Be for real, Pennsylvania; raise the state income tax to pay your bills

The Pennsylvania legislature needs to rendezvous with reality. It can no longer live in the fantasy world where it refuses to cut spending, refuses to raise taxes to pay for that spending, and refuses to borrow money to paper over the $2.2 billion-plus deficit the state faces.

The reality is that the House and the Senate passed a $32 billion budget by wide margins and sent it to Gov. Wolf. He let it become law without his signature. But, when it comes to filling the hole between what the state will spend and what it will raise in taxes, the Republican-controlled House and the Senate have dithered, trying to advance “solutions” that only make the situation worse, all in the name of avoiding any tax increases.

One such “solution” collapsed Saturday. Speaker Mike Turzai (R., Allegheny) convened a caucus meeting of House Republicans to advance new ideas on how to balance the budget without new taxes. Sounds nice, but the outcome of that meeting proved it can’t be done. One idea was to borrow $1.5 billion and use it to plug the hole. Another was to stage a raid on special funds set aside for such projects as retraining workers, recycling, and highway beautification, and use the proceeds for general expenses.

The borrowing idea was shot down by horrified conservative Republicans as an idea that went against their core beliefs on government frugality. They were right; it was a terrible idea. Borrowing money to pay regular operating expenses is like mortgaging your house to buy groceries.

The raiding of the funds and some other ideas (for instance, a gross receipts tax on gas to be levied on consumers) never even made it to the runway.

So, we are stuck where we have been for months — at a standstill, with the Republicans who control the House and Senate unable to advance a plan. Their no-new-taxes pledge has become a noose around government’s neck.

These months of inaction and failed plans makes it clear that a general tax increase is needed.

The thing the legislature should pass is one of the several bills before it that would levy a severance tax on natural gas.  Wolf has a version. So does State Rep. Kate Harper (R., Montgomery) who has had the gumption to stand up to the leaders of her caucus on this issue. The plans differ in their particulars, but each can yield between $300 million and $500 million in new revenue a year. Pennsylvania is the only gas-producing state that does not have a tax on gas extracted. This should not be.

Second, though it is taboo to say it in Harrisburg, the legislature should increase the state’s personal income tax. At 3.07 percent, it is the lowest of all neighboring states. Most seniors and low-income residents are already exempt from the tax. A small increase can deliver the money needed.

Raising the tax by one-quarter of a percent — to 3.32 percent — would yield $1 billion in new revenue. And the cost to the taxpayer who makes the state average of $53,500 a year: about $2.90 a week — less than one Starbucks grande latte ($3.65).

The person needed to make this work is Wolf. He’s been on the sidelines during most of the debate, but he now needs to lead his party. It will take a lot of Democratic votes, along with those cast by moderate and sensible Republicans, to pass any increase in taxes.

That is the reality — and we all need to face it.