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Tax proposals in Pa. budget plan remain contentious

| Wednesday, Nov. 11, 2015, 11:12 p.m.
Pennsylvania Gov. Tom Wolf
Pennsylvania Gov. Tom Wolf

HARRISBURG — The complex budget package that Democratic Gov. Tom Wolf and Republican legislative leaders are considering will be a tough sell in the General Assembly, legislators and analysts said Wednesday.

It includes a higher sales tax, property tax cuts, more education funding and undefined plans to reform public pensions and liquor sales.

“I started getting messages on Facebook and on my cellphone: ‘Don't do it,' ” said Sen. Kim Ward, R-Hempfield. “They don't want their taxes increased.”

Ward thinks a stopgap budget to help nonprofit groups and school districts is necessary while leaders work out a deal to end the budget impasse, which is in its fifth month.

A proposal to require voter approval of all school district property tax increases would have “a devastating impact” on delivering the “kind of public education that Pennsylvanians want and that their students need,” said a letter to Wolf and leaders from the Campaign for Fair Funding, a coalition of education, union and religious groups.

Yet mandatory controls on taxes might attract conservative Republican lawmakers who remain wary of trading a higher income tax for property tax cuts. Unusual coalitions could emerge on each issue, analysts said.

Wolf's office said he opposes eliminating every exemption that allows property tax increases to exceed a certain benchmark pegged to inflation. Senate Republicans say they don't want a permanent sales tax increase and a temporary cut in school property taxes.

Jeffrey Sheridan, Wolf's spokesman, could not be reached.

G. Terry Madonna, political science professor at Franklin & Marshall College, said he “can't remember a deal this complex” in 40 years. It stems from having a Democratic governor and a strong GOP majority in the House and Senate.

Still, there is a “reasonable chance” it may win approval, Madonna said. “Every lawmaker is going to want to know how it will affect their district. Who are the winners and losers?”

The proposed budget “framework” includes a 1.25 percentage point boost in the sales tax, bringing the rate to 7.25 percent in Westmoreland and other counties except Allegheny, where it would be 8.25 percent, and Philadelphia, where it would be 9.25 percent.

Wolf and some leaders say it's a “dollar for dollar” trade-off for reduced property taxes. It would give Pennsylvania the second-highest sales tax in the nation.

It's not “dollar for dollar,” some lawmakers said, since approximately $600 million in gambling tax money that offsets property taxes will pay for escalating pension costs.

“It's going to be a tough sell,” said Sen. John Eichelberger, R-Altoona. He said Wolf calls it a $2 billion property tax reduction but it's really $1.4 billion with the gambling tax money subtracted.

Jennifer Kocher, spokeswoman for Senate Majority Leader Jake Corman, R-Centre County, who stood with Wolf on Tuesday to back the plan, said, “We will continue to talk with our constituents about their concerns while working to provide the property tax reductions and education funding so many indicate that they want.”

“Nothing has changed in my mind,” said Sen. Scott Wagner, R-York County. “I will not vote for a single tax increase.” He wants spending cuts.

House Minority Leader Frank Dermody, D-Oakmont, “and many other House Democrats are hopeful, but need to see the details of each element in the framework before they can support it,” said Bill Patton, Dermody's spokesman.

The deal might allow Wolf and GOP leaders to “save face,” said Wes Leckrone, a political science professor at Widener University. “I'm really kind of amazed at the creativity,” he said.

But, said Robert Strauss, an economics professor at Carnegie Mellon University: “If all they end up doing is raising the sales tax and dumping money into education, with no accountability reform, five months late, then that's not enough (political) cover for anyone.”

Privatizing the state liquor store system is the one part of the package with few details available. That has been a priority of House Republicans, but Wolf opposed selling the stores. He proposed allowing private management of stores, which employ unionized clerks.

Brad Bumsted is Trib Total Media's state Capitol reporter. He can be reached at 717-787-1405 or bbumsted@tribweb.com. The Associated Press contributed to this report.

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