Wednesday, April 16, 2014
Inquirer Daily News

Editorial: Getting serious in Harrisburg: Time to end the budget crisis

Link: Getting serious in Harrisburg: What the legislature has to do to end the budget crisis [Daily News]

Editorial: Getting serious in Harrisburg: Time to end the budget crisis

Link: Getting serious in Harrisburg: What the legislature has to do to end the budget crisis [Daily News]

ATTENTION, Harrisburg: The time for political posturing is over.

Pennsylvania needs a responsible state budget, and we need it now. As the stalemate drags into its fourth week, it's time for the recalcitrant deadlocked Legislature to take the steps necessary to deal with the $3.2 billion deficit and secure the state's future.

By law, the state is supposed to have a budget in place by the start of the new fiscal year, July 1. Instead, taxpayers have been treated to an epic battle between Gov. Rendell and the Republican-controlled Senate. Both sides agree about trimming spending, but Rendell believes a tax increase is necessary to avoid draconian cuts in services. Republicans have dug in their heels and refused to consider any hike.

As a result, the state can't spend any money. Roughly 77,000 government workers have already received only partial paychecks. Tomorrow about 33,000 will see a payless payday and the entire workforce will be without a check on Aug. 7. Suppliers and vendors have also seen payment delays.

It's incredibly unfair for employees to be expected to work without compensation, even if they're going to get back pay after the budget passes. Rendell and the Legislature should immediately pass a stopgap budget - a temporary measure that would fund government until the stalemate ends - so workers aren't held hostage to politics.

This would also allow both sides some breathing room to develop a compromise. Ultimately, a real agreement won't happen unless lawmakers get serious about finding new revenue.

Rendell has already proposed deep cuts in state programs. But anything further - and specifically the plan proposed by the Senate GOP - would cause unacceptable reductions in essential services. We're going to need tax increases to get through the worst state budget crisis in decades.

If lawmakers enact a tax increase, Pennsylvania would be far from alone in doing that. According to an analysis by the Center on Budget and Policy Priorities, 30 states have already raised taxes to deal with deficits and at least 10 others are considering taking the step. That includes our neighbors New York, New Jersey and Delaware. In fact, Pennsylvania would be outside the mainstream if we use only cuts to deal with the deficit.

Luckily, there are some fairly good options available. The commonwealth can make up part of the deficit by targeting a few key areas.

For example, we could join other states in taxing oil companies on the natural gas they extract in Pennsylvania. We could also delay the planned phaseout of taxes on business earnings and assets. Finally, we could increase taxes on cigarettes and start taxing cigars and smokeless tobacco. Combined, these levies would generate $430 million.

 

BUT EVEN ALL of these proposals wouldn't completely cover the budget shortfall. To get serious about dealing with the deficit, state lawmakers are going to have to pass a broad-based tax increase. No one likes to raise taxes, but it's the only real option for dealing with the $3.2 billion hole.

There are two options: increasing the sales tax or the personal income tax. Nothing should be taken off the table, but an income-tax increase is the best option. It's the fairest of all state taxes, one of the most predictable, and Pennsylvania has the second-lowest state income-tax rate in the nation. Increasing the tax by half a percentage point would generate nearly $1.1 billion in new revenue.

So it's time for lawmakers in Harrisburg to come together and do what's right for Pennsylvania.

We need a budget now.

About this blog
Every year, city government spends slightly more than $4 billion. Where does all that money come from? More importantly, where does it go? Are we getting the most bang for our tax buck? “It's Our Money” is a joint project between Philadelphia Daily News and WHYY, funded by the William Penn Foundation, designed to answer these questions.

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