HARRISBURG, Pa. — Standing outside the Capitol here — an ornate jewel wedged in the center of this recession-beaten industrial city — the businessman and political neophyte Tom Wolf told the gathered crowd this week, “I’m going to be an unconventional governor.”
Actually, Mr. Wolf already is. The only person to defeat a sitting governor in the four decades that Pennsylvania has allowed its chief executive a second term, Mr. Wolf is also the only Democrat in the country who picked off a Republican governor at a time when his party’s record was only slightly less calamitous than that of the Tampa Bay Buccaneers.
Democrats, Seeing Opportunity, Nominate Businessman for Pennsylvania GovernorMAY 20, 2014
Under the tutelage of its former Republican governor, Tom Corbett, Pennsylvania became a petri dish for austerity policies, including huge budget cuts and tax decreases, all at a time of slow growth and ballooning pension obligations. Unlike in Kansas, where Gov. Sam Brownback was awarded a second term after pushing for large tax cuts that blew a crater in that state’s budget, voters here showed Mr. Corbett the door.
Credit Matt Roth for The New York Times
Now, firmly ensconced in the Capitol — a Renaissance-style building so majestic he said it once brought tears to his eyes — Mr. Wolf now faces a $2 billion budget gap, an embattled public school system and a legislature with the largest Republican majority since the Eisenhower administration, led by two very conservative members.
Further, energy prices are in steep decline just as Mr. Wolf seeks to persuade reluctant state lawmakers to increase taxes on fracking, the natural gas extraction method that had revitalized the fossil fuel economy here.
In summary, this job may not be as sweet as a Pennsylvania Farm Show milkshake.
Mr. Wolf says that taking on his first elected job at age 66 under tough circumstances is the natural next step of his life narrative. “A $2 billion budget deficit in a perverse way excites me,” he said in an interview at his sparse transition office, where a red tie sat lonely on his empty desk, as if waiting for a serious moment to leap to the neck. “I am a guy who dropped out of Dartmouth to join the Peace Corps and then went back to work in a lumber company.”
Mr. Wolf, who as governor will live in the same house in Mount Wolf, near Harrisburg, that his parents brought him to as a newborn, made his money running the Wolf Organization, a kitchen-cabinet firm owned by five generations of his family. (The town is named for the governor’s great-great-grandfather.) In 2006, he and his cousins sold the business, and a bit later he became Gov. Edward G. Rendell’s secretary of revenue, stepping down in late 2008 for his first run for the governor’s post.
He remains a wealthy man — he contributed $10 million of his $15 million primary campaign costs. His transition expenses were raised through donations from friends and family — rather than taxpayers — including himself. He is declining a salary and benefits as governor. “I’m trying to do this the right way,” said Mr. Wolf, who also will not let his staff members accept even tiny gifts.
He has no political role model, but sees leadership as a combination of management skills, creative policy thinking and deep roots to the place one serves. “I look around and I don’t see anybody who combines all those things,” he said. “I see people who are good managers and don’t give a whit about the place they are trying to govern.”
Like nearly every other state, Pennsylvania was hit hard by the 2008 recession. But a variety of features make the state’s recovery more challenging. Years of short-term fiscal bandages, like injections of tobacco-tax and stimulus funds, and deferred payments to managed-care companies, could not cover falling revenues. It is one of the few energy states that does not have an extraction tax on fracking, and it also has a flat income tax of 3.07 percent, meaning that boom times for the rich do not help the budget here as they do other states.
While revenues have been relatively flat, the use of state services has not. Medicaid and pension costs have ballooned. According to a report by the Independent Fiscal Office, Pennsylvania’s pension contributions are expected to increase 18.3 percent to nearly $1.7 billion this year.
Mr. Corbett elected not to increase Medicaid under the Affordable Care Act, leaving millions of dollars in Washington that could have defrayed health care costs in the state. And he cut the state’s capital-stock and franchise tax, lowering revenues by roughly $600 million a year. Between 2010 and 2014, 27,000 education jobs were lost in the state, among other cuts.
Mr. Wolf believes a 5 percent severance tax on natural gas production could help shore up the schools. “I want this industry to really work in Pennsylvania,” he said. “I oppose what New York did,” referring to a ban by the governor there. “What we need to do is do it right,” he added.
Education was the biggest issue during the campaign. “I have polled for 24 years, and I could not find another gubernatorial campaign where that was the main issue,” said G. Terry Madonna, director of the Franklin & Marshall College poll.
“Some of our systems,” Mr. Wolf said, “are more segregated than before Brown v. the Board of Ed. We have to look at making our tax system fairer.”
Pennsylvania does not currently have a set funding formula for local school districts, which underlies much of the funding inequity, education experts say.
“There certainly has been a groundswell for reforming the way schools are funded in the state,” said Matthew Steinberg, an assistant professor of education at the University of Pennsylvania and an expert on school funding. “The heart of the debate is what that formula would look like.”
But before the state addresses changes to its tax system — something Mr. Wolf said needs to be “more fair” — or school funding or a new fracking tax, Republicans are almost certainly going to be looking for a pension system overhaul. “The big drama will be over those initiatives,” Mr. Madonna said.
While Republicans controlled the legislature before Mr. Wolf was elected, it has gotten more conservative. The State Senate’s long-serving majority leader, the moderate Dominic Pileggi, was tossed out in favor of a far more conservative senator, Jake Corman, in November, demonstrating the growing power of conservative lawmakers in the heavily gerrymandered state.
“We must continue to promote fiscal responsibility,” Mr. Corman said this week after Mr. Wolf’s speech, and “ensure that government lives within its means.”
Mr. Wolf may wish to extend an olive branch to Republicans, but his first move looked more like a Venus fly trap; he rescinded more than two dozen appointments made at the very end of his predecessor’s term, including the state’s new open records officer.
Mr. Wolf insists he can work with any form of legislature, and at least one lawmaker agrees.
“Tom is about as rooted in Pennsylvania as you can get,” said Senator Bob Casey, a fellow Democrat. “He has a quiet toughness that people may not appreciate. He is not going to spend the next three years second-guessing himself.”