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Welcome to "Mike's Memo," an update on what's happening in the 48th Legislative District, the State Capitol, and the progress of my legislative priorities. If you haven't done so already, please take a few moments to visit my website at www.senatorfolmer.com to learn more about issues that may affect you and your family.

Week of March 6, 2017

March Community Report Cable Show:  911 Rapid Response
My March cable show is ready to watch!  Check out 911 Rapid Response in Annville, Lebanon County, an all-inclusive small business providing complete emergency vehicle installation services, custom decals, a gun range, embroidery shop and EMS apparel retail store, all under one roof!  A great small business success story!  You can also watch the show on Comcast on Demand and Harrisburg Broadcast Network (Harrisburg, WHBG-20).

March 2017 - 911 Rapid Response

PA Department of General Services Budget Hearing
The Senate Appropriations Committee budget hearings are underway.  As Chair of the Senate State Government Committee, I had the opportunity to question PA Department of General Services Secretary Curt Topper.  You can watch my question and answer session with the Secretary here, and the entire hearing here.  I look forward to working further with the Department throughout this legislative session regarding procurement issues and more.  On March 6, I look forward to participating in the PA Historical and Museum Commission budget hearing at 3:30 p.m., and on March 9, the Budget Secretary/Secretary of Administration/Governor’s Executive Office budget hearing at 1:00 p.m., both to be held in Hearing Room One of the North Office Building.

Lebanon County Commission for Women 2017 Hall of Fame Inductees
The Lebanon County Commission for Women will honor 13 outstanding women at the annual Women’s Hall of Fame luncheon on March 22.  These hidden heroines are shining examples of community spirit whose many contributions are worthy of deep gratitude and respect! Congratulations on their selection for induction in the following categories:
Linda Krall
– Women Promoting Agriculture
Beryl Hoffman – Women Contributing to the Arts
Mary Gardner – Women Advocating Athletics
Priscilla Wolfe – Women Contributing to the Community
Lillian Morales – Women Contributing to the Community
Maryann Guldin – Women Promoting Leadership in Education
Amanda Musser – Women Promoting Healthy Lifestyles
Phyllis Weiant – Women Promoting Healthy Lifestyles
Marianne Goodfellow – Women Promoting Justice
Sue Allwein – Women Demonstrating Leadership
Amy Shaffer-Duong – Women Fostering Advances in Science/Technology
Nori Fisher
– Trailblazer
Jennie Horstick – Trailblazer

Column:  Taxes
The 2017–2018 budget process began with the Governor’s budget address and has continued with hearings of the House and Senate Appropriations Committee. There are certainly no shortages of ideas on how to address Pennsylvania’s structural deficit.

Some think we can spend our way out of the hole.  However, as Winston Churchill once said:  “We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to pull himself up by the handle.”

Meanwhile, others want to raise taxes.  Last year, the big push was for higher tobacco taxes, which were passed:  $2.60 per pack and $0.13 per little cigar.  The first cigarette tax was enacted in 1935 as a “temporary” emergency tax of 0.1 cent per cigarette.  It was made permanent in 1951.  If tobacco taxes succeeded in getting people to stop smoking today, Pennsylvania’s budget would have another $1 Billion shortfall – that’s how much the Commonwealth collects from tobacco taxes.

Rarely are the implications of higher taxes put into perspective.  As the late author and humorist Peg Bracken once said:  “Why does a ‘slight’ tax increase cost you two hundred dollars and a ‘substantial’ tax cut save you thirty cents?”  When someone says “this tax increase will only cost a few cents a day,” think about holding 100 pounds and having someone add another five pounds:  it’s heavier, not lighter.

I recently saw an article referencing a new tax plan from 100 years ago where state lawmakers then were proposing a 2.5% tax on coal for highway construction and repairs and for new revenues to municipalities where coal mines or coal washing operations were located.  In 1917, Pennsylvania’s coal production was over 100 million tons and employed 757,317 people.  A hundred years later, total production is 51,169 tons and supports about 36,200 jobs – 13,000 directly related to coal mining.

Obviously, as times change, so do the impacts of taxes, which is why I believe it’s important for government to first live within its means before even considering taxes.  To me, taxes should be the absolute last resort – especially since all levels of government have generally grown faster than taxpayers’ ability to pay.

The Corporate Net Income Tax (CNI) was first imposed in 1935 at a rate of 6%.  In 1977, it was “temporarily” raised to 10.5%, which was made permanent in 1982.  The current rate is 9.99%.  In 1991, the rate reached a high of 12.25%.

In response to the 1936 Johnstown Flood, that General Assembly enacted a “temporary” emergency tax of 10% on liquor, which was to expire May 31, 1937.  Over the years, this sunset date was extended many times until it was made permanent in 1951; the current rate is 18%.

The Realty Transfer Tax was enacted in 1951 – also as a “temporary” tax.  It was made permanent in 1961; its rate has always been 1%.

The Sales and Use Tax was another “temporary” tax first enacted in 1953 and eventually evolved into support for public education.  This “temporary” tax started at 1% and has grown over the years to its current 6% (although the initial 6% was also to be “temporary” until 1969; however, that year, the 6% was made permanent).  Allegheny County imposes another 1% on purchases, while Philadelphia adds 2% for purchases (with 1% being yet another “temporary” tax to address that City’s pension problems).

The Personal Income Tax was imposed in 1971 at 2.3%.  Over the years, the PIT rate has varied (some increases were to automatically “sunset”).  The PIT reached its current high in 2003 when it was set at 3.07%.

“Temporary” taxes are rarely temporary.  That’s why the late Milton Friedman said:  “Congress can raise taxes because it can persuade a sizable fraction of the populace that somebody else will pay.”

PennDOT Summer Internships for Students
The PA Department of Transportation is offering summer internships for students in the engineering, science, and technology fields.  Internships are offered in areas including seasonal construction, roadway data collection, and roadside development.  Applications will be accepted through March 30. Find more information here.


Contact Information
Please feel free to contact me at any time on state-related issues that are of concern to you. I may be reached through my website or my Lebanon or Harrisburg offices.

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