Governor Wolf's Latest Budget Proposal

State and Local Tax|Tax

By Matthew Dodge

UPDATE: On October 7th, Governor Wolf’s proposal was voted down 127-73 in the House of Representatives.  New talks between the parties are expected to resume next week.  Visit the “Our Thoughts On” blog for updates as additional budget details as they become available. 

Pennsylvania Governor Thomas Wolf unveiled his latest budget effort on October 6, 2015.  This proposal focuses on resolving the budget impasse through an increase in the state personal income tax rate and by introducing a severance tax on oil and natural gas extraction in the state.

The state personal income tax rate would rise from 3.07% to 3.57%.  The Governor is proposing a natural gas drilling tax of 3.5%, plus 4.7 cents per thousand cubic feet.  The introduction of the severance tax would not displace the impact fee that is currently imposed on drillers in Pennsylvania.

To counter the tax rate increase and imposition of the severance tax, the proposal offers property tax relief to approximately 250,000 seniors and disabled homeowners.  The Governor intends to spend $400 million of the new revenue to fund the education system in Pennsylvania.  The Governor also appears to have abandoned corporate tax reform; an increase in the sales tax rate (from 6% to 6.6%); and the expansion of the sales tax base that he offered up in his proposed budget in March 2015.

Republicans have received the proposal with skepticism and do not anticipate supporting an increase in the personal income tax rate.  A test vote before the House of Representatives is anticipated to take place on October 7th.  Contact us with questions regarding the Pennsylvania budget and visit the “Our Thoughts On” blog for updates as additional budget details become available later this week

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