From Wolf, record budget and tax increases
By Beth Anne Mumford Buckle up, Pennsylvania. Gov. Wolf has introduced his first budget for our state and, as expected, record spending and middle-class tax hikes are on the way.
By Beth Anne Mumford
Buckle up, Pennsylvania. Gov. Wolf has introduced his first budget for our state and, as expected, record spending and middle-class tax hikes are on the way.
The centerpiece of the governor's inaugural budget is a blowout in government spending. Accounting gimmicks aside, the state's general fund - the primary bank account - would balloon 16 percent, to $33.8 billion. That's the largest single-year increase since Richard Nixon was president and the most expensive budget in state history.
Much of this increased spending will go to public education, with an immediate $1 billion boost and a $3.7 billion property-tax rebate in 2017. This, the governor argues, is necessary to ensure our students have all the resources necessary to succeed.
Yet simply throwing more money at our state's education system is not the solution. State education spending is already at all-time highs, and Pennsylvania ranks in the top 10 states in total education spending per pupil. This is not the blighted and underfunded education system Wolf and his teachers'-union supporters like to conjure up in the public's mind.
Wolf also proposes an additional $1.75 billion in school pension payments. Just like his increased education spending, however, this is another solution in search of a problem.
Pennsylvania taxpayers already contribute more than enough to our pension system. In fact, 62 cents of every new dollar to our general fund covers pension costs. Even despite that, the union-dominated Public School Employees' Retirement System still faces a funding shortfall of $33 billion. Plugging this hole with $1.75 billion is like trying to save the Titanic with bubble gum. Without structural reforms, this system will sink taxpayers further.
So how do we pay for all this new spending? This is where middle-class Pennsylvanians should pay attention.
Rather than pulling funds from other areas of our bloated budget, Wolf plans to pay for this new spending binge through higher taxes - and these increases won't just be on the "rich."
The crux of this plan is a 20 percent hike in personal income taxes - from 3.07 to 3.7 percent - and an additional 10 percent increase in our state sales tax - from 6 to 6.6 percent. Combined, the governor's budget would increase state taxes by a staggering $4.5 billion - the largest tax increase in state history.
These tax increases won't just hit Wall Street millionaires - they'll hit those on Main Street who are already struggling to make ends meet. The personal income tax, for example, starts kicking in on families earning more than $36,400 per year and individuals making just $8,700 annually. And the sales-tax increase will apply to essentially everything we buy, regardless of income.
Think of the firefighter saving to put his or her kids through school. Or the single mother paying two college tuitions while also taking care of her elderly mother. Or even single millennials in high-cost urban areas trying to pay off student loans while saving for a down payment on their first home. Those are the people who are targeted by Wolf's tax increases.
Think, too, of 763,000 small-business owners who pay their taxes through personal rates. Increasing taxes on these job creators could force them to cut back employee pay, slow or freeze hiring altogether, or, worst of all, lay off employees.
Wolf tried to soften the blow of all these new taxes by offering property-tax cuts beginning in 2017. Yet the immediate tax increases are more than triple any potential tax relief. His proposal also wouldn't prevent local jurisdictions from raising taxes on their own. Right after Wolf's budget address, Mayor Nutter proposed a 9.3 percent property-tax increase for Philadelphians. There's nothing in the governor's plan prohibiting other mayors from doing the same.
We have paid for the broken promises of politicians with higher taxes long enough. Last year, as a candidate, Wolf was proposing relief for the middle class. But once in office, politicians find other things they need. This year for Wolf, it's education. The year before that, Gov. Tom Corbett needed to increase the gas tax for transportation. And so on.
Pennsylvanians should send a message to Harrisburg that we don't need any more of the tax-and-spend status quo. We need fiscally responsible leadership.