Gov. Ed Rendell, state legislators and county officials are all wrestling with the same question: How do they balance the budget with declining revenue from tax collections.
In 2009 all 50 states revealed the sharpest revenue drop in 46 years, according to a state finances report by the Nelson A. Rockefeller Institute of Government in New York.
Earlier this week, Rendell proposed reducing the state sales tax from 6 percent to 4 percent and lifting the exemption status of 74 items to raise $531 million as part of his $29 billion budget proposal for 2010-11.
The County Commissioners Association of Pennsylvania is trying to determine what the governor’s budget proposal means to county employees and residents in terms of services and programs.
“Counties are calling on the General Assembly to adopt a fair and timely budget,” association Executive Director Douglas E. Hill said in a statement.
The association is a nonprofit organization representing all of the state’s 67 counties. Its membership includes county commissioners, council members, county executives, administrators, chief clerks and solicitors.
“A fair budget will maintain state funding to support services that benefit the health of local communities, including particularly human services, environmental programs and funding for courts and corrections,” he said.
According to Gary Tuma, press secretary for the governor’s office, Rendell’s 2010-11 budget holds down spending, but includes “fairly modest increases in education, public safety, health care and services for seniors and children.”
The bulk of the overall spending increase of 4.1 percent is for medical assistance, education and prisons, he said.
He said the governor’s proposal for 2010-11 will not require any new taxes, partly because of $2.7 billion in stimulus funds that will not be available the following fiscal year.
The change in sales tax is to address an anticipated state revenue crunch in 2011-12 with the loss of stimulus funds and an increase in pension costs in 2012, Tuma said.
County officials said the plan does not address the trend of declining revenues.
“If revenue is declining, how do we pay for state and county services?” said Commissioner Pamela Tokar-Ickes.
The counties’ perspective is a broad view.
“We have mandated services we must provide,” Tokar-Ickes said.
To provide those services the counties need to have adequate funding from the state and federal governments, she said.
“We still are not where we were in 2003,” she said.
State funding has fallen short even in better economic times, according to Hill.
“The result has been an erosion of the state’s commitment to fund mandated and necessary core government services, and a greater burden passed to local taxpayers,” he said.
There is only one way for the county to fill in the financial gaps created by the state’s lack of funding for these services, and that is through property taxes.
“Raising property taxes is the only way we have to make up for the state’s five-year trend of reducing funds to counties,” Tokar-Ickes said.
One proposal to change the taxing system is to broaden the sales tax base and eliminate or at least reduce the counties’ dependency on property taxes.
“I’d love to lower the sales tax and broaden it to eliminate the property tax,” said state Rep. Carl Walker Metzgar, R-Somerset.
“But if we do this for a way for government to get more money for spending, then it would foreclose on that possibility of using it to eliminate property tax,” he said.
The association and its members are calling on the state for a complete reform of the current tax structure.
“Until then we will constantly, constantly, have these issues,” Tokar-Ickes said.
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