Highlights of Gov. Tom Wolf’s spending plan for 2021-22

• The Associated Press
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  The Associated Press (AP) is a U.S.-based not-for-profit news agency headquartered in New York City.

(Harrisburg) — Highlights of Pennsylvania Gov. Tom Wolf’s spending plan for the 2021-22 budget year that starts July 1:

The big picture

• Increases spending through the state’s main bank account to $37.8 billion. Including about $900 million for the current fiscal year, Wolf is seeking authorization for another $5.5 billion in new spending, or about 17% of this year’s enacted budget of $33.1 billion. Counting federal pandemic aid, spending on state operations would rise 10% from $36.5 billion to $40.2 billion.
• Projects a 14.5% increase in tax collections to $40.1 billion, not counting about $1.8 billion collected in the current fiscal year because of tax deadlines postponed during the pandemic. Increases the tax rate on income, but not sales, the state’s two biggest sources of revenue. Most of the new revenue would go to public schools and social services, including fast-growing Medicaid rolls and to reduce waiting lists for services for the intellectually disabled.
• Calls for lawmakers to raise the state minimum wage to $12 an hour on July 1, up from the federal minimum of $7.25 an hour, with annual increases of $0.50 until the minimum wage reaches $15 on July 1, 2027.
• Seeks to expand a bond-funded redevelopment grant program by $1 billion and make the money available to schools for the cleanup of lead, asbestos and other environmental health hazards in school buildings, as well as to help school districts expand high-speed internet service to help educate children online.

Taxes and fees

Personal income taxes: Raises the state’s personal income tax rate to 4.49% from 3.07% to generate $3 billion in the first budget year and about $4 billion a year after that. Expands exemptions so that lower-wage earners — and two-thirds of all wage earners — will pay the same or lower taxes, administration officials say. Exemptions would rise to the first $15,000 of income from $6,500 per taxpayer and to $10,000 from $9,500 per dependent.

Corporate income taxes: Restructures how the state would calculate corporate profits to adopt “combined reporting” and reduces the current 9.99% tax rate on annual steps to 5.99% in 2026. The change is estimated to produce an additional $208 million in revenue in 2020-21 but a tax cut of $404 million in 2025-26.

State police fee: To help fund the state police budget, imposes a fee on each municipality that would be driven by incidents and coverage area, and weighted by population, income and whether a municipality has its own full-time or part-time police force. The administration estimates the fee would produce $168 million.

Spending by category

Human services: Grows $1.5 billion, or 10%, to $16.75 billion.

Pre-K and K-12 education: Grows $2 billion, or 18%, to $11.2 billion.

Higher education: Grows $4.5 million, or less than 0.3% to $1.8 billion.

Corrections and parole: Shrinks $150 million, or 5%, to $2.7 billion.

Pensions: Grows about $70 million, or 2%, to $3.7 billion.

State police: Grows $6 million, or under 0.5%, to nearly $1.4 billion.

Debt: Grows $116 million, or 10%, to $1.3 billion.