Upon the successful passage of the state budget, legislators have returned to their districts for summer recess. At this time, Keystone Liberty will review and highlight the many legislative achievements and stalemates of this session before adjourning for the summer.
Achievements:
School choice: This year’s budget expands the successful educational improvement tax credit. This program offers a lifeline to students trapped in the most underperforming and violent schools while saving school districts and taxpayers hundreds of millions of dollars.
Corrections Reform: The General Assembly passed comprehensive corrections reform that will save taxpayers hundreds of millions of dollars. The legislation will reduce recidivism and increase public safety as corrections officials implement parole and treatment policies proven to be smart on crime.
Unemployment Compensation reform: Lawmakers passed a plan to attain solvency in the state’s unemployment trust fund. By paying off the debt to the federal government with a state bond effort, Pennsylvania will save more than $2 billion and prevent scheduled tax increases on employers.
State Spending Limits: Spending increases in the 2012-13 budget were kept at a modest two percent. This increase adheres to the Taxpayer Protection Act, which limits increases in government spending to a rate less than inflation and population growth.
Taxes: There will be no tax increases. In addition, there will be a continued effort to phase out the capital stock and franchise tax and the elimination of the inheritance tax for family farms.
Stalemates:
Property Tax Elimination: Despite gambling revenues and voter referenda for increasing property taxes, school taxes assessed to homeowners have increased more than 50 percent in ten years. Eliminating property taxes in exchange for an increased state sales and income tax would more fairly distribute the funding responsibility for public schools.
Pension Reform: Pension contributions for state employees are projected to skyrocket by 600 percent in just six years. With more than $30 billion in unfunded liabilities, pensions pose a serious threat to the budget. The obligations will have to be met with dramatic spending cuts or tax increases. Shifting state employees to a 401(k) plan, like the private sector, and adjusting the benefits formula for future service is vital to long-term sustainability.
Prevailing Wage: The commonwealth’s archaic wage laws have increased labor costs for state and local governments and school districts by as much as 20 percent, or $2 billion a year, in extra construction costs. Repealing or reforming prevailing wage would provide several hundred million dollars worth of mandate relief for schools, governments and taxpayers.
Liquor privatization: PA is one of only two states that maintains a government monopoly over the wholesale and retail of wine and spirits. The government enterprise represents a conflict of interest as the PLCB has a dual mission of promoting consumption while enforcing drinking laws. The state stores are bleeding cash and its blunders are costing taxpayers and consumers. Privatization gives an influx of cash to the treasury while providing consumers with better prices and better selection.
Corporate Tax Code: Pennsylvania has the highest corporate tax rate amongst the states and is frequently ranked as having one of the worst business climates. Closing tax loopholes and eliminating corporate welfare in exchange for reduced tax rates will greatly improve the state’s business climate.
Transportation funding: The Governor’s Transportation Financial Advisory Commission estimates that Pennsylvania currently faces a growing $3.7 billion funding gap for infrastructure needs. While some lawmakers assert that PennDOT needs more revenues, PA already taxes and spends more than most other states. There are a plethora of policy options that will save and prioritize the billions already spent.
