Wolf's latest shale-tax pitch would fund Pennsylvania infrastructure

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Pennsylvania Gov. Tom Wolf on Tuesday proposed a $34.1 billion budget for fiscal 2020 while calling again for a tax on natural gas drillers.

Wolf's latest iteration of the Marcellus Shale levy contains a new twist, funding for infrastructure capital projects. The governor said last Thursday that such a tax could raise roughly $4.5 billion for flood control, anti-blight and other measures.

His budget for the fiscal year that starts July 1 contains no broad-based tax increases. It is up $927.4 million, or 2.8%, from last year's adopted plan, not including $500 million in supplemental funds to balance this year's budget.

In his fifth budget message and first since his re-election, Democrat Wolf acknowledged a difficult back-and-forth with a Republican-dominated legislature that has rejected his previous shale tax thrusts.

"In the coming weeks, we’ll have the chance to discuss, debate, and negotiate the details," Wolf told lawmakers at the State Capitol in Harrisburg.

Last year's election-year budget was the first under Wolf that passed on time.

Bond rating agencies have downgraded Pennsylvania over the past three years, citing unfunded pension liability and budget imbalance.

Moody’s Investors Service rates the commonwealth’s general obligation bonds Aa3 with a stable outlook. S&P Global Ratings and Fitch Ratings assign A-plus and AA-minus ratings, respectively. Their respective outlooks are stable and negative.

Wolf, in his 27-minute speech, also proposed more spending on public schools, an increase in the minimum wage to $12 per hour starting July 1 and a job-training initiative to modernize Pennsylvania's workforce through a multi-agency Keystone Economic Development and Workforce Command Center.

An aging workforce and a shortage of modern job skills have shaped Pennsylvania's economic picture.

"When Amazon made its decision not to locate its second headquarters in Pennsylvania, it cited workforce concerns as a main reason," Wolf said. "Across the commonwealth, we have workers aging out of our workforce, and too often the next generation of workers is not there or doesn’t have the skills to replace them."

Wolf proposes transferring half of the fiscal 2019 general fund surplus to the budget stabilization reserve fund, the so-called rainy day account. State officials expect a $23 million balance as of June 30, and continued deposits to total $278 million by FY2024.

In addition, the plan would earmark about $1 billion in general obligation borrowing for buildings, redevelopment and transportation, and $16 million in voter-approved borrowing through the Pennsylvania Infrastructure Investment Authority, or Pennvest program.

The governor also proposed an increase of more than $200 million in basic education and a further $50 million for special education. Additionally, he earmarked $15 million to help counties pay for new voting machines.

The GOP's advantage in the legislature is still solid, though less pronounced after the November elections. Republicans have a 26-21 majority in the Senate, with three vacancies, and a 110-91 edge in the House of Representatives, with two vacancies.

"This budget is not a slam-dunk. We have a lot of work to do," said Senate president pro tempore Joseph Scarnati, R-Brockway. "We have a problem in Pennsylvania and the problem isn't with the revenues, its with the expenditures and we have to balance this out."

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State budgets Tom Wolf Commonwealth of Pennsylvania Pennsylvania