Tom Wolf budget address

Gov. Tom Wolf at his 2015 budget address.

(Commonwealth Media Services)

State revenues are surging to the finish line.

A new report from Pennsylvania's Independent Fiscal Office shows that state general fund revenues are now likely to finish the 2014-15 fiscal year June 30 some $594 million over its initial projections.

That's good short-term news that also puts the IFO's latest estimate $374 million ahead of the revenue base upon which Gov. Tom Wolf built his sweeping 2015-16 budget plan this winter.

But while any surplus is good, it's not enough, Wolf said Monday, for him to make unilateral adjustments to the historic tax increases he's called for to pay for ramped-up education funding and other objectives.

Wolf said that's because, as IFO leaders noted Monday, much of the unexpected revenue growth is the result of one-time maneuvers, like a cut in the time period for the state to claim dormant bank accounts, and a single-case inheritance tax payment of $100 million.

The IFO report also cited a surge in corporate net income tax payments that its experts said they can not explain, and that it is therefore uncomfortable pinning much 2015-16 growth on.

As a result, revenue growth is expected to be much flatter next year, IFO Executive Director Matthew Knittel said. The office's revenue projection for 2015-16 is just $97 million higher than the Wolf Administration's current forecast.

Wolf sees no need to adjust.

"I'm where I was before (with the tax proposal). We have a structural budget deficit, and we need to do some work to address that," Wolf said after an unrelated public appearance in Harrisburg.

That means, as budget discussions at the Capitol begin to heat up, the governor is sticking with his net $4.6 billion tax plan including: double-digit increases in state income and sales tax rates; a new tax on natural gas production; and higher taxes on tobacco products.

Wolf insists his plan will be cost-neutral or a net savings to most middle-class homeowners, because of a companion plan to use some of the new tax proceeds for a reduction in school property taxes.

The IFO, however, concluded in a separate report last month that while Wolf's plan does land most heavily on high-income households, its cumulative effect will result in some net tax increases in all income categories.