The Road Not Taken

Mark Price |

Over the past few years, many other states, similar to Pennsylvania in 2011 and again today, have faced critical choices about whether to raise state revenues, hold firm to “no new taxes” or even cut taxes further. Today we released the results of our examination of the experience of four states, as well as Pennsylvania, and the different roads they each took.

Two of the states – California and Minnesota – raised taxes to improve their fiscal health and to reinvest in education. The other two states – Kansas and Wisconsin – followed the same path as Pennsylvania under Gov. Corbett, cutting taxes to varying degrees and cutting education spending.

The results of this policy experiment are in:

  • The two states that raised revenues have enjoyed percent job growth since 2010-11 that is one-and-a-half to three times larger than the three states – including Pennsylvania – that cut taxes.
  • The states that increased taxes have seen revenue growth – both as a result of the tax changes and as a result of stronger recoveries – of 15 percent and 19 percent. Kansas has seen its revenues fall 5 percent and Pennsylvania and Wisconsin have seen revenue growth of 5 percent and 7 percent, respectively,  a meager enough recovery from the Great Recession to make fiscal stability and reinvestment in vital programs difficult.
  • State school funding per pupil has increased 15-21 percent in Minnesota and California while plunging 9-14 percent in the three tax-cut states. That means the ratio of funding per pupil in Minnesota and California compared to any of the other three states has shifted 26-41 percent in just four years.

It seems likely that this 26-41 percent shift in relative funding per student means that fifth-graders today in California and Minnesota have a substantially better chance in life than fifth-graders in Pennsylvania, Wisconsin, and Kansas.

As we look back five years from now on Wednesday’s vote, what will be the story that we have to tell about the choice lawmakers in Harrisburg made on that fateful Oct. 7, 2015? Will it be remembered as the day that legislators in both parties began governing based on the lessons of Pennsylvania’s own – and other states’ – past experience, the day they made common cause to raise revenues essential to giving all kids a fair chance – and to fixing the state’s finances? Or will this Wednesday be remembered as a day when Pennsylvania lawmakers again rejected common sense, dooming our children to more years of disinvestment in their schools?

Read the full analysis here