Pennsylvania Governor Thomas Wolf unveiled his latest budget effort on October 6, 2015. This proposal focuses on resolving the budget impasse through an increase in the state personal income tax rate and by introducing a severance tax on oil and natural gas extraction in the state.
The state personal income tax rate would rise from 3.07% to 3.57%. The Governor is proposing a natural gas drilling tax of 3.5%, plus 4.7 cents per thousand cubic feet. The introduction of the severance tax would not displace the impact fee that is currently imposed on drillers in Pennsylvania.
To counter the tax rate increase and imposition of the severance tax, the proposal offers property tax relief to approximately 250,000 seniors and disabled homeowners. The Governor intends to spend $400 million of the new revenue to fund the education system in Pennsylvania. The Governor also appears to have abandoned corporate tax reform; an increase in the sales tax rate (from 6% to 6.6%); and the expansion of the sales tax base that he offered up in his proposed budget in March 2015.
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