The $2B question has no answer in budget deal xx xx
By MARC LEVY
HARRISBURG – It is the $2 billion question: Which Pennsylvania homeowners will get the biggest benefit from a higher state sales tax?
Gov. Tom Wolf and leaders of the Legislature’s huge Republican majorities must somehow agree on an answer if the package – intended to underwrite a rebate on school property taxes – is to get across the finish line with a sprawling budget deal that is evolving in closed-door negotiations.
Tax increases in Pennsylvania have passed on the strength of votes from Democrats and moderate Republicans in recent years.
But this bargain between Wolf and Republicans may not necessarily be embraced warmly by those lawmakers, even with the pressure of ending a five-month stalemate that has inflicted considerable damage on Pennsylvania’s schools, counties and social safety net.
For Democrats, raising the sales tax is a red flag that the tax code is becoming more regressive.
“That’s a lot to ask a Democrat to vote for that,” said Sen. Daylin Leach, D-Montgomery. “We usually ask Republicans to vote for that.”
For Wolf, the tax trade-off is part of his overall goal to narrow disparities between wealthier and poorer school districts. Those disparities are aggravated, in part, by a school funding system that relies heavily on local wealth.
The distribution of the money is critically important to Wolf. To him, helping the neediest districts can offset a sales tax increase that otherwise makes Pennsylvania’s tax structure more regressive. A Republican-drafted bill that passed the House in May, however, had a dramatically different philosophy: Bigger proportions of rebates went to wealthier suburban districts where tax bills are higher, prompting Democrats to complain that it ignored poverty.
The differences are wide.
Under a formula initially proposed by Wolf, Philadelphia would get 14 percent of the money; under the House GOP plan, it got 5 percent. Under Wolf’s plan, wealthy Lower Merion would get less than 1 percent; the House GOP plan would give it almost three times as much.
Even if Wolf gets concessions from Republicans, it is not clear who will vote for it.
Many conservatives already are signaling that they will oppose it, and suburban Republican moderates are not a sure thing.
An analysis of state data on sales tax collections shows that Allegheny, Bucks, Chester and Montgomery counties are likely to pay more in additional sales taxes than each would get back under Wolf’s initial proposal last March.
“If there’s real significant tax relief it might be worth voting for the tax increase,” said Rep. Kate Harper, R-Montgomery. “I haven’t seen the numbers, and I’m a little skeptical.”
Rep. Marguerite Quinn, R-Bucks, said her district already is a “donor district” that sends more tax dollars to Harrisburg than it gets back in subsidies.
“My concern with a shift to sending our dollars to Harrisburg is they get put through some funky formula and we don’t get dollar-for-dollar back,” Quinn said. “So I’m a proponent of the local control with it.”
Democrats are not automatic supporters, either.
Rep. Mike Sturla, D-Lancaster, said he must see a formula that sends the money to the most desperate communities and households, especially considering that the poor will help finance it.
“If you want to take a regressive tax and make it more regressive by saying, ‘Well whoever has the highest tax bill gets the relief,’ well then guess what, I’m not voting for that under any circumstances,” Sturla said.
The net school property tax reduction would be $1.4 billion since, under the agreement, about $600 million in slot-machine gambling receipts from casinos that currently go to property taxpayers would shift to pay down school employee pension obligations.
That amounts to a 23 percent net reduction on $6 billion in school property taxes collected from primary residences.
If Wolf and Republican negotiators can get to a compromise, Rep. Michael O’Brien, D-Philadelphia, suggested that lawmakers will swallow hard and vote for proposals that are attractive only to end the stalemate.
“There’s something in that budget for everybody to hate,” O’Brien said, “but it’s time to end it.”
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Marc Levy covers politics and government for The Associated Press in Pennsylvania. He can be reached at firstname.lastname@example.org. Follow him on Twitter at www.twitter.com/timelywriter. His work can be found at bigstory.ap.org/author/marc-levy.