TAX NEWS - June 2010

Pennsylvania Tax: State officials show taxpayers they are willing to tighten their belts

Collecting tax on Internet buys stymies local officials
HARRISBURG -- The 33-room Georgian mansion that has housed Pennsylvania governors since 1968 would carry a "for sale" sign, under a bill filed by a freshman House member from Beaver County.

Selling the mansion won't solve Pennsylvania's $1.3 billion budget deficit, but it would be "a symbolic move" to show taxpayers state officials are willing to tighten their belts, said Republican Rep. Jim Christiana, who suggests reimbursing the governor for lodging.

Christiana's gambit is one of dozens of proposals to surface recently -- from raw ideas to bills filed in the House and Senate -- to bring in money or slash costs as the Legislature faces a June 30 deadline to balance the state budget.

"I think we are on a path that will lead us to passage of a budget ... by the June 30th deadline," Senate Majority Leader Dominic Pileggi, R-Delaware, said Wednesday on the Senate floor.

Christiana's bill to sell the governor's mansion probably won't pass -- conservative Republican Sen. John Eichelberger of Altoona, for example, says the mansion is appropriate housing for the head of state -- but its introduction reflects a mood at the Capitol.

"It does speak of the times," said Christopher Borick, a political science professor at Muhlenberg College in Allentown. "Nothing is sacred, in terms of government spending right now."

Dauphin County assesses the governor's mansion, a 2 1/2-story building on 3 acres overlooking the Susquehanna River, at $1.7 million, about 70 percent of its market value. Its "implied market value" is $2.5 million, appraisal supervisor Doug Boswell said. The property is tax-exempt.

"It's way underassessed," said Greg Rothman, an appraiser and president of RSR Realtors in Harrisburg, who estimates the mansion is worth $7.1 million.

Christiana said it costs about $1.1 million annually to operate the mansion and feed the governor and guests. That doesn't include undisclosed state police security costs, which he estimates at "several million dollars" for officers' salaries and benefits.

"In unprecedented times, it does call for some unprecedented measures," Christiana said. "If we are going to go down the same road (of tax and spending increases), the taxpayers are just going to get fed up. And I think they are already there. First we have to do the due diligence to get rid of the waste and redundancies."

Gov. Ed Rendell's spokesman, Gary Tuma, said a sale wouldn't be cost effective because the residence is used for large meetings, "public events, exhibits and celebrations."

The state is limping toward a new fiscal year, ending one in which lawmakers spent 101 days at impasse before passing a budget. When the House on Tuesday withdrew a $319 million tax-increase package because it lacked support, ideas to save money or cut costs took on greater prominence, lawmakers said.


Among them:

- A bill by Rep. Mike Turzai, R-Bradford Woods, to sell the state's retail and wholesale liquor and wine operations, increase stores from 621 to 750, and revamp the tax structure on liquor and wine, to raise an estimated $2 billion

- A proposal by Sharon Ward of the Pennsylvania Budget and Policy Center to raise the state beer tax from 0.08 cents per gallon to the national average of 0.19 cents per gallon and collect an estimated $36 million. She also proposed applying the 6 percent sales tax to all Internet purchases, to raise $50 million.

- A bill by Rep. Dwight Evans, D-Philadelphia, to tax the extraction of natural gas from the Marcellus shale formation and collect $142 million. Evans also proposed increasing the state tax on a pack of cigarettes from $1.60 to $1.70, to raise $57 million.

- A proposal by Nate Benefield, a Commonwealth Foundation analyst, to privatize operation of state parks for unknown savings. He also proposes ending the $75 million film tax credit for companies producing movies in Pennsylvania.

- Christiana suggests increasing the fine for littering from $300 to $1,000, to raise an undetermined amount of money.


To solicit ideas from taxpayers, four House Democrats yesterday debuted a website, www.yourpabudget.com.

One idea offered on the site -- legalizing marijuana for medical use -- is included in bills pending before the House and Senate.

A bill by Sen. Daylin Leach, D-Montgomery County, would allow physicians to prescribe it. Leach is unsure how much money that might bring in; it depends on how the Department of Health would regulate medical marijuana and what the tax rate would be.

Things as simple as slashing the state's purchase of bottled water could produce substantial savings, said Ken Cook, president of Environmental Working Group, who is circulating a petition to present to Rendell's office.

House Republicans proposed cost-cutting measures and revenue generators that include folding the Turnpike Commission into PennDOT, eliminating Department of Public Welfare spending identified as wasteful or fraudulent in audits, and increasing the use of state purchasing cards to get bank rebates.

Rep. Paul Costa, D-Turtle Creek, said his office saves $10,000 a year by e-mailing, rather than mailing, newsletters.