Friday, July 31, 2015

Report Finds Room for Budget Compromise in Tax Relief Plans

Greg Stotelmyer , Public News Service

PHOTO: A new report from the Pennsylvania Budget and Policy Center finds the tax-relief plans of House Republicans and Democratic Gov. Tom Wolf are a good starting point for budget compromise. Photo by Stephanie Frank.
PHOTO: A new report from the Pennsylvania Budget and Policy Center finds the tax-relief plans of House Republicans and Democratic Gov. Tom Wolf are a good starting point for budget compromise. Photo by Stephanie Frank.
HARRISBURG, Pa. - It's been a month of budget gridlock in Pennsylvania after Gov. Tom Wolf, a Democrat, vetoed the Republican Legislature's spending plan, claiming it is unbalanced and would lead to a $3 billion deficit. However, a new report finds common ground for compromise in the tax-relief plans proposed by House Republicans and the governor.

Economist Stephen Herzenberg, co-author of the Pennsylvania Budget and Policy Center report, said a lot of overlap exists between the two plans on property-tax reform.

"Many places get a similar reduction in property taxes under each plan," he said, "and those reductions in property taxes are paid for in similar ways, with an identical personal income-tax increase and a similar increase in the sales tax."

Wolf vetoed the budget in part because he said it drastically underfunds the state's schools.

Herzenberg said a detailed, side-by-side comparison of the two tax relief plans makes the governor's proposal look "surprisingly good" in many areas of the state represented by Republicans who champion lower property taxes. He said "128 of 238 rural school districts in Pennsylvania do better under the governor's plan - more property tax relief for homeowners under the governor's plan."

Herzenberg acknowledged that Wolf's plan would distribute less in total tax relief than would the House plan - about $3.8 billion compared with around $4.8 billion. Still, he said, hat's a good starting point.

"Reform on property taxes is not a panacea," he said. "It doesn't solve the whole budget challenge by itself, but it would be a huge step forward."

The report is online at pennbpc.org.

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