’s plan will reduce our unfunded liability by $1.3 billion; $370 million for school districts and $900 million for the state.
Wolf remains committed to working with Republicans to come to a negotiated solution, but he will not abandon his key goals. His budget is a blueprint for Pennsylvania's future. It fixes the deficit without gimmicks, makes historic investments in education by making oil and gas companies pay their fair share, rebuilds the middle class by strengthening manufacturing and workforce development, provides property tax relief to middle-class families, seniors and businesses, and reduces the state's unfunded pension liability.