BLOG: Smoke, drink, gamble to fund #PABudget

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By Ted Kirsch, president

AFT Pennsylvania

Pennsylvania can’t smoke, drink and gamble its way to a balanced budget, but it seems Republican lawmakers are ready to try anyway. Instead of developing sustainable and innovative ways to bolster state revenues to pay for services Pennsylvanians need, the legislative majority wants to cobble together “sin taxes” to pay for education, social services and other programs.

It won’t work.

There was good news in the Capitol last week when, on a bipartisan vote, the legislature passed a budget that pays mandated costs such as healthcare, debt payments and employer contributions to public employees’ pensions and still manages to increase education spending by $300 million, including:

•  $200 million for K-12 education,
•  $20 million for special education,
•  $30 million for Pre-K Counts and Head Start,
•  $40 million for higher education,
•  $10 million for early intervention programs.

Unfortunately, the state education formula used to distribute additional funds fails again to restore funding to the school districts like Philadelphia, Pittsburgh, Coatesville and others that never recouped the 2011 funding cuts.

Worse yet, GOP legislators, perhaps because it is an election year, want to rely on unreliable “sin taxes” to fund the budget. Their plan is to increase taxes on cigarettes and electronic cigarettes (but not cigars, for some unfathomable reason); legalize online gambling and slot machines at airports and off-track betting parlors; and enact a short-term, tax-amnesty program.

None of these proposals will generate permanent revenues to fund education programs and state services or eliminate the state’s $1.8 billion structural deficit. In fact, a new law allowing decentralized alcoholic beverage sales could jeopardize the more than $500 million a year in revenues generated now by state wine and spirit stores, not to mention thousands of family-supporting jobs.

Studies show that sin taxes on liquor, gambling and smoking are short-term fixes that raise revenues until higher taxes discourage participation in the activities. In addition, sin taxes encourage black market activity, which cuts revenues and increases law enforcement costs.

This flawed revenue package, which is very likely based on overly optimistic revenue projections, means that school districts will again have to increase property taxes, cut programs and reduce staff. Further, without adequate and reliable funding, Pennsylvania will continue to have the third most expensive public colleges and universities in the country and the third highest student loan debt among its graduates – not exactly a prescription for robust job and economic growth.

It is time that legislators passed a responsible revenue bill that doesn’t burden the poor, middle-class, homeowners and senior citizens. Polls show there is sufficient support among taxpayers to require gas drillers to pay a competitive severance tax, as they do in every other natural-gas producing state.

Pennsylvania voters also support ending corporate tax giveaways, enacting combined reporting to close the Delaware loophole, eliminating the sales tax vendor discount, fixing the bank shares tax and taxing smokeless tobacco, cigars and e-cigarettes. CLEAR for PA coalition estimates these measures alone could generate $550 million a year.

Raising the minimum wage – another step long overdue – would increase personal income tax collections without raising tax rates across the board.

Finally, a Democratic proposal this spring to tax certain kinds of income – lottery and gambling winnings, dividends, royalties, rental income, estate and trust income at 4 percent – could raise upwards of $700 million a year for education and other programs, without burdening average Pennsylvania families.

Legislators made tremendous strides this spring when they agreed to a $31.6 billion, bipartisan budget, but they have only done half the job they were elected to do. They need to finish the job and provide permanent, stable revenues to fund the programs Pennsylvanians want and need.

We simply cannot smoke, drink and gamble enough to pay for high-quality public schools, colleges, roads, parks services. Nor would we want to.

AFTPA represents 32,000 public, private and charter school teachers and school support employees; community college and university faculty and staff; and state employees across the commonwealth. AFT Pennsylvania is affiliated with the American Federation of Teachers and AFL-CIO.