Sunday, October 19, 2014

Debunking Myths about Pennsylvania Governor Tom Corbett: Education, Pensions, Natural Gas and Taxes

Corbett did not cut education funding
            Pennsylvania received a temporary boost from Obama economic stimulus money in 2009 that Governor Ed Rendell, a Democrat, appropriated into the basic education subsidy for the Commonwealth’s school districts.  The districts were warned the money was only temporary.  As a school director at the time, I warned my district not to use the money for long-term items, such as hiring permanent staff, for example.  Some districts budgeted accordingly, but many did not.  The end of the stimulus money was not a cut, but simply an expected return to previous levels.  School district spending has risen sharply over the years and is now at its highest level ever under the Corbett Administration, although it is worth noting student performance levels do not necessarily correspond to spending levels.  Despite the end of the stimulus and the pension crisis in Pennsylvania, school districts across the Commonwealth hold combined budgetary reserves of several billion dollars. 
The claim that the Commonwealth’s subsidization of the teachers’ pension fund does not count toward the budget is a related myth.  The teachers’ pension fund has counted toward the education budget for the last four decades.  School real estate taxes have risen primarily because of Pennsylvania’s pension crisis.    

Corbett did not under-fund pensions
            Several factors have combined to produce Pennsylvania’s pension crisis before Corbett took office in 2011.  First, benefits were raised in 2001.  The Commonwealth subsequently reduced funding a number of times over the years during previous administrations.  In addition, the fund was depleted by stock market losses after the Panic of 2008. 

Natural gas companies do pay taxes to Pennsylvania
            The comparison of Pennsylvania to other states that impose natural gas extraction fees on gas drilling companies does not account for a key difference: Pennsylvania, which taxes both corporate income and assets, has the highest corporate tax burden in the United States.  Like companies in every other industry, natural gas companies pay corporate taxes.  On top of corporate taxes, the natural gas industry also pays an impact fee to counties and municipalities for road repair, emergency response needs, environmental remediation and other related costs.  These impact fees amount to over $200 million a year.

Corbett did not raise taxes
           Corbett kept his promise not to raise taxes to balance the Commonwealth’s budget, despite a four billion-dollar shortfall leftover from the previous administration.  He also did not raise tax rates.  In fact, Corbett cut taxes, including various business taxes, such as restarting the phase-out of the capital stock and franchise tax and exempting small family-owned businesses from estate taxes.  Corbett did lift an arbitrary cap on gasoline taxes, which are a user fee that periodically must be raised to keep up with inflation, in order to fund an urgent major transportation bill approved by the Republican majority legislature to repair roads, bridges and make other transportation improves.  Without adjusting gas taxes, Pennsylvanians would have had to continue to pay more for every good that was shipped by truck because of longer routes that were necessitated by poor roads and bridges, upon which weight restrictions had been imposed because of structural deficiency.  

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