Wolf to seek personal income tax hike to boost school funding

(*This story was updated at 3 p.m. on 2/2/21 with new information about the administration’s tax plan, further details on its education funding plan, and comment from education advocate Donna Cooper.)

Gov. Tom Wolf will ask state lawmakers to approve an increase to Pennsylvania’s personal income tax to pay for new funding for public schools. He is expected to unveil the plan when he makes his annual budget address to state lawmakers on Wednesday, the Associated Press was first to report.

In a statement, the Democratic governor said he will ask the Republican-controlled General Assembly for as much as $2 billion in new funding, with the biggest share, $1.35 billion, used to underwrite such core costs as teacher salaries and supplies, on top of the $6.8 billion they currently receive from the state.

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The money would be driven out through the state’s five-year-old school funding formula, which is supposed to level the playing field between the state’s richest and poorest school districts, the administration said in its statement.

“We can have a great public school for every child in every neighborhood in Pennsylvania, good job opportunities for everyone who wants them, and an economy strong enough to provide for everyone. It is possible to pursue a legislative agenda for this commonwealth that is good for families, good for businesses, and good for the economy,” Wolf said in the statement. “Most of all, I think your family’s future is important enough that we ought to just have this argument right now instead of putting it off until next year, and the year after that, and the year after that. Let’s make Pennsylvania an even better place to live, work, and dream big dreams for your kids.”

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The administration’s plan further calls for increasing payment rates for subsidized child care to keep pace with rates for private-pay families and ensure equal access to child care for all Pennsylvanians, it said. That would be paid for through $87.17 million in additional federal funds “to support these increased Child Care Works base rates and create a more stable business environment for child care facilities,” the administration said.

In addition, schools would receive $200 million more to help cover special education costs. That would come in addition to the  $1.2 billion they currently receive, in addition to other sums of money, the AP reported, citing sources.

If approved, the state’s personal income tax would rise from the current 3.07 percent to 4.49 percent. The administration’s plan would increase the exemption for the lowest earners, the AP reported, citing sources.

The administration’s said its tax proposal would increase the state’s tax forgiveness credit, resulting in many families having their taxes reduced or eliminated.

The administration’s plan allows for a tiered system for tax forgiveness:

• $15,000 for single filers 
• $30,000 for married filers  
• $10,000 allowance for each dependent 

Taxpayers with income at or below those thresholds would not owe any taxes. The percentage of tax forgiveness would decline by 1 percentage point for every $500 above the threshold, resulting in 100 percent tax forgiveness, the administration said.

Before he announced his plan Tuesday, Wolf had teased a much less ambitious 2021 policy agenda that reprised many proposals he’s already pitched to the General Assembly. The platform he outlined last week called for lawmakers to give fresh consideration to a minimum wage hike, an infrastructure package balanced on gas taxes, and recreational marijuana legalization.

But his new budget preview is Wolf’s most ambitious one to date, and one of the farthest-reaching executive policy agendas Pennsylvania has seen in recent decades, said Donna Cooper, a non-profit executive who served as a top policy aide to former Gov. Ed Rendell.

“This could be a watershed moment for the state,” Cooper said. “It’s almost an omnibus of ideas he’s been proffering over his time in office.”

But Cooper, who advocates for early childhood education as the executive director of Public Citizens For Children and Youth in Philadelphia, also argued that there’s “nothing radical” in Wolf’s plan.

Other states have already approved the same minimum wage policies and childcare programs Wolf is seeking, she said. A case pending in Commonwealth Court, meanwhile, could force the state to invest billions of dollars more in public education to improve student achievement.

Any delay in making those proposals a reality could put Pennsylvania at a disadvantage to neighboring states, she said.

“If there is anything we need to do after COVID, it is be a more modern state and show people we can solve problems,” Cooper said. “Any lawmaker who wants Pennsylvania to be a state people move to and want to live in ought to take this seriously.”