Gov. Wolf to call for more education spending, tax on shale in new Pa. budget Tuesday

HARRISBURG — As he gears up for his reelection campaign, Gov. Wolf  on Tuesday will unveil the fourth and last state budget of his first term, hoping to avoid the partisan fighting that has doomed some of his proposals and led to chronically late budget passage.

When he presents his annual fiscal wish list to a joint session of the Republican-controlled legislature, Wolf is expected to stay away from earlier controversial proposals to increase the personal income tax and sales tax in order to reduce property taxes.

His nearly $33 billion plan, according to sources familiar with it, will not go there, and he will again push for savings through consolidating certain agencies. The Democratic governor, however, is likely to advocate a boost in the minimum wage and a new tax on natural gas drillers, two proposals popular with his party's base that have gone nowhere after fierce resistance from many GOP lawmakers.

Still, the incentive to show leadership and ensure a smooth budget process this year is high for both sides in the annual tug-of-war.

It's not just Wolf whose name will be on the ballot in November. All 203 seats in the House are up for grabs, as are half the 50 seats in the Senate. In many areas, those races could be hotly contested, as Democrats attempt to take advantage of President Trump's unpopularity to chip away at the GOP's dominance in both chambers.

And several big-name legislators who are deeply involved in budget negotiations, including House Speaker Mike Turzai (R., Allegheny) and House Majority Leader Dave Reed (R., Indiana), are seeking higher office. Turzai is gunning for Wolf's job, and Reed is running for the House.

"I wouldn't look for anything overly provocative," said political pollster and analyst G. Terry Madonna of Franklin and Marshall College. "This will be a reelection budget."

Wolf has kept details of his plan close to the vest, but late last week announced that he will again propose boosting funding for education, a staple of his budgets. He would increase funding for public schools by $100 million; early childhood education by $40 million; special education by $20 million; and the State System universities by $15 million.

He is also expected to announce a $50 million job training initiative, called PASmart, to enhance STEM and computer-science skills and apprenticeships.

On the opposite side of the ledger, Wolf will benefit from a somewhat brighter revenue picture. According to the state's Independent Fiscal Office (IFO), revenue estimates are holding up well, meaning the state is not heading into the new fiscal year with the gaping deficits of recent years.

The IFO in November projected a $600 million deficit in the next fiscal year, if the state does not spend more on discretionary programs or adopt any new revenue-generating policies — a figure more than two times smaller than last year's projection.

A projection that federal tax changes will lead to higher consumer confidence as well as strong revenues from the state's expansion of gambling have helped fuel the upswing.

"Things are definitely better and stronger than they were this time last year," said Matthew Knittel, the IFO's director.

Still, Wolf is expected to hark back to past proposals to raise new dollars and save money.

For instance, he is expected to again push for a volume-based tax on natural gas drilling in the Marcellus Shale. The governor is also expected to propose consolidating the Departments of Health and Human Services and renew his call for municipalities without their own full-time police force to pay a per-person fee for state police coverage.

Despite the work ahead, there has been little pre-budget buzz. Part of that, longtime political observers said, is pure budget fatigue: the last three years have been dominated by wrangling over the state's finances, with the budget getting resolved weeks or months after the July 1 deadline.

The current $32 billion budget, for instance, wasn't resolved until last October. Wolf's first year in office was marked by a historic impasse that dragged on for nine months.

"We're hoping to see just a more reasonable proposal that hopefully Republicans and Democrats can work together on and get done in a timely fashion," Reed said Monday. For Republicans, he said, that would mean no new taxes and reduced spending.