HARRISBURG -- Suddenly, the Rendell administration wants homeowners to pay a 20 cent "assessment" for every $100 in home insurance premiums to help pay for flood control projects.
"Let's call it a tax," Sen. Mary Jo White, R-Venango County, said Tuesday. "You can argue it's not a lot of money, but when does it get to be too much?"
The proposed tax would affect all Pennsylvania homeowners, regardless of whether they live in flood-prone areas. It would apply to business and residential property insurance.
"It's a matter of life and death," said Kathleen McGinty, secretary of the Department of Environmental Protection. "We are one of the most flood-prone states in the nation."
Gov. Ed Rendell yesterday backed the plan McGinty touted as the nation watched much of Iowa struggle with record flooding. In his February budget proposal, Rendell suggested a 7 cent tax on every $100 of home insurance premiums, but he didn't explain why the amount nearly tripled in four months.
"We're not used to seeing a tax increased before it is enacted," said Sam Marshall, CEO of the Insurance Federation of Pennsylvania.
The state's average premium is $624 a year, according to the Insurance Information Institute's Web site. That would mean a tax of more than $1.20 for flood mitigation.
Rendell said he thinks it's fair to levy that tax on people living miles away from areas plagued by flooding, because "when there are floods ... it gets passed onto all of us." The state funnels taxpayer-funded aid to communities ravaged by floods, he said.
Brian Wolovich, a Millvale homeowner, said he appreciates that government officials want to help flood victims but doesn't see the point of the proposed tax. Wolovich's house flooded in August, but he didn't get state money to help with repairs.
He'd rather see flood programs paid for by the Johnstown flood tax, enacted in 1936 to raise money for victims of that disaster. Revenue from the 18 percent tax on wine and liquor goes into the state's general fund.
"You're overtaxing people," said Wolovich, 31. "What is happening with the Johnstown flood tax money, and why is that not being redirected to flood victims?"
But Lynnell Yerman said she wouldn't mind paying the surcharge because some of the money would help people in need.
"I think it would be fine, because with the way the weather's been, people in the U.S. need help," said Yerman, 47, of Ross. "What's it going to be, a dollar or two? That's less than a cup of coffee."
The tax would be levied on insurance companies, but companies would pass the cost along to consumers, Marshall said.
"We're a pass-through business," Marshall said. "We're no different than your business or any other business out there."
Flood mitigation is important, but the approach is flawed, he said.
Sen. Jane Orie, R-McCandless, said Senate Republicans aren't likely to support a tax increase, no matter how small. A bill passed by the Senate last week, to use slots money, is a better approach, Orie said.
Senate Bill 2 authorizes an $800 million bond issue, with at least $100 million dedicated to flood control projects, said Erik Arneson, communications and policy director for Senate Majority Leader Dominic Pileggi, R-Delaware County. Gambling revenue would be used to pay off bonds for infrastructure improvements.
McGinty said Monday she is backing House Bill 1989 by Rep. Jim Wansacz, D-Lackawanna County, which would nearly triple the insurance premium assessment Rendell proposed.
Rendell's proposal was to help about 80 communities with flood control projects as part of his "Rebuilding Pennsylvania" plan. It's not clear how many projects would be undertaken with increased funding.
Brad Bumsted can be reached at bbumsted@tribweb.com or 717-787-1405. Jenny Paul can be reached at jpaul@tribweb.com.
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