HARRISBURG, Pa. (Jan. 14, 2015) – Pennsylvania’s ranking worsened on a biennial report card measuring the fairness of state and local taxes, according to a study released today by the Institute on Taxation and Economic Policy and the Pennsylvania Budget and Policy Center.
Middle-income Pennsylvanians pay two times more in taxes as a share of income than the wealthiest earners, and the lowest-income earners pay three times more, the study found. Pennsylvanians in the top 1 percent of income actually saw a slight drop in the share of income they pay in taxes, from 4.4 percent in 2013 to 4.2 percent in 2015.
December revenue collections were better than expected, coming in $162 million higher than the December revenue target. This pushes the 2014-15 revenue surplus to $271 million, or 2.1%.
While having more money is better than having less money when trying to balance the state budget, the current 2014-15 revenue surplus pales in comparison to the $2 billion shortfall projected for 2015-16.
HARRISBURG, PA (Dec. 9, 2014) – A severance tax on natural gas, which every other major gas-producing state already has in place, will generate significantly more revenue for Pennsylvania than the current impact fee, even at lower gas prices.
Pennsylvania would benefit from switching from its current impact fee to a severance tax. Depending on the estimate, the severance tax could raise two to four times as much revenue as we expect from the impact fee, with this difference growing over time.
Whether the revenue gain from switching to a severance tax is $400 million, $600 million, or more, this is exactly the type of recurring revenue needed to help restore harmful cuts to our schools, help bridge an estimated $2 billion funding gap in 2015-16, and help close the state’s ongoing structural deficit where revenues grow more slowly than spending.
Budget Secretary Charles Zogby confirmed during his final mid-year budget briefing that Pennsylvania will face a $2 billion budget gap next year. After balancing the 2014-15 spending plan with one-time resources, Secretary Zogby acknowledged that crafting a 2015-16 budget will be difficult for the next administration. This sentiment echoes what the Independent Fiscal Office (IFO), bond-rating agencies, and others (including we here at PBPC) have been saying for months.
Today’s mid-year budget briefing by Budget Secretary Zogby confirms the warnings issued by the Independent Fiscal Office and the independent ratings agencies about Pennsylvania’s dire financial condition. The Commonwealth can no longer rely on one-time fixes to balance its budget. We need long-term solutions that will restore fiscal stability and allow the Commonwealth to grow.