Paying for It

In our analysis earlier this week, we concluded that Governor Corbett’s proposed education budget is “More BAD than GOOD.” But the way he intends to pay for it is just plain WRONG.

First, the governor depends on an overly rosy picture to balance his spreadsheet. He is counting on having $216 million left over at the end of this fiscal year in June to carry forward, yet state revenue collections are already $41 million below where they were projected to be as of January. [Unless otherwise noted, all numbers from PA Budget and Policy Center, “Proposed Budget Overview,” 2-4-14] What’s more, “The governor’s budget relies on more than $1 billion in one-time revenue sources that will not be available for future budgets.” [Sharon Ward, PBPC Commentary, 2-5-14]

Pennsylvania students deserve adequate, equitable, and sustainable funding for their schools. That means tricks like inflating year-end projected balances or finding one-time sources of funding won’t cut it.

I’m also dismayed to see that the governor’s budget depends on $75 million from new land leases for gas drilling in our state parks and forests. We’ve had a moratorium on leases since 2008, and for good reason. Our children’s future depends on a decent education and clean water, air, and soil. But even if you think fracking is a good idea, we can probably agree that we ought to impose a severance tax on Marcellus shale: most states with major mineral resources like ours have a severance tax, not just a mere impact fee. Doing so could yield $334 million per year. [Post-Gazette analysis, 12-27-13] Not imposing this severance tax is essentially a gift to oil and gas corporations, who are some of Governor Corbett’s largest campaign donors. []

And that leads us to the biggest problem with how Gov. Corbett intends to pay for his proposed budget. For the past three years, “attempting to improve growth, [he] made a bet that a billion dollars in new corporate tax cuts would fuel economic recovery, but that bet has been lost.” Instead, job growth in Pennsylvania is behind all but two other states in the nation and our unemployment rate is above the national average. Meanwhile, “corporate profits continue to rise, but those profitable corporations are paying less in taxes, if anything at all.” [Sharon Ward, PBPC Commentary, 2-5-14]

This proposed budget continues to give away millions to corporations that ought to be on the table and available for public goods and services. The PBPC reports that, “Total corporate tax collections are predicted to decline for a second straight year, with continued annual declined expected through 2017-18.” [PBPC “Proposed Budget Overview,” 2-4-14] This includes the continued phase-out of the capital stock and franchise tax, which Gov. Corbett is handing to corporations as a bonus. If our legislators would freeze this one tax at its 2012 level, the state could raise around $390 million. [PBPC, “Budget Analysis,” 5-29-13]

Over the past ten years, under Republican and Democratic administrations alike, the legislature has created a whole raft of new corporate tax breaks. Incredibly, at the same time our students are going without the most basic educational needs, “The annual cost of these [tax breaks] has already grown by 300% between 2003-04 and 2012-13, from $850 million to $3.0 billion, and is expected to reach $3.9 billion by 2018-19.” [PBPC, “Corporate Tax Cuts Help Put State in the Red,” 12-13-13]

This is unconscionable. Corporations need to pay their fair share. Because when it comes to our state budget, if corporations aren’t helping to pay for it, our children wind up paying the price.

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