The Governor of Pennsylvania decided to use his perceived electoral mandate to take on one of the biggest issues that has confronted and confounded the commonwealth for decades: property tax reform. So he advanced a plan that would raise sales and personal income taxes in exchange for a cut in property taxes.
Sound familiar? The year was 1989 and the Governor was Robert P. Casey whose tax reform plan was put on a statewide ballot referendum and was soundly defeated by voters. Fast forward to 2015 and Governor Tom Wolf has placed on the table a property tax reform plan that strongly resembles the doomed Casey proposal. Except the Wolf plan doesn’t even include the dollar for dollar reductions required of the Casey effort.
As despised as property taxes are, and polling consistently finds the levy to be the most disliked, finding an acceptable alternative remains elusive. The Wolf plan appears to have little support in the General Assembly; in fact House Republicans have passed their own proposal. But it too fails to totally eliminate school property taxes leaving the door open for millage rates to simply increase again over time.
An indication of how unpopular the Wolf tax reform plan is can be found in the recent Keystone Business Climate Survey of business owners and chief executive officers conducted by the Lincoln Institute of Public Opinion Research. Nearly 70% of the business leaders said the Wolf property tax shift would result in only a temporary drop in property taxes which would then go back up. Another 14% predicted his plan would actually lead to property tax increases; only 15% expect to see property taxes decline under the Wolf proposal.
Not only does the poll demonstrate disapproval of the Wolf property tax plan, but the survey found the biggest six month decline in business climate optimism since the onset of the Great Recession in 2008. In fact, in the 20 year history of the poll only during that recession and in the aftermath of the 2001 terrorist attacks has business climate optimism dropped so far so fast.
Last September, for the first time since George W. Bush was re-elected in 2004, more business leaders said the state’s economic climate had improved that felt it had gotten worse. The indicator rose into positive territory by just 1%, but it capped a steady move in a positive direction. All of that has changed. The number of owners/CEOs saying business conditions have improved over the past six months has fallen to just 13%, while the number saying business conditions have gotten worse has nearly doubled since last Fall.
The only variable to change during that six month period was the election of Governor Tom Wolf. Governor Tom Corbett left office with a 52% job approval rating. Governor Tom Wolf’s first job approval test yielded just 15% approval with 69% of the state’s business leaders saying they disapprove of the job he is doing.
Driving the dour mood among the people who actually run businesses – big and small – is a general disapproval of Governor Wolf’s budget proposals. A total of 78% disapprove of his proposed budget. Overall 80% say the governor’s proposed state budget will harm the state’s business climate. As a side note, Pennsylvania’s high tax rates and stringent regulatory policies are viewed by the owners/CEOs as the biggest impediments to conducting business in the commonwealth. They now fear that situation is about to get even worse so the state’s job creators are bracing themselves for higher taxes.
Overall the survey results represent a sound and complete repudiation of Governor Tom Wolf’s first proposed state budget along with the major revisions and tax hikes contained within the proposal. Like Governor Casey before him, his ambitious tax reform plans are deeply unpopular and may be destined for the same fate.
(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal. His e-mail address is [email protected].)
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