Pa. House rejects Wolf budget plan

HARRISBURG - In a major blow to Gov. Wolf's agenda, the state House on Wednesday soundly rejected his plan to increase funding for Pennsylvania schools through tax hikes, stirring deeper uncertainty about how or when the state's 99-day budget impasse would end.

The measure, which sought to raise the personal income tax and impose a new levy on natural gas drilling, was defeated, 127-73. Republicans were united against it; nine Democrats broke ranks to join them. The proposal needed 102 votes to pass.

The loss further clouds the future for the first-term Democrat, who for months has insisted the state needs a significant infusion of new revenue to avoid punishing budget cuts.

Still, Wolf said he would not abandon his call for higher personal income and sales taxes to fund public schools and finance property-tax cuts. "I am not taking anything off the table," the governor told reporters.

He also praised Democratic legislators for taking what he said was a politically difficult stand. "I think we made real progress today," Wolf said.

Republican leaders saw something quite different. They called the vote a flat-out rejection of the governor's planned tax hikes.

"It's taking too long to get in touch with reality," said Rep. Bill Adolph (R., Delaware), who chairs the House Appropriations Committee. He said the vote mirrored the message GOP leaders had consistently sent Wolf during budget negotiations over the last four months: There was not enough support for increasing the personal income and sales taxes.

Neither Wolf nor Republican legislators said when they expected to head back to the negotiating table. But the vote seemed to ensure the impasse will eclipse the 101-day budget standoff in 2009 between the last Democratic governor - Ed Rendell - and the GOP-led legislature.

After the vote, the House recessed with no plans to reconvene for two weeks.

Without a budget, there is no official document authorizing how state dollars should be spent. And though state workers are receiving paychecks and state services are continuing uninterrupted, aid to schools, counties, and nonprofits providing social services has been halted.

On Tuesday, Wolf had offered one of his first major concessions during the stalemate, backing off on a demand to raise the state sales tax from 6 percent to 6.6 percent. But he still wanted a personal income tax hike, from 3.07 percent to 3.57 percent, and a new 3.5 percent tax on natural gas drillers.

Wednesday's vote highlighted how deep the ideological and policy divide remains, even after months of budget wrangling.

During six hours of debate on the House floor, dozens of legislators stood to give impassioned defenses of their positions, as Wolf summoned lawmakers to his office until the last minute in a bid to win their votes.

Many Democrats said they agreed with Wolf's stance that new revenues were necessary to close what he has called a $2 billion structural deficit that will haunt the state in future years.

"One thing you can't declare victory about is a need for more money," Rep. Dwight Evans (D., Phila.) told his GOP colleagues. "You may differ in how to get there, but you recognize there's a need for new money."

Evans noted that there were organizations that were losing state aid during the impasse, and that whatever the outcome of the vote, it was time to start seriously discussing a deal.

"I do not like raising people's taxes," he said. "But we have a problem. You only have to look at the arithmetic."

Rep. Rosita Youngblood (D., Phila.) said she was supporting Wolf's plan because it presented an opportunity to shift how revenues were raised and spent.

"We have the ability to stop doing the same thing over and over and over again, and do something different that will create different results for the people of the commonwealth," she said.

But Rep. Rick Saccone called Wolf's plan "a cheap magician's trick," saying it was just a way to surreptitiously reach into taxpayers' pockets.

"This proposal is totally disconnected from the taxpayers," the Allegheny County Republican said in a thundering speech during which he grabbed the microphone stand and waved his arms in disgust.

Nearly all of the Democrats who broke with their party represent districts in the southwestern corner of the state, where the natural gas drilling boom has brought jobs and an economic boost.

"This amendment would have placed a massive burden on an already-struggling Marcellus Shale industry, and I couldn't take part in passing something that would create one of the highest severance tax rates in the nation," said Rep. Jaret Gibbons (D., Beaver/Butler/Lawrence). "Natural gas prices are at an all-time low, and I feel this is not the time to further burden an industry that provides invaluable jobs to our state and region with a severance tax of this magnitude."

GOP leaders who control the House had called for the vote last week. They knew how it would end, but scheduled it anyway to publicly show the governor his proposals were going nowhere.

"Sometimes you have to go through an exercise like this to actually just hold people's feet to the fire," said House Majority Leader Dave Reed (R., Indiana).

It was not immediately clear what Wolf's next move would be, but Republicans said they expect him to give up his call for broad-based taxes.

"We are hopeful he takes a step back and takes the opportunity to digest what happened today," said Jennifer Kocher, spokeswoman for the Senate Republicans.

She said GOP leaders have other options, including trying to build support in the legislature to pass a temporary budget - one with enough bipartisan support to overturn a veto by Wolf.

That echoed a sentiment earlier in the week by Reed, who signaled the possibility, if talks with Wolf break down, of attempting to strike a veto-proof deal on a final budget with Democratic legislators.

During her own address to colleagues, Rep. Margo Davidson (D., Delaware) recalled previous instances where she worked with Republicans. She implored House members to revisit that spirit of bipartisanship.

"We need to come together, regardless of party, and do the right thing," she said. "If not today . . . I certainly hope it's a day real soon."

cpalmer@phillynews.com

609-217-8305@cs_palmer