Capitolwire: House GOP unveils ambitious schedule but no property tax cuts bill til mid-Christmas rush.

By Chris Comisac and Peter L. DeCoursey
Capitolwire

HARRISBURG (Oct. 25) – House Majority Leader Sam Smith, R-Punxsutawney premiered an ambitious fall legislative schedule of tax cuts, spending limits and a laundry list of other hot-button issues on Monday.

Smith, who has denied that his plan this fall is to change the subject from the state pay raise and efforts to repeal it, by advancing other major and controversial issues, said “The key is that we’re doing our jobs; we’re going to continue to move forward this agenda."

But the big-ticket item most lawmakers and Gov. Ed Rendell want to accomplish before the year is over, property tax reform, isn't scheduled for action until Dec. 12.

Starting next week, the House GOP plans to pass an aggressive tax-cutting agenda. They say they have the votes to impose a cap on state spending, reduce the 2003-imposed personal income tax rate from 3.07 percent to 2.99 percent, by 2008, according to House Appropriations Chairman Brett Feese, R-Lycoming. That would still leave the new tax rate higher than the pre-2003 rate of 2.8 percent. By the end of 2008, that tax cut would cost $420 million a year, and $580 million in lost revenue in 2007-08. A family making $50,000 a year would get $40 back each year, after the tax cut took full effect.

They also propose to cut the corporate net income tax in the coming budget year, from 9.99 percent to 8.99 percent. Other proposals offer different targets for the final rate, including proposals to reduce that rate to 7.99 percent. That tax costs $206 million annually for each percentage point cut in the levy, so the House plan would cost $206 million annually.

They also plan to give property owners more power to resist government condemning private property, and eliminate auto emissions testing – and that’s just for the first week of November.

Smith acknowledged some items may get backed up, but said the House GOP had the votes to pass it all, and said if the leadership didn't fill the agenda, others would.

Healthcare and child care tax credits, child predator, gambling reform, price gouging, land preservation and support for military personnel appear on the agenda for later weeks.

And don’t forget the little matter of a special session on property tax relief – that’s in their plan too.

House Republicans say they’re just finishing what they started. House Democrats say it’s just “election-year politics coming out a few weeks too soon.”

While it remains to be seen how far any of these bills will go, the immediate focus of the Republican “Playbook for Progress” will be to limit government spending.

In a promise to “fight for taxpayers,” Smith said Republicans would push for both a statutory and constitutional amendment cap on state government spending.

“This is something that will likely garner some jeers and some cheers,” said Smith, “but it’s a key issue, something we’re going to put emphasis on… something we continue to work with the Senate on.”

The Senate recently approved a package of two separate bills – one to amend the constitution and the other to set spending limitations for state government.

House Minority Leader Bill DeWeese and Democratic Whip Mike Veon argued the Republican proposal to put a hard cap on state spending would cripple many state programs and take away the state’s flexibility to react to population growth, natural disasters and budget cuts handed down from the federal government.

Said Veon: “The facts are clear: creating a hard state spending cap would have a negative effect on state programs and prevent us from reacting to emergencies.”

Tax cuts are also high on the House GOP’s priority list.

Since a GOP-proposed spending cap would provide only $671 million of additional money for next year’s budget, Feese was asked how much of that available cash would go to the tax cuts.

Feese replied, “You’re making an assumption we won’t make spending cuts to balance some of the tax cuts. That’s an incorrect assumption. We will make cuts.”

Feese did not detail the proposed spending reductions, either by dollar or program.

Of all the Republican agenda proposals, the item on which the governor and the Senate feel the most pressure to work with the House is property tax relief.

However, making relief a reality won’t be easy.

“Act 72 may be part of the final solution, but I don’t see it (alone) as the final answer.” Smith said he personally supported “some sales tax base expansion.”

“If I had to guess, it would be somewhat of a hybrid of the ideas that have been out there,” said Smith.

House Democratic leadership opposes the sales tax idea. They have argued it would be overly burdensome, claiming sales tax on clothing, food and services will hurt professionals, damage small businesses, cripple agriculture and tourism, and not deliver on tax relief promises to homeowners.

House Finance Minority Chairman David Levdansky, D-Allegheny, says he supports the governor's position to mandate every school district follow Act 72, but relieve them of the wage tax increase.

Smith said that to focus GOP House members as they addressed the property tax issue, House Speaker John Perzel, R-Philadelphia, asked members “who are you trying to help?”

Smith said, “That question hasn’t been fully answered” by the House GOP caucus, and “priorities have not been set, but he believes the House GOP top targets for property tax relief help are “the elderly living on fixed incomes in their own homes, that’s number one, general homeowners would be number two, farm owners would be number three.”

“The property taxes on family farms are making it harder for those families to keep the farms.”

Smith said property tax relief may not be limited to those, but “when I try to answer that question, that is who I think of.”

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