Friday, August 21, 2015

GUEST COLUMN: Gov. Wolf's budget numbers don't add up

Gov. Tom Wolf recently visited Montgomery County to blast the budget plan that he vetoed, along with the much-needed pension reform bill. His main argument is that the budget passed by the Legislature doesn't add up. He used the term "bad math."

The governor also continues to perpetrate the myth that a severance tax on the Marcellus Shale industry is holding up a budget deal and the revenue raised from such a tax would fund the bulk of his initiatives.

A closer look at the governor's budget plan reveals that his math is not adding up.

He is using the severance tax to play a shell game, diverting attention from where the real revenue will come from to fund his budget; the taxpayers of Pennsylvania.

Let's look at the numbers.When the governor proposed his severance tax, he set an artificial price floor at $2.97 per thousand cubic feet (Mcf) for all gas produced in state, regardless of its actual sale price. This was advertised to bring in $1 billion in revenue. To the governor’s credit, he has removed that artificial price floor.

The only issues now are that his numbers don’t add up and the lion's share of that tax is not going to education.

The House Appropriations Committee analysis based on the current price of the natural gas concludes only $165.7 million will be generated from a severance tax, this after $225 million is deducted to cover the current impact fee, $55 million to pay the interest on a new borrowing program and the additional $10 million for the Department of Environmental Protection.

The governor therefore needs another tax to bring in the revenue he calls for in his ambitious increase in spending.

Another sleight-of-hand in the governor's budget is his property tax relief plan. This calls for an increase in the state income tax from 3.07  percent to 3.7 percent and an increase/expansion of the state sales tax from 6 to 6.6 percent.

Many residents in our area will recognize that conceptually this plan sounds like House Bill 76, which would eliminate the school property tax with a slightly higher increase in the income tax and sales tax.

The governor's plan only uses the increase in the income tax for modest property tax relief, while the increase/expansion of the sales tax all goes into the General Fund.

This is the tax the governor needs to fuel his aggressive spending. It is estimated that the increase and expansion of the sales tax would bring in $1.55 billion.

Again, to fund his massive spending plan the governor needs that increase and expansion of the sales tax to fund the major portions of his budget (education and welfare) while leaving nothing for property tax reduction.

One last area where the governor's math doesn't add up. The governor correctly points out that Pennsylvania’s credit rating has suffered from massive borrowing programs and unfunded pension liability.

That's what makes two of his proposals all the more perplexing. He wants to borrow $3 billion to pay down the unfunded liability in the state's pension plans (while ignoring calls to reform the plans for future employees) and he wants to borrow $165 million to fund alternative energy and jobs programs.

How is borrowing more than $3 billion going to help with Pennsylvania's poor credit rating?

We call on the governor to stop playing this political version of the old three-card monte game and level with the taxpayers of Pennsylvania. He needs to tell the taxpayers that he wants an increase and expansion of the sales tax so he can fund his ambitious plan.

We believe we need to be fiscally responsible with people's tax dollars.

We voted for a fiscally responsible budget and a reform plan for public pensions and the governor vetoed them; if he wants to compromise, controlling costs must be the first step, not raising taxes on middle-class families.

State Rep. Tom Quigley is a Republican who represents the 146th House District in parts of Montgomery County. He was first elected to the Pennsylvania Legislature in 2004. State Rep. Warren Kampf is a Republican who represents the 157th House District in parts of Chester and Montgomery counties. He was first elected to the Pennsylvania Legislature in 2010.

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