By a narrow 104-95 vote early this morning, the Pennsylvania House of Representatives voted to increase the personal income tax rate of Pennsylvanian’s. The goal of the hike is to narrow the budget deficit and to provide money to Pennsylvania’s 501 school districts.
The state personal income tax rate would increase from 2.8 percent to 3.25 percent on January 1, 2004. On July 1, 2004, the rate would roll back to a permanent rate of 3.1 percent, an increase of 11 percent.
The personal income tax increase was part of a package of three bills that would set aside money for specific education programs, restore money cut from drug and alcohol programs and mass transit and require school districts to ask voters to approve a moderate increase in local income taxes in exchange for receiving revenue from slot machine gambling to offset property taxes that typically finance local education costs.
The Legislature has yet to send a bill to Governor Ed Rendell that would legalize slot machines in Pennsylvania.
Both local representatives Larry Sather and Jerry Stern voted against passage of the bill.
“The whole eleventh hour process of debating the need for a significant tax increase was brought about by the current administration,” said Sather. “In March, our governor “blue lined” out of his own budget $4 billion for public education, leaving 501 school districts up in the air as to state revenues they may or may not receive this year. The governor insisted on having his plan approved or nothing else. I believe this is the worst time to saddle the taxpayers of Pennsylvania with such a large increase in taxes.”
Sather believes that those who are opposed to something, have to have something different to offer.
“I realize that there is a structural deficit in this year’s budget that was passed in March,” said Sather. “However the difference between the governors projections on revenue and what we are beginning to see in monthly revenue reports is exceeding everyone’s expectations. The income may not be sufficient enough to offset this fiscal years deficit or shortfall, but by no means does this situation require new taxes to generate $800 million in new revenue for this fiscal year. As a result of passage of this legislation, some of the funding for various programs that had previously been cut will be restored.”
The bill now moves to the senate for approval.
“I see a future of change for this bill,” said Dave Atkinson, chief of staff for Senator Robert Jubelirer. “We believe that the tax increase is too large and the spending package is too rich in the uncertain economic times that Pennsylvania faces.”
Senator Jubelirer has set a priority to put some of the money cut for social programs back into the budget.
“The senator would like to see the money cut for drug and alcohol and other important programs put back into the budget,” said Atkinson. “A good portion of the higher taxes will fund new education spending. If this plan goes through, Pennsylvania would be the only state raising taxes to pay for new spending. It is questionable economics and questionable budgeting when you look at the implications it could have in future years.”
The new plan would boost educational subsidies to the state’s 501 school districts by three percent and increase special education funding by 4.5 percent. It would also set aside $200 million in block grants that schools could use as they see fit to comply with federal mandates to improve standardized test scores. The program also earmarks $34 million for tutoring programs and $15 million to expand the federal Head Start pre-school programs for needy children.
Rendell has held up more than $4 billion in public education subsidies to pressure the Republican-controlled Legislature to consider his education plan which include reducing class sizes through third grade and providing full-day kindergarten.
There is a plan already approved to fund the school districts that have not received state funding for the year.
“The senate passed a stop-gap funding measure to fund the school districts,” said Atkinson. “The senate has urged the house to take that measure up. Whether they will or not I am not sure.”
The Associated Press contributed to this story.
