State Government
12:04 pm
Wed June 19, 2013

Squabble over Business Tax as School Problems Loom Larger

Three big issues have dominated the state budget debate, but with less than two weeks before June 30, one lawmaker is suggesting poor schools are getting short shrift.

"Pensions, transportation, liquor — they're being resolved as we speak," said Sen. Anthony Williams (D-Philadelphia). "Education has not been resolved, and it can actually affect whether we get a budget or not."

Philadelphia school district has announced plans to lay off nearly 3,800 people, and four people have announced a hunger strike to protest the pink slips and closings of 23 schools. Allentown's school district will lay off nearly 100 teachers this week.

Williams said other financially distressed districts will join Philadelphia and Allentown soon if the state doesn't provide more funding. He said Monday that state lawmakers are too busy trying to find consensus on policy issues Gov. Tom Corbett has staked out as his top priorities.

"Where's the money? I don't know. We don't know. We haven't figured that out," Williams said. "I cannot imagine we're able to leave Harrisburg without figuring out what those school districts — how they'll be able to perform and get through their school years."

Philadelphia is asking the state for an additional $120 million dollars. Some observe that in this year's budget, the district will be lucky to get any increase at all. Sen. Jake Corman, who chairs the Senate Appropriations Committee, said leaders are "probably looking at tens of millions" for the cash-strapped school district.

Corman said there are options for raising state revenues, like allowing a business tax that was scheduled to disappear by the beginning of next year to live on a little longer. He said he couldn't see how freezing the phase-out of the Capital Stock and Franchise Tax, currently at 1.89 mills, would hurt business.

"We haven't discussed it with anybody yet. I would consider it, but that's just me," Corman said.

"I don't think businesses will look at it and say, 'Oh, we can't come to Pennsylvania. Oh, we're leaving Pennsylvania.' I mean, it's such a low rate now, it's fairly insignificant to them," Corman said. "Is that phase-out more important than education dollars?"

The words weren't out of his mouth more than a few hours before the House Republican Majority Leader Mike Turzai called an impromptu press conference to preempt nascent efforts to keep the tax.

"We have already implemented that policy. It's an existing law," said Turzai. "It has created expectations with respect to employers and we want the existing law to stay the same. To be honest with you, changes to the Capital Stock and Franchise Tax phase-out would be, for me, a non-starter."