On the General Assembly Passing a Revenue Bill (HB 1198)

John Neurohr and Marc Stier |

Pennsylvania Budget and Policy Center Director Marc Stier made the following statement on the General Assembly Passing a Revenue Bill (HB 1198):

“The General Assembly finally acted today to meet its constitutional responsibility by voting to raise the $1.3 billion in revenues needed to fund the recently passed appropriations law. But while the revenue package may technically balance the budget for 2016-17, in three respects it does not solve the long term fiscal problems of Pennsylvania.

“First, too much revenue ($709 million) comes from one-time rather than recurring sources ($627 million). As a result, the state’s long term structural deficit has not been closed. Next year will bring another debate about how to fund the government over the long term.

“This problem is exacerbated by a second one: the revenue package relies too heavily on dubious sources. Expected revenues from liquor privatization, internet gaming, the license fee for a second Philadelphia casino, and the tax amnesty program are all questionable.

“Third, while new taxes on cigarettes and other tobacco products will discourage unhealthy practices, these taxes, as well as the tax amnesty program, exacerbate rather than reduce the inequity of our tax system. Pennsylvania will remain one of the “terrible ten” states that tax low income households at far higher rates than high income ones.

“The revenue package includes one important reform. The General Assembly has recognized that the sales tax vendor discount, which reimburses businesses for the cost of collecting the sales tax, has been made obsolete by computer technology. It has finally been capped.

“The entire package is inferior to the revenue proposals put forward by Governor Wolf in March. And noticeably missing from the package are smart ideas for raising revenues by instituting a severance tax on natural gas; reforming the corporate income tax to fully close the Delaware loophole; and taxing income from wealth at a slightly higher level than income from wages and interest. All of these proposals would generate recurring revenue while placing most of the burden on those who can most easily afford it.”