The Pennsylvania budget stalemate has drug into its fifth month but information has now emerged about a possible compromise. State Rep Warren Kampf provided an update via email yesterday which contained the following budget highlights:
- The plan is reported to contain $350 million in new education funding. What that would mean to Phoenixville, Spring-Ford or Tredyffrin-Easttown is not yet defined. However, each school district would receive some additional funding over last year.
- There is an historic and significant reform for public employee pensions. The plan that is being offered as a compromise would, among other things, put new hires into a “hybrid” defined benefit/defined contribution plan; this reform is estimated to save $10 billion over time.
- There is also some form of liquor privatization/reform being offered as part of the plan.
- Lastly, some of the gaming revenues (approximately $600 million per year as of this writing) could be used to help off-set the spiraling state pension liabilities.
As you may have read there are also significant shifts in tax policy and revenue enhancements:
- This proposal is said to contain as much as a 21 percent increase in the sales tax (from 6 percent to 7.25 percent) with the revenue raised providing dollar-for-dollar school property tax reductions for all private homeowners (commercial and rental properties will see no relief.) It is reported to reduce property tax bills by 20 percent to 35 percent. Also included will be some kind of a voter referendum requirement for any new school property tax increases.
- A 75 cent per pack cigarette tax increase is in the plan.
Some of these proposals in the budget compromise need to be supported – increased educational funding for school districts and pension reform. Yes on both accounts.
The state’s pension system is unsustainable and pension reform is essential for the future of school districts statewide. Legislation to reform the state’s two underfunded pension systems has been a focus for Kampf since he took office. Maybe pension reform’s time has finally come and some kind of hybrid plan will be included in the state’s final budget.
The resurrection of legislation to privatize the state’s liquor system has emerged as part of the budget discussion. Rather than closing the state stores, legislators are floating the compromise suggestion to expand the hours of the existing stores as well as permitting wine to be sold by beer distributors, grocery stores, etc. (Allowing Wegmans to sell wine makes this a winner suggestion in my book.)
On the tax and revenue side of the budget, a tax increase for cigarettes has my full support but I cannot imagine any PA school board members supporting the a voter referendum requirement for school property tax increases. It’s obvious what would happen if you left the decision to taxpayers whether or not they wanted a property tax increase.
As for hiking the state’s sales tax from its current 6 percent up to 7.25 percent with the added revenue going toward reducing property taxes — ?? For property owners, a reduction of 20 – 35 percent in the property tax bill is very appealing, but what about the non-property owners, they certainly don’t gain anything. Is the property tax reduction worth the higher retail tax at the cash register? The proposed rise in sales tax would make Pennsylvania the second highest US sales tax, right behind California’s 7.5 percent.
Personally, I’d like to know what happened to the natural gas severance tax in this budget. The drilling continues and yet another year passes without an extraction tax.
According to his email, Kampf states he has “…not made any commitments to vote for or against the framework. Without all the details it would be foolish to make such commitments. “ Kampf says that there’s the proposed budget plan does not contain severance or extraction tax on the natural gas drillers and that he would be open to such a tax.
Rep. Kampf would like to hear from his constituents regarding the proposed budget compromise. There’s a short 15 question online survey – click herefor the link. Or you can call his office, 610.251.2876 to offer your views on the proposed budget.