Pennsylvania Governor, Tom Wolf announced his new budget proposals. While ambitious, the proposals held few surprises to anyone who followed his campaign and recent news articles of the past few weeks. Included in his proposals:
- A severance tax on natural gas of 5% (plus a fee of 4.7 cents per 1000 cubic feet, not referenced in the Governor’s speech).
- An increase in the personal income tax from 3.07% to 3.7%.
- Increase in the state sales tax rate from 6.0 % to 6.6%.
- Expansion of the sales tax base to include services that are not currently taxed.
- Property tax relief described to be as much as $1,000 to the average homeowner or a reduction of 50%.
- Lowering of the corporate tax rate by 40% in the first year and 50% by 2018.
- Closing of the Delaware loop hole
- Elimination of the capital stock and franchise tax.
- Increase in the minimum wage from $7.25 to $10.10 per hour.
The revenue generated from the proposed severance tax would go towards funding various aspects of education and to the local communities impacted by the gas drilling. Taxes collected from the increases in the personal income tax and the sales tax would be used to offset revenue losses from property tax reform and to provide tax relief for less-affluent Pennsylvanians.
The Governor acknowledged that he understood that some will not like all or part of his proposals, but asked those who disagree to put forth their own ideas. The Governor closed his speech by saying that while Pennsylvanians did vote for divided government, they did not vote for gridlock.
Which begs the question: given how ambitious the Governor’s proposals are, how flexible will he be in dealing with a conservative legislature that prides itself on not raising taxes?