Corbett's budget: Likes & red flags
There are some things to like about Gov. Tom Corbett's proposed budget. But there are red flags, too.
High on the list of likes is the phase-down — over 10 years and beginning in 2015 — of Pennsylvania's onerous corporate income tax, from 9.99 percent to 6.99 percent. It will prompt investment and growth and lead to more state tax receipts.
Then there's the commonsense move from defined-benefit pensions to defined-contribution retirement accounts for new state employees. There's also a recalibration of benefits for those whose traditional pensions will remain intact but whose provisions were roundly exploited for taxpayer-shafting windfalls. It's a long overdue recognition that 20th-century-style pensions are not sustainable in the 21st.
But the pension “reform” also comes with a vigorously waving flag of red — further reducing taxpayer contributions for a combined short-term savings of more than $300 million for the state and local school districts with the hope that future “reforms” will save the day. Past being prologue, it only makes longer the fuse on the pension time bomb.
Of course, there's also the mother of all tax increases, one the Corbett administration keeps insisting is no tax increase at all and one that consumers won't notice — the five-year phaseout of the Oil Company Franchise Tax.
A nearly 30-cent increase in the per-gallon tax on the wholesale price won't be passed on to consumers? On what planet? And a proposed 2-cent-per-gallon reduction (at the pump) in the Liquid Fuels Tax is a poor consolation prize.