WASHINGTON -- Pennsylvania Gov. Ed Rendell yesterday urged Congress to pass a compromise that would extend the moratorium on Internet taxes without further devastating the already-cash-strapped budgets of states and localities.

Rendell joined two other governors and a quartet of senators at a Capitol Hill news conference designed to whip up support for the compromise. Under the measure, the 5-year-old moratorium on Internet taxes, which expired Nov. 1, would simply be extended for two years.

The compromise is an effort to block legislation, passed by the House and pending in the Senate, which would permanently ban states and localities from imposing Internet taxes. Supporters of the permanent ban, sponsored by Sen. George Allen, R-Va., and Rep. Chris Cox, R-Calif., say it is necessary to keep Internet access affordable for all Americans.

Rendell and others at the news conference agree that Internet access should not be taxed. But they argue that the Allen-Cox legislation contains a too-broad definition of Internet access that would prevent states and localities from collecting revenues on types of telecommunications services that currently can be taxed.

For example, states now collect taxes on local and long-distance telephone services. But these services are increasingly being "bundled" with other services, including Internet access, by telecommunication companies. In that case, the Allen-Cox legislation would prohibit states from taxing the phone services, Rendell and others say.

The result, they maintain, would be billions in lost revenues for states and localities. Even more important is the fact that the legislation would restrict the taxation authority of states and localities -- an authority that they argue is guaranteed by the U.S. Constitution.

"This is the first time ... that the federal government has crossed the line and tried to take away some of our taxing power," Rendell said. If the Allen-Cox bill is approved by Congress, he said, "somebody is going to have to pay" to make up for those lost state and local revenues.

"What will likely happen is that services will be cut. ... It's unnecessary and shouldn't happen, and we ought to be putting the brakes on it," Rendell said.

But Allen contends that extending the moratorium temporarily "is just another excuse to provide the opportunity for states to begin taxing Internet access."

Such taxes could raise the cost of a high-speed Internet connection by $10 to $15 per month, Allen predicted. "Such a proposal would ... further exacerbate the digital divide."