State House Sound Bites

Capitol reporter Katie Meyer covers Pennsylvania politics and issues at the Pennsylvania state capitol.

IFO says some revenues in Wolf's budget would be volatile

Written by Katie Meyer, Capitol Bureau Chief | Feb 8, 2017 10:48 PM
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A spokesman for the Independent Fiscal Office says under certain economic circumstances, some of the governor's projected revenues would come up short. (Photo by AP)

(Harrisburg) -- Governor Tom Wolf's budget plan relies heavily on $2 billion in cuts and savings, as well as a slew of new tax revenues the administration says will add up to about $1 billion.

Like any initial plan, those numbers are estimates. Some GOP leaders in the legislature have already raised early concerns about the accuracy of Wolf's projections.

Independent Fiscal Office director Matthew Knittel said some concerns might be valid.

The IFO puts out a formal budget report in April, but Knittel said based on some cursory analysis, there are a few areas where revenues could definitely be inconsistent.

One is the governor's proposed severance tax on natural gas drilling. Estimated at nearly $300 million, it's a significant part of the revenue package.

But Knittel said volatility goes with the territory.

"For the severance tax there is some uncertainty, as there always is because it will depend on the price, and it will be very sensitive to the price of gas on the market," he said.

Knittel says the sales tax expansions that account for a little less than $500 million of the new revenues will be pretty stable.

Wolf's estimates also factor in some changes to the corporate net income tax structure.

Knittel noted, that tax has significantly underperformed lately--an unforeseen weakness that has contributed to this year's multi-million dollar revenue shortfalls.

Published in News, State House Sound Bites

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