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Pa. Gov. Tom Wolf to unveil budget with familiar call for a tax on natural gas drillers, but with a twist

The Democratic governor will unveil his budget Tuesday in a speech before a joint session of the legislature.

Pennsylvania Gov. Tom Wolf speaks after he was sworn in for his second term earlier this month.
Pennsylvania Gov. Tom Wolf speaks after he was sworn in for his second term earlier this month.Read moreMatt Rourke / AP

HARRISBURG — When Gov. Tom Wolf delivers his budget address Tuesday, he is expected to call for more money for public schools, a higher minimum wage for Pennsylvania workers, and a new tax on natural-gas drillers.

In doing so, the Democratic governor who is now unfettered by reelection concerns — and has been openly showcasing his progressive roots — will have to persuade a more conservative, Republican-controlled legislature to buy in to his plan.

Although administration officials have closely guarded details of Wolf’s budget, a few things appear certain: Wolf will not ask for hikes in the income or sales tax, the state’s two biggest revenue-generating levies. He will ask for additional funding for public schools, as he has every budget year since taking office in 2015. He will ask for money for career and technical training, which has been a recent talking point for Republicans. And he will try, for the fifth time, to persuade lawmakers to impose a severance tax on drillers — although with a twist.

The governor announced last week that he does plan to seek a severance tax on Marcellus Shale natural-gas drilling to help fund disaster recovery and infrastructure projects. But, he said, he is not planning on using that money to balance the state’s books, as he has in past years. Instead, if the measure were approved — a long shot in the historically resistant legislature — the money would funnel through a separate account.

A severance tax has long been opposed as being detrimental to the industry; in turn, the conventional thinking went, it would cost revenue and jobs. The thinking this year is that dedicating the revenue to disaster recovery and infrastructure would convince lawmakers, who would be lured by the promise of more money in their district, to buy in.

“Gov. Wolf will make the case that, throughout history, Pennsylvania has boldly led the nation in advancement and innovation, and he’ll ask the General Assembly to join him in seizing that opportunity to do it again,” spokesperson J.J. Abbott said in a statement Friday, which outlined other areas Wolf will prioritize in his speech, including job growth and opioid addiction prevention.

Administration officials would not say how much in additional spending they will propose over this year’s $32.7 billion budget. They also would not provide specific numbers for proposed increases in education funding. Also unclear is whether the 14 universities in the state’s System of Higher Education, or the four state-related universities -- Temple, Lincoln, Penn State, and the University of Pittsburgh -- would receive more money.

At the negotiating table this year will be a mix of veterans (some of them legislators who have resisted hallmarks of the governor’s past budget proposals) and freshmen, including a new budget secretary for the governor.

While publicly many in the Capitol have expressed a sense of optimism about resolving this year’s budget without much drama, there are some signs that it could be a difficult year for negotiations.

The state’s independent fiscal office, in a report issued last fall, predicted a “challenging budget year” ahead, noting that it projects that legislators will need to plug a roughly $1.6 billion deficit.

Some lawmakers, though, have downplayed that concern.

State Rep. Stan Saylor, Republican chairman of the House Appropriations Committee, has said he believes the office has “historically overestimated” how much money lawmakers are willing to spend. The deficit, he suggested, could be avoided by controlling spending.

“House Republicans will continue to hold the line on new taxes,” he said in a statement. “The people of Pennsylvania want a government that lives within its means, and we intend to provide that.”

Still, the request could affect the tenor of budget negotiations. Republicans in the House came out sharply against a severance tax, and the issue has in previous years contributed to protracted budget stalemates.

Instead, the governor is expected to push an increase in the minimum wage as a way to reduce the cost of certain social services programs while also bringing in revenue.

Wolf unveiled last week a proposal to raise the minimum wage from $7.25 an hour to $15 an hour by 2025.The state’s minimum-wage rate has been stagnant for a decade, rising only to match the last national increase.

Republican leaders in the legislature argue that wages should be decided by the market, rather than mandated by government. And their approach this year has been no different, with many expressing concerns that small business could be hurt by an increase.

“We remain open to a reasonable discussion on changes to the minimum wage,” Jennifer Kocher, a spokesperson for Senate Republicans, said in a statement. “I’m not sure that this proposal meets the definition of reasonable. We cannot deal with changing the minimum wage in a vacuum.”