Pennsylvania State Budget




Recent Issues

Gov. Wolf's Proposed Property Tax Shift

MARCH 24, 2015 | Policy Brief by NATHAN BENEFIELD

As part of his 2015-16 budget proposal, Gov. Tom Wolf has proposed using some revenue from increased state taxes for school property tax relief beginning in 2016-17. This policy brief examines more closely the proposed tax shift.

Natural Gas Severance Tax

MARCH 20, 2015 | Policy Points by COMMONWEALTH FOUNDATION

A severance tax must be considered in light of the state’s total tax structure. Pennsylvania taxes the natural gas industry in many ways that don’t exist in other drilling states. For example, there is no corporate income tax or personal income tax in Texas or Wyoming, and the corporate income tax in West Virginia is 6.5%, compared to Pennsylvania’s 9.99% rate.

Collective Bargaining Transparency

MARCH 17, 2015 | Policy Points by COMMONWEALTH FOUNDATION

Government Transparency

State law empowers government unions to be the exclusive representative of employees during contract negotiations with an employer. This is known as collective bargaining. Negotiations can have far reaching implications because they set compensation for tens of thousands of public employees, costing Pennsylvania taxpayers billions of dollars a year. Despite the enormous impact on taxpayers, the negotiation process is shrouded in secrecy.





Recent Blog Posts

Wolf's Unfair Tax Shift

MARCH 24, 2015

School districts that receive the most in state funding today would also be the biggest winners under Gov. Tom Wolf's proposal for property tax rebates. Gov. Wolf’s proposed tax shift fails to deliver universal property tax relief, creates winners and losers (mostly losers) among school districts, offers no guarantee of lower property taxes, and creates an unfair system of doling out state money unrelated to tax burdens.   

Our most recent policy brief takes a look at Gov. Wolf's proposed property tax shift, part of his 2015-16 budget proposal. As we've noted, Wolf's plan would not provide property tax relief for at least one year after state taxes go up, and only 30 cents out of every dollar in new state taxes would go towards property tax relief in the first two years.

Moreover, Wolf's plan results in a net tax increase of around $1,400 per family of four, both next year and again in 2016-17 after the plan is fully implemented.

A separate analysis from the House Republican Appropriations Committee finds that 80 percent of school districts would be "losers" under this shift. That is, residents would pay more in sales and income tax increases than the district would get for property tax rebates. This analysis doesn't even consider that tax rebates would occur one year after tax increase, or the other state taxes Gov. Wolf is proposing to raise.

Our new analysis finds:

  • Across the state, the disparity in property tax relief under Gov. Wolf’s proposal varies widely. Based on current homestead exemptions, school districts would receive between $301 and $5,209 per homeowner.
  • The top 20 districts would get an average allocation of $2,860 per homeowner. The bottom 20 would get an average of $477 per homeowner.
  • The redistribution favors districts that currently receive most of their funding from state taxes, while districts getting the least relief currently raise more than 60 percent of their funding from local taxes.
  • Philadelphia would receive some property tax relief, along with reductions in the city's wage tax, sales tax and elimination of the local cigarette tax—essentially exempting Philadelphia residents from the statewide tax increase.

You can get the full analysis here.

For an interactive, sortable list of the proposed tax rebates, and current state and local revenue shares, click here.

posted by NATHAN BENEFIELD | 04:25 PM | Comments

Video: Debating Gov. Wolf’s Costly Budget

MARCH 23, 2015

Last week, CF President & CEO Matthew Brouillette appeared on PCN’s Call-In Program with Steve Herzenberg, the Executive Director of the Keystone Research Center, to discuss Gov. Wolf’s costly budget proposal. While Herzenberg defends Wolf’s budget proposal, Matt points to some of the hard realities it will bring to every family in Pennsylvania

Even though Gov. Wolf campaigned on a promise to not raise taxes on middle class families, his budget proposal would hit them with the largest tax increase in the state’s history

In attempt to soften the blow of this broken promise, Gov. Wolf wants to implement property tax rebates. Matt explains that even this will fail to help Pennsylvanians since, over the next two years, less than $0.30 of every dollar in new state taxes will be used for property tax rebates.

Rather than put a heavier burden on Pennsylvania’s taxpayers, Matt explains that the government’s focus should be on “creating opportunities for everyone and reduc[ing] the burden of entry into the workplace and the middle class that are trying to grow businesses.”

Watch the full discussion on PCN’s Call-In Program.

posted by JONATHAN REGINELLA | 02:46 PM | Comments

A Broken Promise Could Break the Bank

MARCH 20, 2015

During the gubernatorial campaign, Tom Wolf promised not to raise taxes on middle class Pennsylvanians. Despite this promise, the governor proposed a budget including the largest tax increase in the commonwealth’s history—a tax increase sure to hit Pennsylvanians of all income levels.

Under Gov. Wolf’s plan, taxes on income, sales, energy, tobacco, banks, and lottery winners would soar. Additionally, Gov. Wolf plans not only to increase the sales tax, but expand the list of items taxed under the higher rate.

To illustrate how Gov. Wolf’s proposal would leave Pennsylvanians with less, we applied his 6.6 percent sales tax increase to a fraction of the 45 newly taxed items under his plan. A single mother sending her child to daycare, a senior, like Kermit Bell’s mother, who relies on home care for her dementia, and a college student trying to further his or her education will all be hit under this sales tax increase.

Here are just five scenarios whereby Pennsylvanians could pay more to cover the gigantic increases in state spending:

Here is a list of the goods and services that would now be taxed under Gov. Wolf's proposal, as outlined by the Pennsylvania Department of Revenue:

Motion and Video Pictures

Financial Investment Activities

Real Estate Agent and Broker Services

Employment Services

Business Support Services

Travel Arrangement Services

Other Support, Office Administrative,

and Facilities Support

Waste Collection

Higher Education

Home Health Care Services

Other Ambulatory Health Care Services

Nursing and Residential Care Facilities

Social Assistance

Performing Arts

Transportation

Spectator Sports

Museums, Historical Sites, and

Similar Institutions

Amusement and Recreation Industries

Recreational Vehicle Parks and Camps

Personal Care Services

Death Care Services

Dry-cleaning and Laundry Services

Other Personal Services

Legal Services

Accounting Services

Specialized Design Services

Scientific Research and Development Services

Advertising Services

Professional Services, Architectural, Computer

Candy & Gum

Personal Hygiene Products

Newspapers

Magazines

Non-prescription drugs

Caskets & Burial Vaults

Flags

Textbooks

Catalogs & Direct Mail Advertising

Airline Catering

Commission

Horses

Construction of Memorials

Uniform Commerical Code Filing Fees

Investment Metal Bullion and Gold

Cable Television


While the governor insists property tax relief would ease the burden of his tax increases, the relief would not arrive until a year after the tax increases kick in, if at all. This sales tax increase and expansion is projected to take $1.6 billion out of the private economy next year and nearly $4 billion per year when fully implemented.

In addition to stunting economic growth, this tax increase would directly affect the standard of living for Pennsylvanians, as a larger percentage of their incomes would be devoted to paying higher taxes, leaving fewer dollars for their own needs.

This isn’t what Gov. Wolf promised during the campaign.

posted by BOB DICK | 09:50 AM | Comments



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The Commonwealth Foundation is Pennsylvania's free-market think tank.  The Commonwealth Foundation transforms free-market ideas into public policies so all Pennsylvanians can flourish.