Cigarette Tax Stalled; School Funding in Danger

Derailed by dispute over hotel taxes, new five-year sunset provision.



This is why you don’t count your chickens until they’re hatched: Yes, both the Pennsylvania House and the Pennsylvania Senate have given approval to bills allowing Philly to raise its cigarette tax by $2 per pack to fund local schools — but they haven’t approved the same version of the bill so far. And that’s turning out to be a big problem.

The House version ran into a Senate buzzsaw on Tuesday — with the upper chamber balking at adding provisions in the bill that would allow some Pennsylvania cities to raise their hotel taxes. Senators began amending the House bill (it now includes a five-year sunset provision on the cigarette tax) but it’s uncertain the House will return from its break to pass the revised version — which, if not would leave Philly in limbo — or whether, in fact, it would approve those revisions: Certainly, it seems House Republicans will resist approving the additional hotel taxes. Which means getting the two chambers to back the same bill may be difficult.

CBS Philly reports:

Superintendent William R. Hite issued the following statement regarding the amendment of the cigarette tax bill by legislators in Harrisburg:

“Today’s action to amend the School District-supported cigarette tax legislation throws us back into uncertainty. Adding the sunset provision to end the bill in five years removes urgently needed recurring revenue, which is extremely troubling given our $93 million deficit and the persistent increases in the District’s fixed costs. At full implementation, the cigarette tax was estimated to generate more than $80 million annually. Ending the tax in five years will exacerbate our structural deficit, complicate our long-term planning efforts, make it harder to access the capital markets and strip our schools of educational services and supports.

“With schools scheduled to open in less that two months, it is crucial that we secure the needed funding to support our students and schools. There is no clear timetable for House consideration on this amended bill, nor any guarantee of final passage. We implore the House and Senate to come to agreement immediately on cigarette tax legislation that does not include a sunset provision.”

Newsworks adds:

Philadelphia Mayor Michael Nutter was in Harrisburg lobbying for the measure to pass without changes.

Nutter spokesman Mark McDonald said the amendments threaten the district’s ability to operate a full school year.

“Every week without this tax in place will cost the district money,” he said. “It is a terrible situation for the district and one that the mayor hopes can be resolved by House and Senate coming together and abandoning this sunset provision.”

The Inquirer explains why Sen. Dominic Pileggi agreed to the five-year sunset amendment:

“That is something that should be examined after five years to see what impact it has had on revenues collected. Is it stable? It is declining, is it growing, what effect has it had on neighboring counties,” said Pileggi.

He added: “I think that it is a fair [change], to see how this has worked out in practice over five years rather than just putting it on automatic pilot.”

And the Daily News explains the possible consequences:

The proposed measure would cut the district’s estimated $93 million deficit in half. Without additional revenue, officials say the district will be forced to make steep cuts, which could include laying off hundreds of teachers, putting as many as 41 students in a class, and slashing school police and building maintenance. It could also delay the opening of schools.