House GOP: More Taxes Not Necessary

Representative Sam Smith
Republican Leader
Pennsylvania House of Representatives
NEWS RELEASE
Date: May 5, 2010 Contact: Stephen Miskin (717) 783-1852
E-Mail: [email protected]
Internet: www.samsmithpahouse.com

More Taxes Not Necessary; House GOP Proposes
Specific Cost-Saving Opportunities for PA
Republican lawmakers call for real efficiencies and entrepreneurship

HARRISBURG – Facing the potential of a billion dollar-plus deficit and another budget impasse, House Republicans have taken up the challenge of identifying revenue sources to balance the budget without the need for additional taxes, House Republican Leader Sam Smith (R-Jefferson County) announced today.

"House Republicans have real concerns regarding the Democrat budget proposal (House Bill 2279), which passed the House when the deficit was only $500 million – now it’s at a billion dollars," Smith said. "As Pennsylvanians are dealing with layoffs, pay cuts and pay freezes, the costs for groceries, goods and services are going up, and the governor and House Democrats want to raise taxes for their increased spending. As the governor has often said, ‘Are they nuts?’"

The Democrat budget proposal, originally introduced by Gov. Ed Rendell in February, spends $29 billion, an increase in spending of more than $1 billon over the current year’s enacted budget. Revenues are $1 billion less than anticipated with two months yet to be collected. According to economists, state revenue collections are not expected to recoup the losses this year.

Smith said Republicans were anticipating a fiscally responsible budget proposal to support; instead the Democrats crafted an overspending budget largely dependent on "hope." The Democrat spending proposal hopes for $850 million in federal funding, it hopes revenues come in better than they are, and it hopes for tax increases.

According to Smith, House Republicans believe in fiscal responsibility, smaller and more efficient government, better and more productive management, and a more disciplined and effective budget process.

"Pennsylvania’s budget should balance every year without gimmicks; that is what fiscal responsibility means, and that is what good management is about," Smith said. "Reps. John Bear and Sheryl Delozier have worked hard to find extra revenues through efficiencies and entrepreneurship. The message is simple: No Taxes Necessary."

For the last several months, Bear, of Lancaster County, and Delozier, of Cumberland County, have met with government officials, financial executives, business leaders and consultants to develop new or enhanced non-tax revenues for General Fund use. Their findings have the potential to generate nearly $1 billion in new revenues for the Commonwealth – without any additional or new taxes.

"It is no longer good enough to focus merely on what we are going to cut or to burden Pennsylvanians with additional taxes," Bear said. "Instead, we need do to things differently by looking for opportunities to make government more accountable and efficient in its operations, while getting state spending under control."

"With tens of thousands of Pennsylvania citizens out of work, combined with a struggling economy, we have to ensure that every budget expenditure is in the best interest of the taxpayers," Delozier said. "The General Assembly and the governor must use fiscal restraint and a needs-based budgeting philosophy during the current budget cycle. We need to look for new non-tax ways to generate funds for the state. These are suggestions that can be options."

Bear and Delozier drew on their respective experiences with the IMPACCT Commission. IMPACCT was created in 1995 by a concurrent resolution in the General Assembly and comprised of 250 members from the public and private sectors to analyze all areas of government; it ultimately developed 450 reform recommendations.
The House Republican revenue generators through efficiencies and entrepreneurship are:
• Expanded Use of Purchase Card (P-Cards): Make P-Cards, similar to debit cards, the primary method of payment for all goods and services purchased in PA.
o Revenue potential/cost savings: $62 million to $219 million annually

• Feasibility of processing other state’s Supplemental Security Income (SSI) payments: PA began processing its own SSI payments in 2003, the only state to process SSI payments in-house, saving $35 million. There are nine states (CA, NY, TX, MA, NJ, NV, RI, HI, VT and DC) that pay the Social Security Administration more than $300 million to process SSI payments.
o Revenue potential/cost savings: $50 million to $152 million annually

• Correcting Tax Refund Errors: The Department of Revenue sends out 2 million refunds annually with a 10-12 percent error rate. Reduce the error rate.
o Revenue potential/cost savings: $50 million annually

• Improve State Vehicle Fleet Management: Reduce the state auto fleet by a third; require state employees to use rental vehicles for trips over 100 miles.
o Revenue potential/cost savings: $36 million annually

• Eliminate Medicaid Eligibility Errors: Establishing an Income Eligibility Verification System would cut the error rate, which is as high as 14 percent according to the state auditor general, and as low as 4 percent according to the Department of Public Welfare.
o Revenue potential/cost savings: $288 million to $1 billion annually

• Improve Unclaimed Property Law Compliance: Property deemed forfeited is not being reported as it should.
o Revenue potential/cost savings: $50 million to $80 million annually

• Streamline Sales Tax Collection/Internet Sales Tax: By adopting the National Conference of State legislatures (NCSL) Voluntary Streamlined Sales and Use Tax Agreement, Pennsylvania has the chance to collect some of the more than $300 million in uncollected taxes from such online companies as Amazon.com and Overstock.com that do not collect sales taxes.
o Revenue potential/cost savings: $21 million (based on historical 3 percent compliance)

The total potential revenue generated if these proposals are implemented range from $557 million to $1.56 billion.

"Today’s proposals are just a part of the House Republicans’ efforts to update Pennsylvania’s government for the 21st century," Delozier said. "Rep. Bear and I will continue working with our caucus and anyone else to prevent additional taxes from being taken out of people’s pockets."

"We are still working on ideas. Some will be better using technology and dealing with public safety," Bear said. "Pennsylvanians expect us to balance the budget without any new taxes."

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