Here's a win-win fix for Pa. budget

GOOD NEWS, I've figured out how to solve Pennsylvania's budget mess.

In a nutshell - and, trust me, there are lots of nuts involved - it's big new spending without big new taxes.

Democratic Gov. Wolf gets to keep his promise of more money for schools and such. Republicans running the Legislature get to keep their fiscal fidelity.

It's a win-win.

How, you might ask?

Concede Republicans have the votes to stop new broad-based taxes; then grab money that's already there and pick up some that should be.

For example, a little known fact.

Retailers collecting the state's 6 percent sales tax (8 percent in Philly) get to keep 1 percent of the amount they collect and remit to the commonwealth.

Been that way for decades; last year they kept $82.5 million.

About half the states allow such skimming; we're the only northeastern state that does, and one of only 13 states with no dollar limits.

Originally, before computers, the intent was to help defray bookkeeping and mailing costs. But come on. Payments now are all electronic.

Phil Mattera, of Good Jobs First, a D.C.-based nonprofit, non-partisan policy research group, studied the issue some years back and found Pennsylvania a national leader, behind only Illinois and Texas, in giving away sales tax revenue.

"It's kind of a funny practice that not too many people are aware of," Mattera says. "It was meant to help small retailers . . . but now that everybody's highly computerized it's a kind of an entitlement program, especially for mega-retailers."

In 2008, for example, Mattera's study estimated Walmart's "compensation" for collecting sales tax in Pennsylvania was more than $3 million.

Maybe we should let the state keep the taxes it assesses rather than sharing with retailers while thinking about raising taxes.

Just a thought. And we start with $82.5 million.

Next, let's look at a few tax-exempt items Wolf proposed taxing as part of his overall plan to raise the sales tax to reduce property taxes.

(Spoiler alert: Property taxes aren't going to be reduced because the sales tax isn't going to be raised, but let's cherry-pick some items from Wolf's plan.)

There is no sales tax on cable TV.

The state Revenue Department says such a tax would yield $260 million next year. What? People gonna stop watching TV?

If we tax gum and candy, we get another $108 million.

If we tax stuff such as spa treatments, tattoos, tanning and hair removal? A whopping $157 million.

I don't know. Must be more tanned, smooth and tatted folks out there than I think.

Taxing legal work except for family and criminal law? Another $152 million.

So let's see. Just by changing some sales tax stuff, we get $759.5 million; a very good start.

Now, how about looking at what some, including the conservative Commonwealth Foundation, see as corporate welfare?

The Pennsylvania Racehorse Development Fund, created after the state legalized gambling in 2004, is budgeted to get $253 million.

How about this?

How about we first develop, as our Constitution mandates, a "thorough and efficient" education system to help poor rural and urban areas and then develop racehorses?

Just some of those funds, say $40.5 million, could be used to bet on the future instead of the ponies.

That brings us to $800 million in new revenue without a broad-based tax increase and without upsetting those who bow and scrap to the gassy gods of Marcellus.

That's close to half what the Wolfman wants. Half-a-loaf's way better than none.

And the bulk of this new revenue can be had without a lot of pain, unless you're a lobbyist for the retail industry, Comcast, Hershey, the organized bar or . . . uh oh, wait . . . I see a potential problem here.

I just remembered how public policy really gets made. And that's not good news.

Email: baerj@phillynews.com

Blog: ph.ly/BaerGrowls