by Molly Rush
www.cbpp.org HOME
Federal policies have reduced tax revenues imposed extra costs on Pennsylvania, according to a new report by the Center on Budget & Policy Priorities. They have cost the state 7.3% of its total budget or $6.2 billion between FY2002 and 2005. Net costs, including federal relief funds are $5.3 billion.
Pennsylvania is one of seven states with the largest net losses. Among the policies responsible: federal tax cuts over the last three years due to the impact of federal cuts on state tax codes, for instance a federal tax credit for multi-million dollar estates means that most states - including Pennsylvania - lose that amount dollar for dollar.
States, by federal law, cannot charge taxes on internet access fees or sales taxes on goods purchased over the internet and from catalogs. So state and local governments have lost at least $61 billion just as face the worst fiscal crisis in decades. The total loss of revenue and federal programs as well as th federal help has amounted to only $20 billion.
Unfunded mandates and under-funded federal requirements add up to $73 billion for the cost of election reform, No Child Left behind and the education of the disabled who are eligible for both Medicare and Medicaid. The failureof the federal government to provide prescription drug coverage means that state and local governments are noe spending $28 billion more each year, with annual costs rising by double-digits per year.
Federal tax cuts have meant that states have to raise taxes and charge higher fees for programs affecting middle- and low-income households. Worse, the added tax burden is regressive as states rely on sales and excise taxes.
Analysis by the Urban Institute-Brookings Institutions find that two of three dollars in tax cuts are going to the richest 20%; households with incomes over a million dollars are getting a tax cut of $123,600 this year alone.
Businesses have also benefited at the expense of the states, including Pennsylvania. A "bonus depreciation" causes a loss of another $14 billion in revenue over the last three years.
What does all of this mean to you?
Take a look at your budget: are you now paying higher sewage bills and for services once covered by real estate taxes? Has your community's libraries cut back on their hours? Are school art and music programs being cut? Are students''college tuition fees and student loans going through the roof? Are cuts being made in Medicare and will Section 8 programs be at risk?
An expected federal budget deficit of $477 billion this year [$4.6 trillion over ten years] means that grants for programs such as education, transportation and environmental protection face 3.5% cuts. But
Congress has just voted for increases of tens of billions for a bloated military budget, one that does not include the cost of current wars. Plus states and localities have to cough up extra dollars to pay for Homeland Security measures to protect water systems and telecommunications, airport security, and needed fire and police gear - another mandate for which the federal government has not provided its share of the cost.
State tax revenues are $73 billion lower this year than they would have been if revenues between 2001 to 2003 had remained at 2001 levels.
Costs to Pennsylvania as a percentage of its general fund budget:
tax changes .2%;
internet sales 2.4%;
internet access .2%;
special education 1.8%;
No Child Left Behind 1.3%
prescription drugs 1.4%;
Total: 7.3% of state budget.
[Deduct 1.1% in fiscal relief and net cost to Pennsylvania is 6.3% of the total state budget.]
This year Pennsylvania is losing $1,662,000,000;
in 2005 it will be $1,955,000,000. In short, the whole call for tax cuts is a huge scam that benefits the rich and powerful at our expense.
These are not just numbers. They affect quality of life, higher taxes and cuts in services. States have had to rely on one time only remedies. The move toward privatization only aggravates the problem.
The cry for tax cuts is a total scam and we're all paying.