For the first time in the state's five-month-old budget standoff, Gov. Wolf and Republican legislators indicated Monday that they had reached a tentative agreement on key pieces of the state's long-overdue spending plan.
Senate Majority Leader Jake Corman (R., Centre) said negotiators were discussing a $30.26 billion budget that would boost education funding through a sales-tax hike, offer corresponding property tax relief, and reform the state's pension system.
While signaling that agreeing to a tentative framework was a significant step forward, Corman cautioned that many details still needed to be worked out and approved by legislators and Wolf.
"We're not done by any stretch," he said.
One key aspect would likely be raising the state sales tax from 6 percent to 7.25 percent, Corman said. That would allow for about $2 billion in new revenue, which would be put toward a major property tax reduction and allow the state to increase basic education funding by $350 million in the fiscal year that started in July.
Three sources with knowledge of the discussions had said the sides were talking about boosting total education funding -- including special education and pre-kindergarten -- by $750 million over two years, but Corman said the focus was on this year alone.
Details about the framework -- including potential reforms to the state pension system or privatizing state-owned liquor stores -- remained in flux.
Increasing education funding through a tax hike would be a boon for Wolf, who has long argued for sending more money to schools though a permanent new revenue stream. But Corman and House Majority Leader Dave Reed (R., Indiana) said another of the governor's stated priorities -- implementing a new levy on natural gas drillers -- was now off the negotiating table.
The first-term Democrat and Republican legislators have for months struggled to agree on any specific numbers for the long-overdue spending plan. Both sides said last week they had been inching closer to a final accord, without offering specifics on where they believed they were making progress.
Wolf campaigned on significantly increasing education funding in Pennsylvania. He had originally proposed increasing basic education spending by $400 million in the current fiscal year, plus an additional $100 million on special education and $120 million on early-childhood education.
To fund those increases, Wolf has called for a variety of tax hikes, which Republicans have steadfastly opposed. Wolf's plan to hike the personal income tax to send more money to schools was voted down overwhelmingly in the state House last month.
It was not immediately clear how the new spending increases would be funded. Republicans have long said they favor alternative revenues -- such as selling the state's liquor stores, or expanding gambling options -- while Wolf has said he prefers a permanent funding stream.
Reed told Republicans last week that talks had been progressing and a final deal could be reached by Thanksgiving. But he made no mention of finding major new revenue sources for school funding.
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