By Rep. Doug Reichley (R-Berks/Lehigh)

As budgets go, the spending plan announced by Gov. Ed Rendell on Feb. 9 did not have much in it for Berks and Lehigh county residents to celebrate. The governor has proposed to cut funding for counties, non-profit organizations and higher education institutions even further than last year. This means less funding for mental health treatment, conservation districts, and community colleges, but the governor did find a way to provide $25 million more to one of his pet grant programs while seeking another $1 billion in new spending in the midst of the worst recession in 70 years. 

To afford that spending, the governor was counting on approximately $850 million in federal aid included in a job creation bill, but Senate Democrat leadership yanked the funding out. Now the governor must hope that Congress passes this huge expenditure in other legislation which has not yet been approved. This puts the state in the precarious position of waiting impatiently for the federal government to engage in fiscally reckless behavior so that the state can avoid another prolonged budget impasse like last year.

Along the way to his balanced budget, the governor throws under the bus not only the programs he touted as crucial in the last budget (Pre-K Counts, Head Start supplemental assistance), but also programs that legislators champion, such as libraries, job training for women returning to the workforce, and education scholarship tax credits for businesses. The governor will seek to provide more dollars to local school districts with a $354 million increase in basic education funding, but fails to address the long-term structural costs which are driving property taxes higher.

More than any other aspect of the budget, the increases in public employer pension contributions in 2012 for both state government and school district employees and retirees should be the focus of transparent and bipartisan discussions on how to reduce expenses on taxpayers. Since the state Supreme Court has told the Legislature three times in the last 20 years that we cannot reduce defined pension benefits for any current retiree or employee, at the least the governor should have started the examination of a conversion of all newly hired employees over to a defined contribution pension system.

Instead, the governor chose to focus on proposing $1.5 billion in new taxes in order to create a ‘Stimulus Transition Reserve Fund’ as a shelter from the fiscal tidal wave posed by public employee pensions after he leaves office. Not only does the governor propose to expand the state sales tax to currently untaxed items such as dry cleaning, airline tickets, textbooks, beauty products, non-prescription drugs, but also to legal, engineering, architectural and accounting services.

These new taxes on some of our small businesses will be compounded by a new $43 per employee tax on every employer starting in January to repay the federal government for the more than $1 billion Pennsylvania has borrowed to provide unemployment compensation benefits.

To try to lessen this financial burden on employers as we attempt to lift ourselves out of the recession, I am researching legislation to give employers a tax deduction on state tax returns in the same amount as any increased unemployment compensation fees which they must pay.

Harrisburg needs to recognize the only way out of the economic slump is to help businesses add employees, not to hinder them with added taxes.

Rep. Douglas Reichley

134th District

Pennsylvania House of Representatives

(717) 787-1000

(610) 965-9933

Contact:  Todd Abele

tabele@pahousegop.com or (717) 783-3957

Member Site: RepReichley.com

Twitter Site:  Twitter.com/repreichley