Current deal doesn’t go nearly far enough
Not long after Gov. Tom Wolf took office in January, he put forward a bold budget proposal with big ideas that offered landmark changes to how Pennsylvania funds education.
Months after halting and contentious negotiations between Wolf and Republican legislative leaders, however, it seems little will change with how the state functions, although there could be one very big tax increase that will hit middle- and low-income earners hard in their wallets.
The broad framework of the budget deal announced last week hinges on an increase to the state’s sales tax, which would raise the rate to 7.25 percent in Washington and Greene counties. An early analysis shows the 1.25-percent increase would raise about $2 billion a year in revenue, a portion of which would boost basic education funding, while the remainder would offer a still-to-be-determined property tax cut for homeowners.
As usual with our state government, it doesn’t go nearly far enough.
A severance tax on natural gas extraction was a centerpiece of Wolf’s initial budget proposal designed to bolster state funding for education even more.
Of course, it never stood a chance in the Republican-controlled Legislature.
Even though Wolf said he will continue to pursue a natural gas severance tax in future years of his first term, that seems unlikely to happen with the current political makeup of this Legislature.
With that in mind, maybe it’s time to restructure how the existing impact fee is distributed.
The argument against a natural gas extraction tax is the drilling industry already pays its “fair share” through the Act 13 impact fee that has been in effect for four years. But all of that money – in some cases, massive sums of money – goes directly to the municipalities were drilling occurs.
Cumberland Township received $918,147 in drilling money this year – the most in the state – and four of the top six payouts in Pennsylvania go to communities in Washington and Greene counties. Morris Township in Greene received $865,695, while Morgan and Amwell townships each received more than $700,000.
But the school districts in those communities don’t get a dime from the impact fee money. That should change to offer some financial support to the school districts where drilling is most prevalent.
Meanwhile, the budget deal should alter its approach that focuses solely on raising the overall sales tax to boost school funding. Instead, why not remove some of the nontaxable items from that list? Or, why not levy a modest tax – say 1 or 2 percent – on clothing and shoes?
How many people from West Virginia or Ohio shop for clothing on our side of the state line because those items are not taxed? How much revenue is the state losing that could go toward education?
In the end, any budget deal can’t be just about raising new revenue. It must also be about correcting systemic problems facing Pennsylvania.
Will the Legislature have the courage to tackle the public pension crisis facing the state?
There are rumblings a 401k-style plan would be offered to new hires, which is long overdue as pension obligations continue to eat into the budget.
And will there be changes to the outdated manner in which the state sells wine and liquor? It’s highly doubtful the entire state store system will be dismantled, but it should at least be modernized to offer more choices and convenience.
If Wolf and the state Legislature only focus on a sale tax increase and leave these other major items off the table once again, it will be a lost opportunity and just another example of our elected leaders kicking the can down the road.
This state budget deal still has the potential of offering bold solutions to long-neglected problems. Hopefully, this moment isn’t wasted.