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Editor’s note: This is an updated version of the column originally posted this morning.
“God helps those who help themselves,” was one of my mother’s favorite sayings. Little did I know it might someday become the unofficial motto of the Commonwealth of Pennsylvania.
Or so it seems in Harrisburg these days, where the ascendant idea is that the best way for the state to pay for services such as education and mass transit is to share its taxing authority with local governments, allowing them to raise the money by taxing themselves.
To use a real-life example, take the Philadelphia School District, please.
On the rocks financially, it came up with a plan to raise the $300 million it needs by asking the city, the state and the teachers’ union to each chip in money. The “ask” from the state was $120 million.
Presuming the money would come out of the state Department of Education’s $10 billion budget, district and city officials went to Harrisburg to make their “ask.” Very much like little Oliver Twist, who famously said: “Please, sir, I want some more.”
It made sense because funding education is one of the central functions of the state. It says so right in Article III, Section 12 of the state Constitution: “The General Assembly shall provide for the maintenance and support of a thorough and efficient system of public education to serve the needs of the Commonwealth.”
This “ask” presents a problem for Gov. Corbett, who does not want to spend more money on education. In fact, he has spent most of his first term cutting various state subsidies for it.
For the governor, it presents a delicate political situation. He is running for re-election next year so he doesn’t want to be seen hitting little Oliver with a stick, especially since Oliver is his ward. On the other hand, he doesn’t really want to give him more. What to do?
The plan that has emerged from the governor’s office is a package of state aid that involves no state aid at all. It sounds magical, doesn’t it?
Instead of finding more state money, the idea is to let Philadelphia tax itself to raise the money it needs. The main instrument is the state sales tax. Raised from 7 percent to 8 percent in the city only as a temporary measure during the Great Recession, it is due to expire in June 2014.
The proposal being floated is have the state pass legislation that gives the city power to make that one percentage point increase permanent, and to direct the $130-$140 million a year it raises to the school district. In addition, Corbett has embraced Mayor Nutter’s proposal to help the schools by imposing a $2-a-pack tax on cigarettes sold in Philadelphia on top state and federal taxes. That $2 tax will raise $45 million this year and close to $90 when fully implemented in 2014. It, too, requires legislative approval.
When Nutter first proposed the cigarette tax, I thought it was bad idea, not because of the tax itself (I don’t smoke, so it won’t cost me a dime) but because I thought it had little chance of passing in the legislature.
But, Harrisburg has a new attitude toward such taxing schemes.
Traditionally, the state has jealously protected its taxing powers, unwilling to let local governments piggyback on them. There are obvious political reasons for this, but good policy reasons as well.
To get down to basics, it is why we are called a Commonwealth, an antique English word that embodies the idea that government exists to serve the common weal — now known as the common good.
People look at Pennsylvania government and all they see is a huge bureaucracy. In reality, it is not. It is a redistribution machine. For every dollar the state collects in taxes, 72 cents goes back to local governments, mostly to help them meet the costs of providing education to schoolchildren and services to the needy, the mentally ill, the mentally disabled and the disabled.
In fact, if you eliminated every single department in state government — except for Corrections, Education and Public Welfare — you would save only $6 billion from the $28 billion state budget. Those three departments spend the other $22 billion.
Because of its broad taxing powers, the state is a natural vehicle for redistribution. Its job is also to measure the varying needs of each of the 67 counties and apportion the money fairly, each according to its needs, a process governed mostly by formulas developed over the years.
To get down to basics again, it is the reason state government exists. Common weal. Get it?
Some people don’t get it. They believe that taxation is confiscatory per se, that government is inherently evil and that redistribution is socialism. These people used to be called the lunatic fringe. Today, they are called the House Republican Caucus.
When I surmised that Nutter’s cigarette tax idea was a non-starter in Harrisburg, I was using the old playbook. The new playbook is that while we (read: the state) will not countenance increased taxes; we may be willing to let you tax yourself silly, especially if you are the Whore of Babylon, also know as Philadelphia.
If this “tax yourself silly” plan comes to pass, once fully implemented, the city’s share of support for the school district will go up by 25 percent, while the state’s share will decline. Which, to cut to the chase, may be the idea behind the Corbett plan.
This concept is not limited to the schools. Members of the House Republican Caucus also do not like the fact that the word Transportation in the title Pennsylvania Department of Transportation includes mass transit. I am not exaggerating.
As state Rep. Daryl Metcalfe put it recently: “Your buses don’t do a thing for my constituents. How about we pay for your state roads and bridges, and you pay for your own buses?
Another Republican, state Rep. Rick Saccone chimed in, saying that his constituents in Washington County were “fed up with, as most of them say, pouring money down a black hole of inefficiency, patronage and corruption.” Excuse his Freudian slip.
Saccone was referring to SEPTA, aka also the Whore of Babylon.
Metcalfe, who represents Butler County in Western Pennsylvania, is a hoot. He’s every comedy writer’s dream of a whack-a-doodle, say-anything conservative. He makes Glenn Beck look like Mister Rogers.
It would be easy to dismiss him, except for the fact that he is an elected member of the House and chair of the State Government Committee. I see him as representing the Id of the rural Republican conservatives who dominate leadership in that chamber. He speaks what they think, but must repress because they are not sufficiently whack-a-doodle.
For the record, Metcalfe is right about the buses. Butler Area Transit has six buses; SEPTA has 2,000. On the other hand, Philadelphia has only 361 miles of state-owned roads, while Butler County has 654 miles. So, there.
PennDOT needs money and needs it badly, so the legislature has spent a lot of time this year finding ways to increase funding without — and here’s the tricky part, as always — increasing any state taxes, which is Gov. Corbett’s steadfast pledge.
The other week the Senate passed a bill to raise an additional $2.5 billion for transportation through a variety of means, including fee increases (it’s okay, fees are not taxes), through new charges on drivers who get tickets (again, charges are not taxes) and by lifting the cap put on a per-gallon tax paid by gasoline producers (it’s really a tax increase, but since it’s billed as a cap removal, it passes the Corbett test.)
Last week, the Senate-passed bill emerged from the House Transportation Committee with $500 million whacked out of it, including a lot of the money earmarked for mass transit. Not to worry.
House Republicans inserted language into the bill allowing local governments to levy add-on sales, income and real estate transfer taxes to fund transportation. It also allows counties to impose a $5 fee on vehicle registration.
In other words, if you folks in southeastern Pennsylvania want to fund SEPTA, pay for it yourself by increasing your taxes locally. We — the state — are withdrawing from the field.
My bet is that this particular gambit will not succeed. The Republican leaders in the Senate may not be amused by Butler County’s attempt to raise taxes in suburban Philadelphia. Here I am thinking specifically of Senate Majority Leader Sen. Dominic Pileggi (R., Delaware County) and head of the Senate Transportation Committee, Sen. John Rafferty (R., Montgomery County).
The Corbett sales tax gambit does look like it will fly. The cigarette tax is foundering, due partly to the fact that the Philadelphia delegation could not supply a unanimous vote for the idea. As to the transportation bill, it appears the legislature will kick that down the road until it returns in the fall.
The governor did get his budget bill passed before the June 30 deadline and he says it includes $145 million more for Philadelphia schools. The trouble is no one can find it in the many line items in the budget bill. My hunch is that the governor is counting money originally included in his budget proposal delivered in March as “new.”
The problem with that gambit is that the district, in making its own budget, already included that money in its calculations and still came up $300 million short. I am not an expert at math, by any means, but even I know you can’t count the same money twice. That “new” money the governor talked about Sunday night may be illusory.
Which adds an absurdist moment to the continuing drama of the Philly schools. Oliver begs for more, please sir. Mr. Bumble ladles out the contents of an empty spoon into Oliver’s empty bowl. Then he smiles benignly and says: “God helps those…who help themselves.”