Why Pennsylvania Residents and Visitors are Still Paying Tax on a 77 Year Old Flood [Kicking Back with Jersey Joe]

On March 16, 1936 unusually warm temperatures caused a rapid melting of snow which began to fill the rivers across Pennsylvania.  By early morning on March 17^th, the rivers in both Pittsburgh and Johnstown began to overflow their banks and the St. Patrick’s Day Flood of 1936 was on and it is still being paid for today.

By late morning, many cities were completely underwater, which lasted for five days.  It wasn’t until March 21^st that the flood receded enough to allow clean up to begin.  The damage to homes, businesses, and the steel mills cost $4.19 billion in today’s dollars to Pittsburgh alone.

In Johntstown 30,000 were left homeless.  Check out this historic newsreel sensationalizing the devastation:

To help offset the cost, the Pennsylvania government quickly approved The Johnstown Flood Tax.  Although other major cities in the state were also affected, it was named for Johnstown which seemed to take the brunt of it.  The 10% tax was added to every bottle of liquor purchased by anyone anywhere in the state.

The tax quickly racked up enough cash to rebuild Johnstown and Pittsburgh.  However, the state never shut it down.  Instead, they expanded it and continued to fill the state’s money vaults.  The tax was raised to 18% in 1968.  Take a drive through PA, stop at a liquor store – and you’re paying it!

The tax rakes in over $200 million annually.  The state places the cash in the general fund for use on various projects.

Trouble is, most people don’t realize they’re paying it.  It’s not marked as part of the additional 6% state sales tax on customer receipts from a liquor store.  I lived in PA for almost 30 years and I had no idea this was ever going on, since it was enacted long before my time.  I gave my PA grandmother a call and she had no idea about it, even though her family has been paying it since she was a child.

Pennsylvania residents have begun to express serious outrage with the state’s tax system.  In 2006, casino gambling was legalized and casinos were constructed.  The promise of permitting gambling was to give residents a break on their property and school taxes as the state’s cut from gambling would be able to cover the cost.  To this day, most residents never saw those tax cuts and instead, property and school taxes continue to rise.

A grass roots campaign has been organized to eliminate the tax at johnstownfloodtax.com and on facebook.com/RepealTheJohnstownFloodTax.

The flood tax has even been a target of conservative talk show host, Glen Beck who wrote about it in his book, Arguing with Idiots.

Johnstown, Pennsylvania floods again in 1977.

One of the solutions to prevent Johnstown from flooding again was designed by the US Army Corps of Engineers.  Large cement flood walls were constructed along the banks of each river in the city proper to help assist drainage and keep water moving downstream during times of high water.  After the walls were constructed later that year, the city was declared “flood free,” although that was not meant to be as the city flooded again in July 1977, again causing massive damage and requiring financial support from the state.  In this case, the flood tax worked, but it has been one of the few times since enacted that financial support was needed.

In March, State Representative Michael Sturla proposed an amendment to rename the tax the “Tom Corbett Liquor Privatization Tax” as part of an ongoing debate to privatize the state’s liquor control board and allow for more privately owned liquor stores to open.  Currently, the powerful liquor control board has a virtual monopoly on all sales of booze in the state.

High water marks on city hall from the 1889, 1936, & 1977 floods in Johnstown, Pennsylvania.

THE 411

Name: The Johnstown Flood Tax

What: 18% tax on liquor purchased in the state

Where does the money go: Pennsylvania general fund

JERSEY JOE RECOMMENDS:

The 18% tax is on top of the 6% state sales tax on alcohol, that’s increasing the price by a total of 21%.

The tax is good idea if it is being used in the right way, such as flood control projects and disaster rebuilding.  However, the tax is so old, most people have no idea they are paying for it.

To be fair, it should not be factored into the cost of a bottle of booze, but should be spelled out as a charge on the customer receipt.  If the funding is no longer needed – eliminate it or at least let people know that they are paying it.  Is this just another way to hide a tax and keep it out of site – out of mind?

I’m not taking a stance either way on the issue, but I was shocked to find that this tax does exist.

Image credits – Richard Clark, waferboard, wwward0, Lost in Scotland, killian.3158