Posted on 02/07/2007 7:08:48 AM PST by Namyak
New taxes fuel Rendell's $27.3 billion budget
By PETER JACKSON Associated Press Writer
HARRISBURG, Pa. (AP) -- Gov. Ed Rendell asked Pennsylvania lawmakers Tuesday to approve higher taxes for consumers, employers, tobacco users and waste haulers to help finance a $27.3 billion budget that includes initiatives in health care, energy and property-tax relief.
Rendell also suggested the possibility of leasing the Pennsylvania Turnpike to a private operator and levying a new tax on oil-company profits to raise the necessary $1.7 billion for highway and bridge improvements and mass transportation.
The budget, the first of Rendell's second term, also calls for raising the sales tax from 6 percent to 7 percent - the first increase in 39 years.
The Democratic governor said he is sensitive to the political risks of increasing taxes, but added, "I believe we have no choice."
"We must put our own house in order, regardless of the fact that others are responsible for damaging it. We must fund the obligations imposed on us by federal law. And we must continue to provide services to our most vulnerable citizens," he said.
Republican legislative leaders were not as enthusiastic.
"I think there was a stunning array of different new taxes we need to look at," said Senate Majority Leader Dominic Pileggi, R-Delaware, adding that the "climate for tax increases right now is a difficult one."
Overall, the budget for the year that starts July 1 would increase state spending by 3.6 percent, to $27.3 billion. That works out to nearly $2,200 for every man, woman and child living in Pennsylvania.
A portion of the sales-tax increase would be used this year to cut property taxes for non-senior homeowners a year ahead of schedule. In the future, about $700 million a year - half the amount of the increase - would be earmarked to supplement the $1 billion a year in property-tax reductions that slot-machine gambling is expected to generate.
To help extend subsidized health insurance to about 800,000 adults who lack coverage, Rendell proposes a 3 percent payroll tax on employers that do not provide employee insurance; increasing the $1.35-a-pack cigarette tax by a dime a pack; and taxing smokeless tobacco and cigars for the first time. The governor's plan also would outlaw smoking in workplaces, restaurants and bars.
Regarding the turnpike lease, Rendell said he wants assurances the state would maintain some control over certain aspects of the 500-mile-plus roadway, such as toll increases. The administration estimates such a deal could generate as much as $965 million annually.
And Rendell signaled an eagerness to impose a new tax on oil companies - which he said are playing "a sophisticated shell game" to dodge the state's corporate net-income tax - to bail out cash-strapped mass transit agencies around the state. If the proposal is approved, oil companies would be exempt from the existing tax but would pay more than 10 times as much through the gross-profits tax.
"It is time for the oil companies to finally pay their fair share of the transportation tax burden in Pennsylvania," he said.
To promote alternative energy sources and increase energy conservation, the governor is seeking legislative and voter approval for an $850 million bond issue. The borrowing would be paid off with revenue from a new "systems benefits" fee on the sale of electricity, which is expected to cost the average residential customer about $5 a year and the average industrial user nearly $900 a year.
Rendell proposed increasing the tax on municipal solid-waste disposal to raise millions of additional dollars for the state's hazardous-waste cleanup program and environmental stewardship fund.
The National Federation of Independent Business, a small-business advocacy group with 18,000 Pennsylvania members, said the tax proposals will force many businesses to choose between laying off employees or deferring investments.
"When taxpayers called for reform last November, they did not intend for bigger government and higher taxes," said Kevin Shivers, the group's state director.
Rolf Hanson, director of the Associated Petroleum Industries of Pennsylvania, an arm of the American Petroleum Institute, said the cost of the proposed oil-company tax would likely be passed along to motorists through higher retail prices.
"Ultimately, there's one taxpayer, and it's the consumer," he said.
Rendell also proposed expanding the state prison system by at least 2,000 beds in 2007-08. The expansion, which the administration says is necessary to accommodate a burgeoning prison population already thousands of inmates beyond capacity, includes plans to reopen the state prison in Pittsburgh this summer.
In his 55-minute speech, the governor also touched on non-budgetary topics, such as gun control.
Rendell urged passage of a state law limiting handgun purchases to one per month per person, a proposal he has long advocated, and said he favors empowering local communities to pass their own gun laws. He also called for laws to upgrade the possession of a stolen gun to a felony and to require gun owners to report the loss or theft of a firearm to police.
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"We must put our own house in order, regardless of the fact that others are responsible for damaging it. We must fund the obligations imposed on us by federal law. And we must continue to provide services to our most vulnerable citizens,"
The easily verifiable fact is that Rendell and his ilk are wholly responsible for the financial straights that Pennsylvania is in. Rendell's budget reads like a liberal wet-dream, and it's only the tip of the iceberg, because at the end of the article he mentions tackling Pennsylvania's firearm freedom problem.
The PA Turnpike as is, throws off some $300 million per year in cash. They bring in $400 million per year, spend $50million on maintenance and some more on salaries, and the rest is surplus.
PA wanted "CHANGE" and so they voted for Rendell.
Rendell will be glad to take change even if he doesn't make change.
rendell has completely lost his mind. the republicans in the state senate better put the breaks on his plans or pa will be driven straight into the ground. people in this state better start paying attention.
Hmm..I thought all those slot machines and gambling lic's were supposed to bring property tax relief??!!!
Pennsylvania had a surplus under Gov. Ridge. The first thing Rendell did when he got in office was raise the income tax rate. We rewarded him for that by reelecting him in a landslide. Why shouldn't he go for broke and raise the sales tax, gas tax and anything else he can? The stupid voters in Pa gave him a mandate. By the way, our local newspaper refers to these taxes as "fees". I guess that's supposed to make them more painless...
All those people in Pennsyltucky should bow to Fast Eddie and thank him because he gave them what they voted for...and then elect John Street as the next gubner.
Wow.... that's a relief. I was afraid he was going to raise taxes on my el;electric bill. BTW, for those of you who don't live here in Pennsylvania, this is the third time this phony fatass has promised to reduce or 'eliminate' property taxes.
So he wants to help property owners with their taxes. Well, I don't own any property; I rent and I very much doubt the landlord will lower my rent any when (if) he gets his property taxes lowered.
I really think I am ready to leave Pennsylvania for good. It's run by a bunch of greedy sons of b!tches who are out to get every last dime they can before they run this state into the ground. I don't feel like waiting around for that.
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