Challenges to Building
Public and Policymaker
Support for Education
Sharon Ward
Education Policy Leadership Center
Education Finance Symposium
November 17, 2006
RISK OF A STRUCTURAL DEFICIT
Number of Factors Contributing to Structural Gap
10 or 9
8
7
Alaska
Alabama
Arizona
Arkansas
Georgia
California
Colorado
Kentucky
Hawaii
Florida
Missouri
Idaho
Nevada
Rhode IslandIndiana
New Mexico
South DakotaMichigan
Pennsylvania Washington Mississippi
South Carolina
Oklahoma
Tennessee
Virginia
Texas
Wyoming
Most at Risk
6
5
Connecticut Kansas
Delaware
Louisiana
Illinois
Maine
Iowa
Maryland
MassachusettsNew York
Montana
New Hampshire
North Carolina
Ohio
Oregon
Utah
West Virginia
4 or 3
Minnesota
Nebraska
New Jersey
North Dakota
Vermont
Wisconsin
Least at Risk
State Budget Risk Factors
 Number of services taxed under the sales tax
 Strength of the corporate income tax (in PA 50% of corporations








who had income paid no CNIT)
Taxing of electronic commerce ($705 billion - $1.1 billion)
Tax preferences for the elderly
Progressivity of the personal income tax
Growth of expenditure needs; i.e. long-term care
Tax policy choices
TABOR or spending limits
Failure to delink from Federal tax changes
Other structural gaps
Source: Iris J. Lav, Faulty Foundations, State Structural Budget Problems and How to Fix Them.
Washington DC; Center on Budget and Policy Priorities (May, 2005).
One of the Terrible Ten: Most
Regressive Tax Systems in the Nation
3
0
Washington
Florida
South Dakota
Wyoming
Nevada
Tennessee
New Hampshire
Texas
Pennsylvania
Illinois
Alabama
Michigan
Louisiana
Arizona
Indiana
Colorado
Connecticut
Georgia
North Dakota
Hawaii
Oklahoma
Rhode Island
Utah
New Jersey
Mississippi
Kansas
New Mexico
New York
Alaska
Arkansas
Massachusetts
Missouri
Iowa
Virginia
Wisconsin
Kentucky
Maryland
North Carolina
Nebraska
Ohio
Minnesota
Idaho
West Virginia
California
Oregon
Vermont
Maine
South Carolina
District of Columbia
Montana
Delaware
Ranking State Tax Unfairness: How Pennsylvania Stacks Up
6
5
4
Ratio of Burdens, 2000
>300%: 8 states
200-300%: 3 states
100-200%: 37 states
<1: 3 states
2
1
$2.7 Billion in Tax Cuts Proposed in 2005-06
Bills Reported from House Finance Committee
Bill Number
Description
Fiscal Impact

HB 153
Organ/Bone Marrow T. C.
$6.3

HB 220
Career Development T.C.
$20.0

HB 338
Repeal GRT (Cell Phones)
$302.0

HB 344
Sales Tax Exemption Fire Equipt
$83.7

HB 472
Used Computer T.C.
$12.2

HB 504
Historic Preservation T.C.
$25.0

HB 515
Business Tax Cut Plan
$53.1

HB 529
P I T exemption 529 plans
$0.16

HB 600
Military Leave Tax Credit
$34.0

HB 650
Uncapping the NOL
$165.6

HB 797
Reduction in CNIT Rate
$288.2

HB 906
Phase-out of Inheritance Tax
$936.0

HB 1062
C-B Mental Retardation T.C.
$30.0

HB 1312
Rapid Phase out CSFT
$334.3

HB 1586
Reduction of the PIT to 2.80%
$373.3

HB 2038
Tax Credits for Internships
$30.0

HB 2096
Deductions for 529 Plans
$17.0

HB 2374
Motorbus Excise and Franchise.
$10.0

HB 2585
Increase in the EITC
$20.0
______________________________________________________________________________

Cumulative Fiscal Impact
$2.736 billion
National Campaign to Restrict State
Spending

Taxpayer Bill of Rights (TABOR) legislation modeled after law enacted in
Colorado in 1994

Creates permanent, mandatory limits on state spending

Limits state spending increases to a highly restrictive formula (inflation +
population growth)

Could be accomplished via statute or constitutional amendment

Would lead to deep cuts in state spending. If spending limits were enacted in
2003, PA’s budget would be have been $1.5 billion in 2005-2006.

Spending limits proposed for state government, local governments and school
districts

Grover Norquist: Americans for Tax Reform, Howard Rich (I kid you not)
Voters Don’t Like TABOR
 Colorado voters took a time out in 2005:
After TABOR business boomed
 Business leaders led anti-TABOR effort
 Voter referenda in three states failed in 2006
 Maine:
46% to 54%
 Nebraska:
30% to 70%
 Oregon:
29% to 71%
 TABOR leaders fared poorly at the polls

Note: the 65% solution failed in Colorado (the antithesis of adequacy)
Talking About Education
 Build on strong local ties to education
 Education polls well continually
 Link education to economic development
 Lesson from emergency services payroll tax:

52 letters is a crisis
 Lesson from the infectious disease report

Focus on the overall problem, not the
comparison
Pennsylvania Budget and Policy Center
412 North Third St.
Harrisburg, PA 17101
Phone: 717-255-7181
Fax:
717-255-7193
E-mail: [email protected]
On the web: www.pennbpc.org