- Associated Press - Tuesday, June 21, 2016

HARRISBURG, Pa. (AP) - Democratic Gov. Tom Wolf backed off his latest proposal for an increase in sales or income taxes, saying Tuesday his budget priorities can be met without it.

Wolf also lowered his request to the Republican-controlled Legislature for new money for public schools as closed-door budget negotiations plowed toward the July 1 start of the new fiscal year.

He also echoed Senate Democrats’ concern over balancing the budget on tax collections from what could be the state’s biggest expansion of gambling since it authorized casinos in 2004.

No budget vote had been scheduled as of Tuesday, and tight-lipped negotiators have reported no agreements on key elements of a budget with nine days until the fiscal-year deadline.

Wolf now says his priorities are a balanced budget that carries $34 million more for heroin addiction programs and $250 million more for public schools. He had initially sought $350 million for public schools, a 6 percent increase.



“I think we can do all this,” Wolf said during a regular appearance on Pittsburgh radio station KDKA-AM. “A balanced budget, the increase in education, and heroin initiatives without a broad-based tax increase. I think we’re making some good progress. I think we’re very close.”

Wolf and lawmakers spent much of the last year mired in a bare-knuckled partisan fight over Wolf’s first budget, an embarrassing crisis that all sides seem determined to avoid repeating, particularly in an election year.

In February, Wolf proposed a $3.3 billion spending increase paid for by a $2.7 billion tax package, anchored by higher taxes on income, sales, tobacco products and Marcellus Shale natural gas drilling. That would have raised the budget to more than $33 billion. Part of his aim was to wipe out a 2016-17 deficit projected at $1.8 billion by the Legislature’s Independent Fiscal Office.

It was not clear Tuesday whether Wolf will accept the sort of one-time budget-balancing stopgaps that have prompted five credit rating agency downgrades in the past four years.

At this point, a budget of somewhere below $32 billion now seems more likely. Potential new revenue sources include a cigarette tax increase and tax revenue from a gambling expansion, according to Democratic lawmakers.

First up for a vote this week in the House of Representatives is expected to be legislation to authorize casino-style gambling in bars, fraternal clubs, truck stops, airports and off-track betting parlors, and on casino-run websites and online mobile applications.

Supporters, including numerous House Republicans and Democrats, tout it as a source of cash to limit the size of a tax increase necessary to balance the budget.

Wolf has not come out in opposition to a gambling package, and it is not clear whether it can pass the Senate, let alone the House.

But on Tuesday, Wolf said he shares the concerns of Senate Minority Leader Jay Costa, D-Allegheny, that the gambling expansion under consideration in the House carries “somewhat questionable” longer-term revenues that may pose a threat to collections from casino gambling and lottery sales.

“I share those concerns, and I think we have to be very careful about that,” Wolf said.

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