PA week in review: Bleak budgets, property tax reform and gift bans

By PA Independent Staff

This week brought more troublesome fiscal news for Pennsylvania as April revenue numbers lagged behind expectations, and the Independent Fiscal Office revealed dismal fiscal projections.

A judge also unsealed unflattering documents regarding a Philadelphia union leader, while lawmakers returned to Harrisburg and continued their debates over property tax reform and gift reform.

Here’s a look back at the week’s coverage:

Property tax would leave state with winners and losers

The state Senate continued to vet legislation that would replace the unpopular school funding mechanism with money from the personal income tax and sales tax.

Senate Bill 76 would eliminate property taxes and hike the state’s personal income tax from 3.07 percent to 4.34 percent to help fund schools. It would also increase the sales tax from 6 percent to 7 percent and expand it to cover more goods and services to help compensate for the end of the unpopular property tax.

The new funding mechanism would still come at a hefty price, seeing as it will have to make up for the $12 billion property taxes pull in a year. State Sen. Mike Folmer, R-Lebanon, one of the bill sponsors, acknowledged lawmakers “cannot make a perfect world.”

“This is a tax shift. There’s no doubt about it,” he said. “And there’s going to be some winners and losers. There’s no doubt about that.”

FBI document details allegations against Philly union boss

A state judge this week unsealed documents from a 2006 FBI investigation into infamous Philadelphia union boss John “Johnny Doc” Dougherty.

The document is a sworn affidavit by FBI Special Agent Kathleen O’Hanlon, who said she had probable cause to believe Dougherty broke federal laws. The agent believed Dougherty unlawfully received free labor at his house and a condo in Wildwood, N.J., and he lied about his income and evaded taxes.

At the time, the FBI was seeking a warrant to search Doughtery’s south Philadelphia home. Dougherty was never charged with a crime.

Dougherty was and still is the business manager of the Local 98 of the International Brotherhood of Electrical Workers.

Philadelphia Common Pleas Court judge Lisa Rau, who also dismissed a 2009 libel lawsuit filed by Dougherty against the Philadelphia Inquirer, disclosed the documents this week.

Dougherty took issue with editorials published by the Inquirer during his 2008 run for state Senate. He was defeated in a bitter primary battle against state Sen. Larry Farnese, D-Philadelphia, who was backed by former state Sen. Vince Fumo, Dougherty’s long-time political rival.

Dougherty’s lawyers characterized the release of the documents as an effort by the paper to retaliate against Dougherty for bringing the lawsuit.

Lawmakers explore tougher gift regulations

Kentucky lawmakers have strict rules when it comes to accepting gifts — their recently strengthened law now precludes them from accepting even a cup of coffee.

Stung by several recent embarrassing ethical lapses within state government, Pennsylvania lawmakers are exploring their own way to crack down on gift-giving. And they could get as tough as Kentucky, said state Sen. Lloyd Smucker, R-Lancaster.

“I don’t know yet,” Smucker said when asked if the Keystone State would be willing to go so far. “We have a lot of work to do to consider all possible options here. But yes, I think that’s a real possibility.”

What’s clear is there will be some type of ban on gifts that has “appropriate exemptions or exceptions,” Smucker said. Those exemptions could include a carve-out that allows gifts from lawmakers’ family members or allowing “de minimus” gifts with values of $25 to $50, he said.

School spending and graduation rates don’t add up in region

In Pennsylvania and neighboring states, there seems to be little connection between school spending and graduation rates.

Census data from 2013 shows that Pennsylvania spent a little more than $13,500 per pupil in the 2011-12 school year.

According to a new report, Pennsylvania has a statewide average high school graduation rate of 84 percent. For black or Hispanic students, it’s 68 percent. For Asian or white students, it’s 89 percent. Economically disadvantaged students graduate at a rate of 74 percent, while 64 percent of English language learners complete high school.

Maryland spent virtually the same amount of money on each student as Pennsylvania and came out with the same average graduation rate — 84 percent.

Meanwhile, Ohio spent about $11,200 and had a graduation rate of 81 percent. New York spent close to $19,000 and had an overall graduation rate of 77 percent. New Jersey spent $16,000 and graduated 86 percent of its high school students.

Pennsylvania sinking deeper into financial hole

Pennsylvania has a revenue problem this fiscal year, but it’s hardly snuck up on anyone watching the monthly revenue reports.

The Department of Revenue announced Thursday that the state collected $328.3 million General Fund revenue in April, 8.8 percent below expectations. Year to date, the state’s revenue is $504.5 million behind estimates, when adjusting for an $80 million transfer from the state’s liquor store profits that was made ahead of schedule.

The day didn’t get any better when the state’s Independent Fiscal Office released new estimates that show that the state’s 2013-14 revenue could be $608 million less than originally anticipated.

“Sorry for the bad news,” IFO director Matthew Knittel said.

Philly schools face bleak budget

The state isn’t the only public agency looking at tough times. The School District of Philadelphia is facing budget cuts.

Superintendent William Hite previously issued a hopeful Action Plan 2.0 to transform schools at a cost of $320 million. But now that the budget for 2014-15 has been released, it’s looking as if the district will instead be coming up at least $96 million short.

Reductions in staff and services are inevitable in the face of a gap that size.

On the lighter side

Pennsylvania has a strange state law that limits school buses to 40 feet, though the legal limit for manufacturers is 45 feet.

Thanks to legislation by state about the odd restriction here.