PA House Republicans’ Cost Savings Plan
In an attempt to balance the state budget without raising taxes, the House Republican Caucus has developed a plan to reduce spending in the Pennsylvania State Budget.
One interesting idea proposed is providing the service of processing other states Supplemental Security Income (SSI) Payments (Pennsylvania processes its own). Processing other states SSI payments could generate revenue for PA and also reduce payments other states make to outside processing firms.
The House Republicans also recommended reducing or eliminating Medicaid eligibility errors. The state Auditor Generalfound a Medicaid error rate of 14%, costing taxpayers upwards of $1 billion. Reducing the error rate will save taxpayers, and focus Medicaid spending on those who truly need, and are eligible for, the aid. The Commonwealth Foundation has highlighted the need for Medicaid reform previously.
One proposal, however, implementing a Voluntary Streamlined Sales and Use Tax Agreement, seems questionable as a cost saver, but could simply function to increase the tax – and tax compliance burden -in Pennsylvania. The Republicans’ plan is to collect sales taxes from online and catalogue transactions, from those who voluntarily comply. The Tax Foundation found states that have enacted the Streamlined Sales and Use Tax Agreement actually carry higher tax rates than the national average. The Commonwealth Foundation has written about the consequences of internet taxes, such as job loss, in the past.