The good news is that the Pennsylvania Senate has approved a revenue package to eliminate a $2.2 billion budget deficit.
The bad news is that the plan includes heavy borrowing and pushes Gov. Tom Wolf to squeeze Medicaid eligibility and benefits.
Republicans who control both the Pennsylvania House and Senate unveiled their plan to balance the $32 billion state budget last week. The plan includes a proposal to borrow $1.3 billion against the state’s annual share of the 1998 multistate settlement with tobacco companies.
State senators approved a plan that includes a severance tax on natural gas drilling that would generate about $100 million per year. Pennsylvania, the nation’s No. 2 gas-producing state after Texas, is right to impose the severance tax on natural gas drilling similar to other gas-producing states.
The plan also includes $405 million in new or higher taxes from a gross receipts tax on natural gas, electric and telecommunications bills.
According to the plan, the new tax on natural gas bills would be 5.7 percent, or $5.70 on a $100 utility bill and the existing tax on electric bills would rise by more than a half-percent to 6.5 percent, while the tax on phone bills would increase by 1 percent, to 6 percent.
GOP senators seek to raise another $43.5 million by requiring online companies like Amazon and eBay to collect sales tax from third-party sellers using their sites. The Senate plan also counts on $200 million in revenue from the expansion of casino-style gambling in Pennsylvania.
The revenue package drew bipartisan support, including from Wolf, a Democrat.
“It’s not what I want, it’s not perfect, but I recognize that there are things we have to do as leaders and individuals to try to reach a compromise,” said Senate Democratic Leader Jay Costa, D-Allegheny.
But the spending plan faces an uncertain future in the House, where the Republican majority is likely to resist calls for higher taxes to help close the budget deficit.
House GOP spokesman Stephen Miskin said House members will have “questions and concerns” about the Senate plan. He said there’s no timetable for the House to take up the legislation.
State lawmakers should have developed a plan that generates more revenue to avoid heavy borrowing.
It is fiscally irresponsible and risky to be so dependent on heavy borrowing to prop up current spending.
Reprinted from the Philadelphia Tribune
https://www.phillytrib.com/commentary/risky-revenue-package-for-state/article_36589124-cb21-548e-91a4-4f2e7a9f7e9f.html
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