Indiana, PA - Indiana County

Reed, White talk taxes

by on August 27, 2014 10:59 AM

State Rep. Dave Reed, R-Indiana, said Tuesday that neither the approximately $1 billion generated annually in state gaming revenue nor the $500 million that might be raised annually through a severance tax on nonconventional (Marcellus) gas wells would be enough to replace the $14 billion local share paid annually to help fund the state’s public school districts.

Speaking at the Indiana County Chamber of Commerce’s Eggs & Issues breakfast at the Indiana Country Club, Reed said the state’s sales tax and the personal income tax are the only two sources of revenue big enough to significantly reduce school property taxes in Indiana County and the rest of the state.

Reed said legislation he recently introduced would increase the state’s sales tax by 1 percent and boost the personal income tax from 3.07 to 3.7 percent. Those combined increases would generate an additional $4 billion and lead to an immediate 40 percent reduction in the real estate tax for the average property owner in Indiana County, he said.

Responding to questions submitted by some of the more than 100 guests at the breakfast, Reed and state Sen. Don White, R-Indiana, both agreed the state’s $50 billion unfunded liability in the public employees pension fund is driving the state budget deficit.

“We have a $50 billion hole and no one wants to confront it,” White said, adding that every time more money is directed to the pension deficit, it takes state dollars away from some other important issue that needs attention..

“Any agency that receives money from the state should be concerned” about the pension fund deficit, White said.

White introduced legislation, which has passed the Senate, that would require all state elected officials to convert their state pension plans to a defined contribution plan when they are elected or re-elected as a step to getting the pension deficit under control.

Reed proposed that what is needed is a hybrid — a base pension for the public employees supplemented by a 401(k)-style program. He cautioned against simply pulling the plug on the current pension funding plan. The state, he said, is now getting a 7.5 percent rate of return on its money invested to fund the pension. If an arbitrary end date was placed on the current pension system, the rate of return would drop substantially and actually cost the state about $30 billion more, he said.

Reed is seeking his seventh term in the 62nd District in November. He is being challenged by Democrat J. Kevin Freeberg, an Indiana Area Junior High School teacher.

Reed and White were also asked for an update on efforts to privatize the state’s liquor store system.

“It’s one of those issues when you move one thing, 15 others fall out of place,” Reed said.

When it comes to a possible restructuring of the state’s monopoly on liquor sales, Reed said most consumers have “an expectation of convenience” — they want to be able to go to their neighborhood grocery store and buy beer or a bottle of wine.

“It’s a matter of convenience,” White agreed, adding he’d like to see smaller stores in rural areas be able to sell beer and wine and compete better with large grocery chains.

In response to a question on education funding, White said a continuing emphasis on STEM (science, technology, engineering and math) education is critical.

The Marcellus natural gas drilling industry will continue to create more jobs and that industry “needs qualified, skilled workers,” White said. “I don’t want to push this industry out of here,” and he said he wants local residents to be qualified to fill new Marcellus-related positions.

U.S. Rep. Bill Shuster, R-Hollidaysburg, discussed some national and international issues during the breakfast program.

Passage of the Farm Bill and the VA Reform Bill were two of Congress’ recent significant accomplishments, he said. Next year, he said, Congress must continue its search for funding for long-term transportation system repairs and improvements.

Shuster said the state’s Department of Environmental Protection has done ”a very good job” safeguarding Pennsylvania’s environment, and he has resisted efforts by the federal Environmental Protection Agency and the Army Corps of Engineers to gain more authority over coal mining and more control over bodies of water that are not navigable.

On the topic of immigration, Shuster said, “We’ve got to secure the border first.”

He said there are an estimated 14 million to 16 million foreigners illegally in the U.S. and thousands of unescorted children are arriving at America’s southern border because President Obama has been “nodding and winking” and hinting there will be amnesty for them if they enter illegally.

Some of the trouble spots in the world have grown more serious, Shuster said, because of a lack of leadership on the part of president. And an area that has received little attention or news coverage, he said, is Southeast Asia, where China has been “pushing out” farther into what is generally recognized as international waters and claiming more of the sea as being inside its territorial boundaries.

More also needs to be done to ensure China trades fairly with other countries, he said.

And Shuster opposes a proposal to increase the federal minimum wage to $10.10.

“It would be a negative effect,” Shuster said. “The best way to get the wage up is to get the market up.”

He said when the minimum wage is increased, many employers find they have to raise all their workers’ wages.

Shuster running for an eighth term in the 9th Congressional District. His Democratic opponent is Alanna Hartzok.

White also had praise for the sponsors of Tuesday’s breakfast program. He said no chamber of commerce in his senatorial district is more active than the Indiana County Chamber of Commerce. He said he’s proud Democrats and Republicans work so well together and with their legislators for improvements in Indiana County. In many cases those people from both political parties are brought together by the chamber, he said.

EDITOR'S NOTE: This story corrected at 6:50 p.m. to identify the Democratic candidate for U.S. House in the 9th District.

Randy Wells has been a reporter and staff writer at The Indiana Gazette since 1988. His regular assignments include coverage of the Indiana County commissioners, Indiana Borough council and the Marion Center Area School District. His email address is
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