2016 Budget: Same Song, Different Dance!

Pennsylvania is, once again, in it’s annual budget spectacle. The Commonwealth found itself in a position of passing a budget with tax increases but no solution on where to go to find the revenue to pay for the things they budgeted.

Residents and think tanks alike have, year after year, pointed out the flaws of writing a budget with increases without appropriating the necessary funding in an up front and transparent matter but like many other things the public points out, The General Assembly simply chooses to ignore that voice.

We are looking at a budget that promises about $1 billion in new spending increases that will then require an appropriations bill to pay for it all.

With the median household income in the state at $52,000 it would take that household 19,231 years just to pay for the increase in spending…just the increase!   I would like to remind everyone that 10,000 people a year are already losing their homes because of taxes!

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The political cartoon above paints a somewhat accurate picture but it misses one important factor.  The General Assembly doesn’t really pay for anything as a body.  The taxpayers of the state pay for it all.   They create the debt and then they send us the bill for it!   They just haven’t yet decided on how they can apply the taxes in hidden venues to the working families (like the Act 89 Gas Tax) so we don’t really see the tax increase like we would if it was a PIT or SUT tax.   We can then direct our anger at the business world for the higher prices instead of looking at the hidden taxes thanks to inventive government taxation.

Don’t get me wrong.  I don’t want to see the PIT or SUT increased.  We need to reserve that for something like eliminating the School Property tax through a revenue neutral tax shift (see SB 76).

I became active on Facebook because of the School Property Tax Issue and in the process I have friended several state legislators so I can watch what they post on their pages.  It came as no shock to me that after the budget was passed legislators were boasting about how much money they got for the districts they represent.

These postings came from legislators on the right and the left.  It’s almost as though their proud goal was to increase state spending so they can return to their constituents and boast about returning a small portion of their taxes to their districts to help solidify their re-election bids.

While many people despise the concept of “bringing home of the bacon” it would appear we only despise it when other legislators do it.  When it comes to our own districts, it’s perfectly acceptable even it means higher taxes for all.  If it wasn’t, why do they keep getting re-elected.

Legislators who oppose School Property Tax Elimination  through SB 76 as well as the campaign funding special interests who feed them the talking points insist that the property tax problem in Pennsylvania is a spending problem and not a problem with the tax itself.  I fail to understand why they can’t understand that it’s both.   Obviously, as long as the legislators can kick the taxes down to working families through some other tax it’s perfectly okay in their mind.

So the legislators admit that they know there is a spending problem.   They went in to the budget process once again admitting it in a way that demonstrates there is full knowledge that this spending problem exists.  Their solution: spend more!

The amount of money this budget spends outstrips current revenue tax collections by over $1 billion dollars. That increase in spending in this year’s budget is equivalent to FIVE TIMES the rate of inflation.

Governor Wolf wanted more than the Budget gave him.  The Governor didn’t get what he wanted.  Then again, maybe he did.

Think of it like those messy divorces where one spouse extorts the other spouse claiming to want everything  when in reality they would settle for a portion of that.  It’s simply strategic negotiation to ask for more than you want so that it appears that you are compromising when you give in to get what it was you really wanted all along.

The House passed the budget with an overwhelming majority.  The Senate amended it  (with only 3 dissenting votes)  and sent it back down to the House.  The House approved it and sent it to the Governor.

Then came the stalemate.  After increasing spending without necessary cuts (you know, revenue neutral tax shifts like we see with SB 76) they can’t seem to agree on what to tax to get the money necessary to fund it.  Part of the reason for that is that the way the want to fund these increases impacts different parts of the state if different ways.  It’s that whole taxes for thee but not for me mentality again!

The budget becomes something like Christmas where our legislators just  use their  charge cards (that would be us, the taxpayer) to provide for bonus gifts to all the campaign funding special interests and now that the credit cards bills come due they have to start paying the bills.  The money, however, just isn’t there. They have to get is from somewhere and that somewhere is out of our back pockets.  And one way or another they’ll come out afterwards with their spin about why all of it was necessary.

Increasing spending is somehow always justified.  They can always find reasons for increasing spending but it’s sort of like me trying to explain to my wife why I need that $5,000 Cal Flame 4-burner Liquid Propane Gas Grill with side burner from Lowe’s.  She’ll show me the checkbook and then show me the budget explaining the differences between want and need.  Besides, she’ll tell me,  our existing gas grill works just fine. This, however is a concept that seems to be alien to most of our legislators.

The Senate amendments shifted more money to Higher Education  with a few other changes to ultimately come up with a budget that was slightly less than the House Budget. Never mind that the more money they get from the state, the higher we see tuitition rates soar. 

Also don’t applaud because the total spending was slightly less.  It was so slight that it is very little difference.  They also played a budgetary trick to accomplish the goal.

In order to meet that $40 million increase to Higher Education, the Senate took a $95.3 million annual expense for bond-funded, economic development projects out of the general fund budget.

That is not a tax cut. That’s also not a revenue neutral tax shift.  We are still on the hook to pay for it but that cost for the Commonwealth Financing Authority obligations will simply be tacked on to other revenue needs.  All this did was push the total need for new taxes and other income to about $1 billion, after accounting for their hoped for increases in liquor sales.

Here are some of the spending expenditures in the new budget according to the Commonwealth Foundation:

  • A $200 million increase in the state’s main aid line for K-12 education – Wolf’s top priority – to a record $5.985 billion. It also provides $50 million in increased funding for special education services, pre-kindergarten and Head Start programs.
  • $15 million to support new initiatives to tackle the heroin and opioid addiction crisis gripping much of Pennsylvania, and to provide additional money for existing drug and alcohol treatment lines.
  • Significant new funding to reduce waiting lists for home- and community-based services to help seniors stay in their own homes and to help adults with intellectual disabilities stay in their communities.
  • $11 million in funding to recruit and train 180 new state troopers to help maintain force levels in the face of 324 current vacancies and an anticipated surge in near-term retirements.
  • A 37 percent increase for mosquito control, to $5.4 million, as the state attempts to ward off mosquitos carrying both the West Nile virus and, new this year, the Zika virus.
  • The plan also increases spending for General Assembly operations by $18.6 million, to $313.5 million; and $13.1 million more, for a total of $355.5 million, for the state’s court system.

 

There is also $10 million in funds to help cover costs for the Democratic National Convention to be held in Philly later this month.    It’s buried as a $10 million line item to the Department of Community and Economic Development titled “for regional event security and support.”

It’s unclear exactly how that $10 million would be spent, but getting it in the budget wasn’t a partisan battle, as you might imagine. That’s because when the Republican National Convention was held in Philadelphia in 2000, Gov. Tom Ridge committed $7 million in cash to help fund the event and the security surrounding it. (However, in the 2000 budget, the line item was titled “National convention.”)

Some of the proposed revenue, we’re told, will come from a $500-$600 million increase in  cigarette and other tobacco taxes. Study after study shows that revenues from sin taxes are unpredictable and decline over time never yielding what the legislators claim it will yield.  Other aspects include gaming expansion and wine reform but these are are one-time revenue streams. If these revenue estimates fall short or fail to grow, lawmakers may be looking at a personal income or sales tax increase next year to bridge the gap.

It is also ignoring one important factor.  While they don’t want us looking at the historical record….the legislative revenue predictions are almost always exaggerated.  They  rarely meet their expectations meaning it creates more needs for increasing taxes in the future.  This years Independent Fiscal Office report of revenue collections for the past fiscal year revealed that total revenue came in approximately $98 million below expectations.

Here’s one example:  In the midst of the budget talks PennDot weighed in claiming unless an alternative funding source needs to be found to pay for state police operation, PennDOT officials project that by the end of this decade, it will consume nearly all of the approximate $1 billion in new funding expected to be available annually for road and bridges from the 2013 transportation funding bill known as Act 89.

That $1 Billion came from increasing the fuel tax and motorist  fines and fees with the promise that it would pay for infrastructure.  This is yet another one of the failed projections by state legislators when it came to the benefit and impact of the fee on gas.

The promise of infrastructure repair isn’t panning out.  The state police’s share of those dollars is expected to grow by at least 4 percent a year as more municipalities look to save money by cutting or reducing their local police force and ask an increasingly manpower-challenged state police to fill the void.  Those municipalities have, in many cases, been forced to make those local cuts because of unfunded mandates at the state level.  The other option to the municipalities is to raise the local property tax, all driven by the state.

Meanwhile, the fees, fines and taxes going into the motor license fund is growing at less than 1 percent a year.  Among the ideas on the table so far is getting the nearly 70 percent of municipalities that rely on the state police for full- or part-time coverage, according to a 2012 Pennsylvania State University study, to pay a fee for the service.   Got that, more State mandated increases in local taxation that are necessary because the State has done such a poor job at meeting their own expectations.  (Not to mention the expectations of many of the taxpayers.)

Don’t forget that one of increased items in the budget is the $11 million in funding to recruit and train 180 new state troopers to help maintain force levels in the face of 324 current vacancies and an anticipated surge in near-term retirements.

Remember the gambling revenue.  Remember how that was going to dramatically decrease your property taxes.  I remember being told that but that’s not what happened.  You are paying more in property taxes now then you were then as monies from the gambling profits were diverted into other areas.

There have been rumors of a tax increase that will impact natural gas heating bills. Of course that natural gas tax will be paid for on the backs of the 54% of the homeowners who use natural gas, supposedly a cleaner form of energy, to heat their homes.  Nothing like targeting one sector of society to pay for things through taxes that will go be spent on others.

There’s also some talk about a tax increase on bank savings accounts.   After all if you have enough money to actually set some aside for a rainy day they have to get a bigger slice of that.

The bi-partisan nature of this years budget in the increased spending is sent out as though this is a good thing. It’s all Kum-Ba-Yah for the Governor and Legislators.

Let’s put that in words that actually reflect what just happened.   Democrats and Republicans alike in the house and the senate came together to agree that Pennsylvanian’s have to pay more in taxes some of which goes to increase Walking Around Monies (WAM’s) so they they can buy more votes to get re-elected to they can pass another budget where the working families of this state will have to pay even more.

After the passage of the House Budget Rep. Dave Reed posted on his Facebook Page:

This evening, the House passed a budget bill with the majority of both the Republican and Democratic caucuses voting in support of the proposal. There is NO increase in the income or sales taxes.

Others mirrored that sentiment….NO increase in the income or sales tax as though they aren’t really raising our taxes.

They do the same with the local property tax.  Even though much of the driving costs of local education spending comes through unfunded mandates that have to paid for through local taxation; even though the increased cost at the local level is, in large part, a result of the actions of the state legislators, they often brag about not increasing our taxes.  Some of them tell us, when we complain to them about our property taxes, that it’s not their problem.  We should be complainging to the school districts and those who simply don’t know any better believe them

Pennsylvania is already on an unsustainable path.

With no substantive Pension Reform package most school districts will only see a repeat  of this years budget where the a large number of school districts called for local increase.  In many cases this was above the Act 1 limits which, once again, were rubber stamped approvals through the Department of Education.  Remember how they promised that Act 1 was going to curb spending?

The promise of Voter Referendum through Act 1 becomes a joke since the 3 remaining options to by-pass the referendum are the target of state legislators for their unfunded mandates.

In just two short years the budgets have managed to  increase spending by more than $2 billion.   That’s not nearly as much as the Governor wanted but for many Pennsylvanians, it’s far more than they can afford.

That $2 billion almost matches the total amount of spending increases in the previous 8 years.  The 8 year total increase was $2.85 billion.

While the future funding solution remains a mystery, one thing is certain…the General Assembly dropped the ball again and that means more taxes for the working families of the state.

Frankly, I find the lack of transparency and the depths the average citizen in this state has to go through to try and find out what is actually happening in this budget debate.  We deserve to know how much more debt we’ll have to shoulder and how we are going to be forced to pay for it.

I would suggest visiting the following website:

http://usdebtclock.org/state-debt-clocks/state-of-pennsylvania-debt-clock.html

It’s the Pennsylvania debt clock that shows that the debt for a family of 4 in the state of Pennsylvania $42,600.  That’s about $10,000 less than the median household income for working families in the state.

The cost of living increase for seniors living on social security will not cover the increase in taxes at the local, state and federal level much less provide them with the ability to keep up with the rate of inflation.

Pennsylvania already has it’s share of problems with attracting other businesses to the state unless it contains a lucrative Corporate Welfare tax break.  Hiding more taxes within the business community that are passed on to consumers will force more businesses to go elsewhere while hurting more of the local family-owned businesses.  If the goal is to put the small business community out of business to make way for the Corporate chains, then Pennsylvania legislators  are doing what they need to do to make that happen.   I happen to think that’s a bad idea.

It is time for us all to begin asking some very serious questions.

How many of the governments tax relief and abatement programs are a result of the reckless spending of those we elect to represent us?

Of the growing number of people who have become dependent on supplemental food stamps, how much of this is the results of the spending by those we elect to represent us?

When it comes to  growing number of people not working (forget the unemployment number-they’re fabricated to paint an inaccurate picture of the declining workforce) how much of this is a result of the harm those we elect to represent us do to the small business Community?

How many more people in Pennsylvania will face bankruptcy, foreclosure and the possibility of losing their homes because of the pass the buck spending policies of those we elect to the General Assembly?

When do these legislators actually start representing us?

 

 

 

 

 

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