OPED: The problem with spending

State Representative Seth Grove
Rep. Seth Grove (R-Dover) representative for the 196th District

One billion for school property tax reductions. Remember that statement when slot machine gaming was approved in the Commonwealth under former Gov. Ed Rendell? Slot machine gaming was supposed to provide a $1 billion reduction to the $12 billion in total school property taxes paid annually,of which homeowners are responsible for $7 billion. Unfortunately Gov.Rendell set this program up to fail. So what happened?

First, homeowners only receive $595 million in property tax reductions; the $1 billion figure was unrealistic. When you look at your school property tax bill and it looks like someone reduced your assessed value that is the slot machine revenue being applied. It has been constant at $595 million for the past three fiscal years. It is distributed by a stagnant and complex formula which drives money to poorer school districts.That is why York City School District residents receive about $500 in reductions per homeowner and the rest of York County homeowners only receive $150, give or take.

What are the other expenses of the Property Tax Relief Fund?

  • $21.2 million in Sterling Act Tax credits, or reimbursements to local governments for the loss of Earned Income and Net Profits Tax to Philadelphia’s Wage Tax. 
  • $136.4 million for expanded Property Tax/Rent Rebates (PTRR).
  • $30.4 million in PTRR for cities and “high-burden” areas.
  • $5 million for Volunteer Fire Department Grants.

If you add it all up, it totals $788 million in expenses.  Here is the kicker; there is only $780 million in revenue:

  • $773 million in slot revenue taxes
  • $6 million casino loan repayment
  • $600,000 in interest

In order to continue these programs the Budget Office must transfer funds from the Property Tax Reserve Account, which only has $1.4 million remaining. In order to keep this program in the black, we transfer approximately $20 million per year. The state can receive additional casino loans for only $15 million to try and extend the life of this program. The PTRR program had to borrow $1 million to cover administrative costs from the General Fund. On top of all this, Gov. Wolf proposed using $35 million from his proposed severance tax increase to fund the Pennsylvania Gaming Economic Development and Tourism Fund because that fund is over extended. Again, Gov. Rendell set the Gaming Economic Development and Tourism Fund to fail and the myth of a severance tax increase for education funding is yet again exposed.

The reality is Gov. Rendell’s charade is up. Over the next few fiscal years, the $595 million you receive in school property tax relief will be diminished and the accounting charade will finally be exposed.  Maybe it will hang on longer, if all the remaining casino licenses are approved, but the truth is, when your expenses are greater than your revenues you have structural deficit.

And that my friend is the problem with government: spending taxpayer dollars past the ability of revenues to cover those expenditures.

As a member of the House Appropriations Committee, every year I am inundated with more funding requests than the year before.  Everyone wants more taxpayer dollars. It is our job as elected officials to look at the balance sheet to ensure revenue coming in matches up with the revenue going out. If left unchecked, the balance of revenues exceeding expenses flips, so expenses exceed revenues. Again, this is the “structural deficit” Wolf talks about. Of course, his sole idea to solve the problem is more taxes.

Let’s look at the property tax “structural deficit.” This entire program is an example of how poor fiscal decisions have led to the impending destruction of a program designed to help Pennsylvanians.The more government expands for the good of its people, the more it costs to deliver those services. Ultimately, even the best intentions can lead to the worst results.This is why we must be responsible fiscal stewards of our tax dollars.

As we continue to debate the budget, the expense side must be addressed. As our pension crisis continues to grow, we cannot afford billions in new spending. Not even Gov Wolf’s original proposed tax increases can cover the unsustainable growth in government expenses. In fact, the Wolf administration admitted with $12.7 billion in new taxes they would still have a structural deficit of $300 million in only two years. We must roll up our sleeves to make prudent decisions and ensure our state budget doesn’t become a charade like property tax relief from gaming. I will continue to be a fiscal watchdog providing oversight on government spending to ensure taxpayer dollars are used in the most efficient and effective manner.