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Budget, Transition in Focus

Governor-elect Wolf has named the leaders of his Transition Team, with former DEP Secretary Katie McGinty heading things as his chief of staff. Other members of the Wolf transition leadership include leaders from business, labor, academia, finance and government. This team has to not only assess the jobs being done by state agencies, but identify key cabinet appointments, and help outline plans for Wolf’s first budget proposal. Wolf’s first priority was announcement of a Budget Deficit and Fiscal Stabilization Task Force.

All face an immediate problem. The Independent Fiscal Office has identified a $1.85 billion structural budget deficit for the new Governor’s first year in office, which puts even more pressure on both Wolf and legislative leaders to solve this problem without reducing services. House and Senate Republicans have already said that keeping government spending and taxes in check are priorities for the new legislative session.

This clashes with Wolf’s stated goals that include significant increases in state education funding, replacing the state’s HealthyPA Medicaid program with a more extensive federal program, along with strengthening state environmental and jobs programs. He plans to fund these increases with a severance tax on natural gas, modernization of the state liquor system, closing the Delaware loophole, expansion of some sales taxes, and making changes to the state’s personal income tax laws.

Governor-elect Wolf has focused on what Pennsylvanians can do “together,” and Democratic leaders are saying his victory means the public will DEMAND the General Assembly help him achieve his goals. But most governors have learned that’s not the case during their first year in office. And that’s not even been the case in the last four years, when Republicans controlled the House, Senate AND Governor’s office.

The fiscal mess has many “experts” predicting that besides reversing the state’s Medicaid programs and accepting federal funding, Wolf’s first move will be the call for passage of a 5 percent severance tax to help fill the budget hole. Polls show public and bipartisan support – which is not surprising, given the fact that people would always rather have someone else put up the tax dollars if at all possible. But opposition to a severance tax is also bipartisan, and more based on geography and ideology. The leadership of both chambers has opposed severance taxes and could forestall action or votes for months.