PA Budget Discussion. Commonwealth Foundation CommonwealthFoundation.org

Transcription

1 PA Budget Discussion Commonwealth Foundation CommonwealthFoundation.org

2 Summary of Rendell s Budget Proposal Total Spending: $66.4 B, $29.0 B General Fund GF relies on $2.8 billion in federal aid (assumes additional $850 in Obama budget) Sales tax expansion & lower rate Reduces CNI from 9.99 to 8.99, imposes combined reporting Natural gas tax and cigar/smokeless tobacco tax New Taxes to Stimulus Transition Fund

3 Taxpayer s Budget Reduces taxes on working Pennsylvanians and job creators. NO: Rendell Increase Tax Revenues Eliminates corporate welfare, WAMs/pork-barrel projects, and special interests spending. NO: Rendell Increases Corporate Welfare Spending Balances the budget without accounting gimmicks, shell games, or new debt. NO: Rendell Proposes $1.55 in New General Fund Borrowing

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5 PA Taxes Add Up Pennsylvania has the 11th highest state and local tax burden. Pennsylvania taxpayers pay $4,463 per capita in state and local taxes, 10.2% of their income. Pennsylvania ranks 20th or higher in state and local total taxes, spending, property taxes, income taxes, corporate taxes, and debt per capita.

6 Spending Under Rendell General Fund spending increased by $9.1 billion, or 44.9% since $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 Largest growth in Education, Public Welfare, Transportation, and Treasury (Debt Payments) Pennsylvania General Fund Spending, to % $10,302,270 in Thousands of Dollars $7,035,388 $6,529, % $10,986, % $20,320,174 $29,430,399 $0 K-12 Education & Support Public Welfare TOTAL

7 39 States Have Lower Tax Burden

8 Sales Tax Reduction/Expansion 74 Exemptions Removed Products & services to be taxed: Accounting, Consulting, Custom Programming, Advertising, Funeral Services, Non-Prescription Drugs, Newspapers, Magazines, Personal Hygiene, Residential Telephone, Coal, Helicopters, Flags, Dry Cleaning, Candy and Gum, Financial Institution Fees, Gratuities $531 million in revenue for Est. $900 million per year increase thereafter

9 Business Taxes Corporate Net Income Tax reduced from 9.99 to 8.99 percent, imposes Mandatory Unitary Combined Reporting, Single Sales Factor, Eliminate NOL Cap Additional $66.6 million in FY , $167 million/year thereafter Combined reporting would create a disincentive for out of state companies to operate in Pennsylvania.

10 Natural Gas Tax Gov. Rendell proposes new tax on natural gas extraction to generate $161 million in Any tax should be tied to environmental costs, not slush fund for state Severance tax should be deferred until investors recoup their costs FL gives tax credits to small producers, TX reduced its tax by 80% in hard-to-drill areas, OK delays its tax until investments have been recovered, and LA suspended its tax to incent new drilling.

11 PA State Debt Debtor Debt Outstanding As of: Per Capita Source Total State $41,186,955,000 Dec $3,313 State $8,690,755,000 Dec $699 Governor's Executive Budget State Agencies and Authorities $32,496,200,000 Dec $2,614 Governor's Executive Budget Total Local $74,787,069,000 $6,015 School Districts $24,324,397,208 FY $1,956 PA Dept. of Education County/Municipal Debt (Est) $51,345,851,868 FY $4,130 US Census Bureau Total $115, 974,024,000 $9,328 Debtor Debt Outstanding 2002 Debt Outstanding 2009 Inc rease Percent Change Total State $23,119,191,000 $41,186,955,000 $18,067,764,000 78% State $6,270,391,000 $8,690,755,000 $2,420,364,000 39% State Agencies and Authorities $16,848,800,000 $32,496,200,000 $15,647,400,000 93% So urce: Go vernor's Executive B udget Pennsylvania State and Local Government Debt Pennsylvania State Government Debt

12 Unemployment Compensation Governor Rendell proposed increasing Unemployment Compensation benefits to get a one-time federal grant of $270 million This would cost Pennsylvania taxpayers another $60 million each year in perpetuity Pennsylvania s UC fund already owes $2 billion in debt to the federal government. Pennsylvania ranks among the top 10 states in highest unemployment taxes per employee

13 Public Welfare Fraud Audits Medicaid Improper Payments Auditor General Wagner estimates $325 Million in errors based on DPW error rate Based on error rate of audit -$1 Billion in fraud LIHEAP 18 people stealing more than $500,000 of LIHEAP funds Tens of millions in potential savings Special Allowance Program Labeled rife with mismanagement and poor oversight. Tens of Millions in Savings

14 Pensions Rendell proposes fresh starting fund, with graduated increases in contributions Only delays payment to future generations Must have reform Defined Contribution (e.g. 401-k plans) for all new hires Prohibit pension obligation bonds, DROPs Reduce benefits where possible

15 Spending Reforms Spending Transparency Database Show me the spending. HB 1880 passed PA House Repeal Prevailing Wage Laws Billions in unnecessary cost to construction Privatize Yellow Pages Government Start with state liquor stores Corrections Reform Reduce costs without jeopardizing safety

16 More Spending Reforms Eliminate Corporate Welfare PA is 2 nd to Ohio -$700 million/year in economic development spending Economy lags US School Choice Educational Improvement Tax Credit, charter schools, homeschooling cost much less Medicaid Reform Convert to vouchers to buy private coverage