Let flood tax revenue flow into struggling cities
The first question anyone should raise about the Johnstown Flood tax – an 18 percent levy on alcohol sales in Pennsylvania – is why is it still there? Why should people keep paying this tax, decades after Johnstown was able to rebuild in the wake of a 1936 flood? The short answer is: Because it’s a sweet, sweet revenue plum. Subsequent legislatures not only didn’t kill a tax that outlived its purpose, but raised it twice. (Originally it was 10 percent.) Now it brings in $240 million a year.
State Rep. Robert Freeman, D-Northampton, has devised a rational plan to distribute the tax to municipalities struggling under the weight of tax-exempt properties.
Many towns, including county seats and those that are home to colleges, feel this pinch. Under Freeman’s bill, which was approved by state House Local Government Committee, Easton would receive $1.8 million, Bethlehem $3 million and Allentown $6 million.
Freeman has addressed some of the initial flaws in the legislation. For example, shares for Philadelphia and Pittsburgh would be capped. The bill faces tough vetting before the House Appropriations Committee, which will be soliciting suggestions on plugging a $240 million budget hole.
Yet the time to respond to the needs of cities and boroughs dealing with tax-exempt property is now – while the state is still enjoying budget surpluses. Freeman’s strategy is a response to a dilemma that municipal officials have been bringing up for years.
If the Legislature doesn’t have the stomach to kill an obsolete tax – and no one is holding his breath – it should recognize that many towns are going under through no fault of their own, and redirect the flood tax revenue.
Freeman’s bill would address this need.