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A Decade of Deep Cuts in PA. Don’t Let It Happen.

12:27 pm in Uncategorized by ThirdandState

By Sharon Ward, Third and State

Deep state cuts have already put health care at risk for kids and denied help to families struggling in this economy. They have put thousands out of work in schools, colleges, nursing care facilities and hospitals.

Think that’s bad? You ain’t seen nothing yet.

The Pennsylvania House may vote as soon as next week on a bill that will cut corporate taxes by close to a billion dollars by the end of the decade. More cuts to schools and health care will be next.

House Bill 2150 would close some corporate tax loopholes in Pennsylvania, but it is paired with big tax breaks for businesses. Even after counting new revenue from closing loopholes, this bill is a big money loser for the commonwealth.

The Pennsylvania Budget and Policy Center and Better Choices for Pennsylvania has an Action Page where you can send a message to your House lawmaker to reject this bill as is and to take steps to close tax loopholes more responsibly. Closing loopholes should not come at the price of budget deficits for years to come.

We’ve all seen the state budget headlines in recent months. 88,000 kids have had their public health coverage cut off. 14,000 Pennsylvanians have lost their jobs in schools and colleges. College tuition is rising, and help for families struggling in this economy is harder to come by.

Closing corporate tax loopholes could help Pennsylvania turn things around, but not if lawmakers pair it with business tax cuts that will cost us now and for years to come.

Some Hope for PA Revenue in January but Corporate Taxes Still Lag

2:10 pm in Uncategorized by ThirdandState

A blog post by Michael Wood, originally published at Third and State.

Pennsylvania’s revenue performance has been pretty uneven this fiscal year due in part to a stubbornly slow growing economy and to policies that have cut the tax bills of big profitable corporations. After months of significant revenue shortfalls, however, January provided some hope.

General Fund collections came in close to estimate in January – falling $10.2 million, or 0.5%, short of monthly targets. This is a marked improvement over the previous several months, when revenues fell between 3% and 6% short of estimate. Get my full analysis of the January revenue numbers here.

January is an uneventful month for most revenue streams, with personal income tax collections being the exception. January is second only to April, when tax returns are due.

Corporate collections continued to fall significantly short of estimate in January and account for more than half of the General Fund’s revenue shortfall so far in 2011-12.

Revenue collections for the 2011-12 Fiscal Year are $497 million, or 3.5%, below the Corbett administration’s revenue estimates. The administration is now projecting a year-end revenue shortfall of $719 million, although the Independent Fiscal Office (IFO) believes this to be too pessimistic, based on recent economic trends. The IFO expects the year-end shortfall to be in the $500 million range.

But comparing revenue estimates to actual collections tells only part of the story. Most tax revenue has been growing over the previous year, but not quickly enough to offset the cost of business tax breaks like bonus depreciation.

To make matters worse, Governor Corbett has proposed a state budget that moves Pennsylvania in the wrong direction. His budget maintains deep cuts to public schools that hit the poorest districts the hardest. It sharply reduces funding to public universities that could stifle innovation and drive up college tuition when many families can least afford it. Rather than closing tax loopholes and ending special tax breaks, the budget is balanced by cutting health care for children and adults.

Pennsylvania came out of the recession strong, ranking among the top 10 states in job growth. Our unemployment rate was a point lower than the national average and we were making investments in our schools, hospitals, and workforce that were creating real jobs.

We have since reversed course – increasing class sizes, limiting access to care, and cutting workforce training opportunities. As a result, we have seen our job growth advantage slip. Pennsylvania actually created more new jobs in 2010 than in 2011. If we continue on this course, Pennsylvania will be more likely to fall behind our competitors as the economy grows.