It’s time to move forward on a Pa. tax bill
In states as different as Kansas and Illinois, Republican legislators have recognized reality and retreated from their extremist anti-tax agenda. But in Pennsylvania, Speaker of the House Mike Turzai and many Republican House caucus members still believe in the false prophecy of tax and budget cuts.
In states as different as Kansas and Illinois, Republican legislators have recognized reality and retreated from their extremist anti-tax agenda. Tax cuts on businesses and spending reductions have led in those states, as they have in Pennsylvania, not to prosperity but to stagnation, deep cuts to public investment, and huge budget deficits. Understanding that, Republican legislators have finally given up their old-time religion and voted to raise taxes to balance the budget.
But in Pennsylvania, Speaker of the House Mike Turzai and many Republican House caucus members still believe in the false prophecy of tax and budget cuts. And that’s why, almost two months after the deadline, the Pennsylvania budget is only half done. A general fund appropriation bill has become law. But while the Senate has enacted a tax code bill that would generate sufficient revenue to balance the budget, we are waiting for the House to take action on any bill to raise revenues.
All Pennsylvanians, liberal, conservative, and in between, should demand that Speaker Turzai bring the House back to work and raise sufficient revenues to balance the spending plan they already passed. And they should stand against a forthcoming House Republican plan to raid special state funds to balance this year’s General Fund budget. This fix puts the problem off for at most a year, but it does nothing to reduce the long-term structural deficit. And it compromises the integrity of many parts of the state budget.
The consequences of not funding the budget affect all of us:
The General Fund balance will turn negative by the middle of September. We are only going to get through the next few weeks because Gov. Wolf transferred money from the Motor Vehicle Fund to the General Fund. By Sept. 15, the General Fund will fall into deficit again.
Credit rating agencies have been waiting for the state to balance the budget rather than downgrading the bonds issued by not only the Commonwealth, but local governments and school districts. Their patience will run out soon if there is no plan in place to balance the budget.
Wolf has allowed most of the spending appropriated by the General Assembly to continue, but recently put $188.3 million of appropriated funds in budgetary reserve. At some point he will be forced to withhold far more discretionary spending if there is no plan in place to balance the budget. Given that so much of the budget is mandated by federal law or employee contracts, the only two places where large sums can be withheld are in support of schools and human service agencies.
We need an agreement on revenues to fund the budget soon. The Senate Tax Code Bill is a step in the right direction, but it could be improved. Its environmental provisions are troubling. Some of the taxes in the bill, such as the gross receipts taxes reinstated on natural gas and increased on electricity and telecommunications, fall too much on the middle class. The severance tax in the Senate bill is far too low.
These problems could be fixed in a final revenue package negotiated among the House, Senate, and governor. And if we really had our way, most of the new revenue would be raised by our Fair Share Tax Plan, which could generate $2 billion in revenue while cutting taxes on 60 percent of Pennsylvanians, and we would be able to make more significant investments in Pennsylvania communities than this austere budget.
But we understand that the General Assembly is not going to pass a tax plan that is perfect by anyone’s standards, let alone ours. Our government is divided between a Republican-controlled General Assembly and a Democratic governor. Republicans in the two houses of the General Assembly are themselves divided.
The political system created by the Pennsylvania Constitution, like that of the United States, often leads to this kind of division. To work well, these systems require political officials from different parties with different ideologies and representing different interests to be willing to compromise with one another.
Right now, Wolf, Senate Republican Leader Corman and Democratic Leader Costa and House Democratic Leader Dermody appear ready to do that. They understand that when an austere budget is underfunded by $2 billion, the time has come to raise revenues. They know that the time has certainly come to create a severance tax on natural gas drilling.
Yet Speaker Turzai won’t do what other Republicans here in Pennsylvania and in other states have done — recognize reality and let the House move forward on a tax bill. It’s time he do so.
Marc Stier is the director of the Pennsylvania Budget and Policy Center, a nonpartisan, statewide policy research project that provides independent, credible analysis on state tax, budget, and related policy matters
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