May 11, 2012 | By | Posted in General News

Week in Review: PA budget plan moves forward, taxpayers up in arms

State spends $30 million to keep refinery open

By PA Independent Staff
HARRISBURG — The state budget moved to the forefront this week after sitting on the back burner since Gov. Tom Corbett's budget address in February.

The state Senate approved its version of the budget but boosted overall spending by half a billion dollars from what Corbett proposed. The additional revenue won favor with all Senate Republicans, but it left Senate Democrats divided because some wanted to see a higher final figure.
Taxpayers also made their voices heard this week, rallying here Monday for a proposal to eliminate property taxes and replace them with higher sales and income taxes.
Senate budget adds $500 million in spending
State Sen. Jake Corman, R-Centre, chairman of the Senate Appropriations Committee, said the increases were within the revised revenue estimates, made available last week. The $550 million carryover, Corman said, will be needed as the state faces increases in pension costs and Medicaid payments.
Spending will grow about 2 percent over the current year.
I think it’s fiscally responsible, and it reflects the revenues of today,” said Corman, noting the governor’s proposal in February was made with fiscal assumptions, which changed in the spring. 
But higher-than-expected tax collections in April led the state’s Independent Fiscal Office last week to anticipate a $300 million deficit for the end of the year. That report allowed for the additional spending in this year’s budget, as well as preparation for higher costs in coming years, Corman said.
State Sen. Anthony Williams, D-Philadelphia, urged fellow Democrats who supported the budget to reconsider.
Williams and other Democrats who voted against the plan said it should include further increases for education and welfare, along with changes in the tax code to get more revenue from gas drillers and companies using loopholes to avoid paying taxes.
Property tax elimination plan draws hundreds to capitol

More than 200 people attended a rally Monday in support of the proposed Property Tax Independence Act. They gathered at the Capitol to tell lawmakers they’re tired of burdensome school property taxes, tired of seeing neighbors' houses foreclosed.

The bill, pending in the House and Senate, would eliminate school property taxes, the $12.7 billion in annual revenue replaced by an expanded tax base and higher income and sales taxes, among other sources.
If passed, the move would change the way school districts finance their operations, as property taxes allow districts to help meet budget gaps. Though the bill is presented as a revenue-neutral trade-off, it could trigger more cuts later, as income and spending habits of residents change and district costs fluctuate, according to school finance experts.

Demonstrators said they were willing to pay more on goods and services throughout the year, as opposed to footing an annual tax bill.

“It seems like we can keep all the other bills paid, and the property tax bill just keeps going up,” said Chester County resident Ruth Ann Wheatley.

House GOP seems split over Senate budget plan

House Majority Leader Mike Turzai, R-Allegheny, said he sees “a lot of positives” in the plan, keeping the budget at a level that won’t lead to a tax hike while accounting for extra revenue collected this spring.

State Rep. Daryl Metcalfe, R-Butler, said the increase leads the state in the wrong direction.


“Last year, we tried to reset some of the spending, but I think we still had a continued reset to do this year,” Metcalfe said. “We need to work to reduce spending, not pump $500 million back into the budget the governor proposed this year.”

Spending on welfare and subsidies for higher education, he said, are increases that, conversely, could be cut. Assistance to colleges and universities, he says, isn’t helping the average taxpayer.

House Democrats, meanwhile, are expressing concern over the spending plan, and want to see more money for education, higher education, long-term care and funding for the disabled.

The state House is expected to begin addressing the state budget the week of May 29.

Taxpayers shell out $30M to keep Delaware County refinery open

Before the purchase, hundreds of pink slips had been readied, threatening the community at its economic core. A Department of Labor and Industry report says every 100 jobs at the refinery leads, indirectly, to 1,800 jobs.  

The purchase, with an initial cost of $180 million, was bolstered by a $30 million state subsidy — called an Opportunity Grant — from the Department of Community and Economic Development.

Delta's hope is to save on its annual $11.8 billion jet fuel bill by integrating a refinery, a landmark business move that made national headlines. Locally, the purchase was a saving grace for the town, and Delaware County.

The $30 million grant wasn't without precedent, said Steve Kratz, spokesman for the DCED. Delaware gave a $25 million grant for a refinery purchase in 2009.

Taking into account what was at stake — and the private investment coming from Delta — the significance of preserving Trainer's economy outweighed the cost of a taxpayer grant, said Kratz.

“This was a case of basically saving a town, saving a way of life in our community, saving thousands of jobs and really keeping fuel and oil prices under control,” he said. “If that shut down, that’s going to have a widespread effect not only on Pennsylvania but the entire Northeast.”
Bill would shut off 'triple dipping' in unemployment system
The unemployment system was made to help those out of work, but one little loophole let state employees benefit to the tune of $2 million.

Putting a Band-Aid on an open fracture of an unemployment system, the House Labor and Industry Committee on Tuesday unanimously passed a bill targeting "triple dipping."
House Bill 2346 would amend the state’s Unemployment Compensation Law to keep state retirees from collecting unemployment benefits on top of their state pensions and benefits after returning to work.
State laws say a retiree can work up to 95 days, as an annuitant, before their benefits are affected. When interpreted as “involuntary” termination of unemployment, the annuitant is eligible for unemployment benefits after leaving the job.
A reported 459 state annuitants engaged in the practice in 2010 and 2011, costing around $2.1 million, according to researchers for the bill. While that’s a tangible figure, it pales in comparison to the system’s estimated $1 billion in unemployment benefit overpayments since 2008.

Pennsylvania Joins Opposition To Real ID Act

The federal program was enacted in 2005 to create national standards and a national database for drivers’ licenses by requiring states to connect their existing information electronically. It also added costs to verify documents necessary to apply for a license, such as birth certificates and Social Security cards.

Some groups also have warned that the national database would be a “honeypot for identify thieves.”
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