Cavalry Sales Tax comes to the rescue
Some may have noticed the big news in Harrisburg last week. The governor's proposed budget wants to lower the state sales tax rate from it's current 6% to 4% yet somehow increase the revenues the sales tax will generate. Magic? No, the idea is that the things the sales tax would cover would be increased. Its something like 70 or so exceptions of things that do not get hit by the sales tax. So the great increase in coverage will more than make up for the lower rate. The base for the sales tax must be going up by at least 50% for the math to work out. Dave's back of the envelope suggests the proposal could increase what is hit by the sales tax by up by 75%.
But then there is Allegheny County, which also gets revenue from a 1% sales tax and redistributes it via the Regional Asset District (RAD). So think about that. If the 1% county tax stays the same and the base of what is taxed goes up by 50%-75% then how much will the RAD tax bring in locally?
For 2010, the RAD budget was a hair less than $80 million. With a big expansion of what the sales tax covers, the RAD be looking at a $40-60 mil/year windfall in future years? Could make a lot of local issues look a lot different. Library funding? Transit funding? The share of that which the city will get by statute could go a long way toward closing that 15 mil shortfall that so traumatized us last month.
$40-60mil is kind of small compared to the entire county budget, but when you really parse out the truly discretionary part of the county budget, $60 million would be a huge chunk of new revenue to allocate. Could almost transform the role of the county in local government. So a big deal potentially and it might be worth talking about sooner rather than later even if there is only a chance it will happen.
Of course, it is all just a proposal at this point.... That and anything associated with the state budget in Pennsylvania is a morass almost by statute.... or so it seems. There is an argument that since an election year is coming up for much of the state legislature, they have some incentive to keep the budget process a little quieter this cycle. We will see...