- Associated Press - Wednesday, November 5, 2014

MANCHESTER, Pa. (AP) - If he hasn’t already, Gov.-elect Tom Wolf will hear from lawmakers that he must be willing to compromise and curb growing costs if he wants to advance an ambitious agenda through the Republican-controlled Legislature that includes increasing taxes on the natural gas industry.

With their numbers reinforced after Tuesday’s election, Republicans sent that message Wednesday as the newly elected Democrat thanked supporters who came out to greet him at a restaurant near his home town of Mount Wolf in south-central Pennsylvania.

Wolf won nearly 55 percent of the vote in Tuesday’s election, making Republican Tom Corbett the first Pennsylvania governor to be denied a second term.

One big task before Wolf will be to deal with a yawning structural budget deficit as he tries to make good on promises to dramatically increase the state government’s share of public school costs.

Wolf, who will take office Jan. 20, campaigned on slapping a 5 percent severance tax on natural gas producers to make them pay their “fair share,” erasing school funding cuts under Corbett and restructuring Pennsylvania’s personal income tax.

He would not say Wednesday what his spring agenda will look like - “you’re just going to have to wait and see what I put out,” he told reporters - and his campaign never released precise details on how he would overhaul the income tax structure.

But he has said he wants to shift a bigger income-tax burden to higher earners and raise it so the state can shoulder 50 percent of public school costs, up from about one-third currently. Under Wolf’s plan, the income-tax increase would then deliver potentially a multi-billion dollar reduction to the $12 billion school property tax system, perhaps Pennsylvania’s most hated tax.

But Republicans already have concerns. For instance, they will want cooperation in trimming costs from the state’s huge public pension debt and growing social safety net programs. They also worried that tax increases will not solve any long-term problems.

“In all these issues that (Wolf) brings forward, the first conversation is going to be about the other side of the balance sheet,” said Senate President Pro Tempore Joe Scarnati, R-Jefferson. “We can agree to do all these things, but it’s not solving the problem. It’s feeding the fire.”

Some Republican lawmakers admitted they did not know much about Wolf’s income tax plan.

Sen. Charles McIlhinney, R-Bucks, said proposals to impose a severance tax and shift how schools are funded has possibilities in the Legislature, but lawmakers will demand say over where the money goes. If he’s willing to compromise, “I think he’s going to have some success,” McIlhinney said.

Sen. David Argall, R-Schuylkill, said that simply reducing school property taxes - rather than eliminating them - raises concerns that the tax rates will simply rise again.

“And then people get whacked with both higher property taxes and higher income taxes,” Argall said. “That’s going to be a very difficult proposal to sell to the members of the House and Senate.”

Wolf said he hopes he and Republican majority leaders can find ways to work together, and he gave ideas for savings, such as paring down payments to charter schools and changing management of pension funds. But he said more money will be needed to fix a structural deficit and meet new spending needs.

“We’ve got to be thinking in terms of billions of dollars,” Wolf said. A new source of revenue will be necessary, “and the 5 percent severance tax could fit that bill,” he added.


Levy reported from Harrisburg.

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