State lawmakers look to taxpayers to help close $2 billion budget gap

If you have electricity in your house or a phone, Pennsylvania lawmakers want you to help pay for the budget’s $2 billion gap.

Along with the controversial, highly publicized tax on natural gas bills, in a vote last month, the Senate also approved levies on telephone and electric utilities, which typically pass such costs onto customers.

The revenue package still must go before the House, where its fate is uncertain, and House leaders have said they would not simply “rubber stamp” it. But if the Senate has its way:

Those who heat their homes with natural gas would see a new 5.9 percent tax on their bills. A consumer with a $100 monthly bill would pay $5.90 per month, or $70.80 per year, in new taxes.

Taxes on electric and telephone utilities — including landlines and cellphones — would increase from 5 percent to 6 percent. Together, the natural gas, electric and telecommunications taxes would raise more than $400 million per year.

For the first time, Pennsylvanians could buy aerial fireworks — paying a 12 percent tax, in addition to regular sales taxes. Lawmakers say this could raise $2.8 million per year.

Websites that facilitate thirdparty sales, such as eBay, Etsy and Amazon Marketplace, would be required to collect Pennsylvania’s 6 percent sales tax. Lawmakers say this would allow the state to collect an additional $43.5 million in the coming fiscal year.

A new severance tax on Marcellus Shale drillers would bring in $80 million annually. Though not a direct tax on consumers, industry leaders warn it could affect natural gas prices.

As House members decide what to do with the Senate’s solution, industry leaders and advocacy groups are ready for a fight.

Terry Fitzpatrick, president and CEO of the Energy Association of Pennsylvania, said utilities have concerns about the transparency of the taxes.

“We’re sort of being used as a

collection agent to maybe mask the cost,” he said. “It takes the cost of government and it presents it to customers not on your tax bill, but on your utility bill.”

One group of residents who would be winners under the new taxes: Those who do not heat their homes with natural gas. Mr. Fitzpatrick said slightly more than half of Pennsylvania residents use natural gas.

Gene Barr, president of the Pennsylvania Chamber of Business and Industry, said he worries that the tax package would take away the state’s competitive advantage of having “affordable, accessible natural gas.”

Some manufacturing members of the chamber have estimated that they could spend more than $1 million a year in taxes from the new 5.9 percent gross receipts tax on natural gas, Mr. Barr said.

Although lawmakers are resistant to raising income or sales taxes, Mr. Barr said, “our real concern is that raising that [utilities and natural gas] tax actually depresses our economic growth even more.”

Meanwhile, Senate leaders called the revenue package a responsible solution for a budget that required difficult choices.

Lawmakers had to fill a $1.5 billion gap in last year’s budget, and a $700 million deficit in the fiscal year that began July 1.

Some members of both major parties were among those to oppose the measure, which passed by a 26-24 vote.

Sen. Art Haywood, DMontgomery, said he would not support the tax increases without also increasing the minimum wage.

“I am not opposed to raising taxes when appropriate,” he said in a statement after the Senate vote. “At the same time, when we raise taxes on everyday people, we must consider the impact on their wallets. There are more than one million Pennsylvanians in low-wage and poverty pay jobs.”

Sen. Stewart Greenleaf, RMontgomery, also opposed the tax proposal.

Mr. Fitzpatrick, of the energy association said he has sent emails to House members. Some are sympathetic, he said.

But one thing is clear: Even if lawmakers agree with his perspective, there is no consensus on what to do about it.

“There’s all sorts of ways to raise money, certainly none of them are perfect and all of them have political downsides for folks,” he said. “So there’s nothing but tough choices and we realized that.”

Steve Miskin, spokesman for House Majority Leader Mike Turzai, said House Republicans are discussing alternative revenue ideas. Representatives had been told to prepare to return for possible votes this month, but no date has been set.