Executive Deputy Secretary of the Budget addresses crowd of Realtors® in Harrisburg

Executive Deputy Secretary of the Budget Brenda Warburton addressed a crowd of Realtors® in Harrisburg yesterday at the annual Public Policy Seminar about the yet-to-be-passed 2015-2016 budget, as well as the proposed 2016-2017 budget.

Warburton was introduced by PAR’s 2016 President Todd Polinchock.

In the 2015-2016 budget, Gov. Wolf proposed significant property tax reform and corporate tax reform, said Warburton. However, the tax reforms are not included in the 2016-2017 proposal. “The governor is still interested in reform, but it’s very clear we’re at a significant crossroads,” she said. “Currently, we do have a significant structural budget deficit. In 2015-2016, we are $510 million short. We are facing a $2 billion deficit next year.”

Warburton said consequences will be “very severe” if we cut spending. “Gov. Wolf wants to build a bipartisan agreement that funds state projects while dealing with the deficit.”

For the 2016-2017 budget proposal, Gov. Wolf has suggested $32.7 billion in total spending, driven by an increase of $1.6 billion of mandated obligations. Funding debt obligations and pensions are larger contributors to the total spending amount, said Warburton. She noted this is the last year for significant pension increases, but that we will have “extraordinary high pension costs for the next 20 years.”

To raise funding for next year’s budget, the governor has suggested several ways to generate income, such as increasing the personal income tax from 3.07 percent to 3.4 percent and applying sales tax to items like movie theater tickets and basic cable. He has also suggested an insurance premiums tax surcharge of .5 percent, an increase in cigarette taxes and an 8 percent tax on promotional games in casinos.

A budget shortfall could lead to some significant impacts, said Warburton. She said $1 billion would be cut for pre-kindergarten through grade 12 funding, no funding to school construction and no funding for state-related universities. “Gov. Wolf would like to make the key investments to prepare children for the future, we need these education programs,” said Warburton. She added there would also be $600 million cut for vital human services, increased debt costs and rising local property taxes, she said.

Gov. Wolf’s priorities for 2016-2017 are jobs that pay, she said. There are 5.87 million Pennsylvania residents employed, an all-time high. The unemployment rate is 4.6 percent, below the national average of 4.9 percent. The governor also would like to merge the Board of Probation and Parole with the Department of Corrections, and improve pensions, including reducing investment fees and consolidating investment management, she said.

“The governor has initiatives to cut spending, and to reduce spending in agencies. Agencies have been expected to do more with less,” she added.