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Governor Wolf Vetoes Entire 2015-16 Budget
In an effort to force the General Assembly into supporting his request for $4.5 billion in new taxes, including increases in the Personal Income and Sales and Use Taxes, Governor Wolf did what no other Governor in over 45 years has done – vetoed the entire General Appropriations Act.
The General Assembly sent the Governor a responsible, no-tax-increase spending plan on June 30. Minutes after receiving the budget, which included a 3.6 percent overall increase in spending and $370 million in new funds for public education, the Governor said “no” and vetoed the entire bill, resulting in Pennsylvania now entering its third week with no approved budget.
Many of us are wondering why Governor Wolf, who appeared to be a reasonable new leader, is insisting on such massive tax increases when we can meet the needs of State government without the necessity of taking more money from families and businesses. I remain hopeful that a compromise can be reached so we can appropriately fund the services the people of Pennsylvania and Lancaster County depend on.
Governor Wolf Vetoes Historic Pension Overhaul Legislation
With the support of public sector unions, last week Governor Wolf vetoed historic legislation that would have moved new State employees, public school teachers and legislators out of a defined benefit (pension) program and into a defined contribution (401-K) program. The plan would have no effect on current retirees or current employees.
Pennsylvania’s pension crisis is crippling State government and local schools. In the budget the Governor vetoed, the General Assembly had to budget an additional $700 million just to meet the requirements in 2015-16. Clearly, that is not sustainable, and changes must be made to more align the current system with benefits packages available to the vast majority of private sector employees.
Pension costs are among the top cost-drivers for our schools, so there is little doubt that property taxes will rise again because of the Governor’s veto. Unfortunately, the only solution Governor Wolf has proposed is to borrow money through pension obligation bonds, which is currently unlawful.
I cannot, in good conscience, impose costs on our children and grandchildren to pay for the failure of State government to properly manage the pension system. I have also said that I cannot consider new revenue sources, such as those proposed by the Governor to fund his proposed spending increases, without addressing our current unfunded liability, which is a staggering $58 billion.
Governor Wolf Vetoes Liquor Privatization Legislation
Among the many vetoes that Governor Wolf issued in the last several weeks was a proposal to move State government out of the direct business of owning and operating liquor stores. Pennsylvania is in the small minority of states that continues to be in the alcohol business.
The General Assembly sent the Governor a proposal that would have shifted this system into the private sector and helped raise valuable new revenues to help fund important and necessary State programs, including public education. The Pennsylvania Liquor Control Board would have continued to regulate the sales of alcohol and continued its important work of making sure liquor sales and use was done in accordance with existing laws.
Unfortunately, Governor Wolf, citing the need to protect over 4,000 union jobs, rejected this plan within hours of receiving the legislation. This means that Pennsylvanians, at least for the foreseeable future, will continue to pay for the State liquor monopoly system, which means higher prices, less convenience and additional cost.
Governor Wolf Vetoes New School Funding Formula
Despite his administration’s open support for the work of the Basic Education Funding Commission, Governor Wolf vetoed the General Assembly’s most recent School Code bill, which would have required all new education funding to be driven out through the new school funding formula.
The Basic Education Commission was specifically created to address the gross inequities in how State funds are provided to schools. Lancaster County schools, many of which are growing, have been unfairly treated through the existing formula and would have benefited under the new formula. Specifically, high-taxed, low-income districts would have finally realized more equity.
Unfortunately, this veto was issued as part of the Governor’s overall “budget package” vetoes. This means that we will have to work to enact the new formula through other legislation. Simply put, we cannot continue to send disproportionate amounts of funding to schools with declining enrollment or those schools which are relying on State support in lieu of making a strong local funding effort.
What’s Next in the Budget Impasse
I am hopeful that we can work to put together solutions that are agreeable to Governor Wolf and the General Assembly. Governor Wolf’s proposed taxes have been unanimously rejected by the House of Representatives (not one Democrat or Republican voted for that plan), so clearly we need to move in a more moderate direction.
I am concerned about how this impasse could impact our social service agencies and schools. Please know that I will do all that I can to support a responsible path forward; however, that cannot come at the expense of our working families, businesses or economy.
Video of my comments regarding the state budget and related legislation is available here.
Senate Box 203036