1. Challenges to Building Public and Policymaker Support for Education Sharon Ward Education Policy Leadership Center Education Finance Symposium November 17, 2006

2. RISK OF A STRUCTURAL DEFICIT 10 or 987654 or 3 AlaskaAlabamaArizonaConnecticutKansasMinnesota ArkansasGeorgiaCaliforniaDelawareLouisianaNebraska ColoradoKentuckyHawaiiIllinoisMaineNew Jersey FloridaMissouriIdahoIowaMarylandNorth Dakota NevadaRhode IslandIndianaMassachusettsNew YorkVermont New MexicoSouth DakotaMichiganMontanaWisconsin PennsylvaniaWashingtonMississippiNew Hampshire South CarolinaOklahomaNorth Carolina TennesseeVirginiaOhio TexasOregon WyomingUtah West Virginia Most at RiskLeast at Risk Number of Factors Contributing to Structural Gap

3. State Budget Risk Factors Number of services taxed under the sales tax Strength of the corporate income tax (in PA 50% of corporations who had income paid no CNIT) Taxing of electronic commerce ($705 billion - $1.1 billion) Tax preferences for the elderly Progressivity of the personal income tax Growth of expenditure needs; i.e. long-term care Tax policy choices TABOR or spending limits Failure to delink from Federal tax changes Other structural gaps Source: Iris J. Lav, Faulty Foundations, State Structural Budget Problems and How to Fix Them. Washington DC; Center on Budget and Policy Priorities (May, 2005).

4. One of the Terrible Ten: Most Regressive Tax Systems in the Nation

6. $2.7 Billion in Tax Cuts Proposed in 2005-06 Bills Reported from House Finance Committee Bill Number Description Fiscal Impact HB 153 Organ/Bone Marrow T. C. $6.3 HB 220 Career Development T.C. $20.0 HB 338 Repeal GRT (Cell Phones) $302.0 HB 344 Sales Tax Exemption Fire Equipt $83.7 HB 472 Used Computer T.C. $12.2 HB 504 Historic Preservation T.C. $25.0 HB 515 Business Tax Cut Plan $53.1 HB 529 P I T exemption 529 plans $0.16 HB 600 Military Leave Tax Credit $34.0 HB 650 Uncapping the NOL $165.6 HB 797 Reduction in CNIT Rate $288.2 HB 906 Phase-out of Inheritance Tax $936.0 HB 1062 C-B Mental Retardation T.C. $30.0 HB 1312 Rapid Phase out CSFT $334.3 HB 1586 Reduction of the PIT to 2.80% $373.3 HB 2038 Tax Credits for Internships $30.0 HB 2096 Deductions for 529 Plans $17.0 HB 2374 Motorbus Excise and Franchise. $10.0 HB 2585 Increase in the EITC $20.0 ______________________________________________________________________________ Cumulative Fiscal Impact $2.736 billion

7. National Campaign to Restrict State Spending Taxpayer Bill of Rights (TABOR) legislation modeled after law enacted in Colorado in 1994 Creates permanent, mandatory limits on state spending Limits state spending increases to a highly restrictive formula (inflation + population growth) Could be accomplished via statute or constitutional amendment Would lead to deep cuts in state spending. If spending limits were enacted in 2003, PA’s budget would be have been $1.5 billion in 2005-2006. Spending limits proposed for state government, local governments and school districts Grover Norquist: Americans for Tax Reform, Howard Rich (I kid you not)

9. Voters Don’t Like TABOR Colorado voters took a time out in 2005: After TABOR business boomed Business leaders led anti-TABOR effort Voter referenda in three states failed in 2006 Maine: 46% to 54% Nebraska: 30% to 70% Oregon: 29% to 71% TABOR leaders fared poorly at the polls Note: the 65% solution failed in Colorado (the antithesis of adequacy)

10. Talking About Education Build on strong local ties to education Education polls well continually Link education to economic development Lesson from emergency services payroll tax: 52 letters is a crisis Lesson from the infectious disease report Focus on the overall problem, not the comparison

11. Pennsylvania Budget and Policy Center 412 North Third St. Harrisburg, PA 17101 Phone: 717-255-7181 Fax: 717-255-7193 E-mail: ward@pennbpc.orgward@pennbpc.org On the web: www.pennbpc.org