Wolf Budget Includes Retroactive Tax Hike

Governor Wolf gave his annual budget address to a joint session of the General Assembly on Tuesday. One of the strangest things about the speech was that he didn’t talk about any of the details of his 2016-2017 budget proposal. Instead, he spent nearly thirty minutes lecturing and insulting House and Senate Republicans because they have refused to give him the spending and tax hikes he’s demanded in the 2015-2016 budget.

It’s hard to blame the Governor for not wanting to talk about the details of his budget proposal. As we noted last week, Wolf is insisting that there is a structural deficit; at the same time he’s also demanding that the General Assembly authorize a budget that spends even more money. To pay to cover the budget deficit, that his proposal makes worse, he is calling for numerous tax increases. His fantasy, or nightmare, budget includes a retroactive 11 percent increase in the personal income tax. Wolf’s income tax hike would include all money that you’ve earned since January 1, 2016. Since the budget doesn’t get passed until June that means taxpayers would virtually be guaranteed to have to write a check to the Pennsylvania Treasury to cover the difference.

Governor Wolf’s proposed budget is so absurd that even left of center newspapers are calling him out on it. From the Pittsburgh Post-Gazette:

"Gov. Tom Wolf is caught in a time warp. It’s February 2016, but he thinks it’s November 2015. That’s when he thought he had a "deal" with the General Assembly on a 2015-16 budget.

"Earth to governor: There was no deal, there is no deal, and the proof is there is no completed budget for the fiscal year that is seven months old…In his speech Tuesday, the governor said, ‘We are going to have to face hard facts.’ Indeed. It is a fact that the compromise he favored last fall passed the Senate but not the House, so get over it."

Governor Wolf ran his election campaign as a realist who wanted to help out the middle class. However, his policy positions make it perfectly clear he’s living in a fantasy land at this point and is bent on increasing taxes on the middle class. Wolf’s budget pays lip service to improving efficiency to cut costs in some departments. However, he does not mention any of the areas that are the real cost drivers.

For example, if the Governor wants more education funding to get to the classroom, then he should eliminate the so-called "prevailing wage" mandate. This one change could save school districts and local governments nearly $1 billion per year. Other changes, like eliminating the $250 million Race Horse Development Fund and similar corporate welfare items would free up resources to balance the budget in a taxpayer-friendly way. Wolf also ignores the saving that could be achieved by reforming the public pension system.

The General Assembly has an opportunity to look out for taxpayers and address longstanding issues with state policies that have unnecessarily made government more expensive. Solving the issues driving up the cost of government would be far better for Pennsylvania’s future than the Governor’s budget proposal.