HARRISBURG -- A coalition of business groups is urging state officials not to balance the deficit-ridden state budget by increasing the corporate net income tax, the personal income tax or other business taxes that will make Pennsylvania "less competitive" and cost jobs.

"Don't raise taxes in a recession -- it's advice akin to 'don't light a match in a propane plant,'" David Taylor, Pennsylvania Manufacturers Association director, said at a news conference today.

His group, along with the Pennsylvania Business Council, the Pennsylvania Chamber of Business and Industry, the National Federation of Independent Businesses and a dozen others urged Gov. Ed Rendell and the Legislature not to repeat what the groups called the mistakes of 1991, when the state raised $3 billion in new taxes to correct a $1 billion budget deficit.

This year, the state budget deficit will hit $2.3 billion by June 30, Mr. Rendell has predicted, due to shortfalls in income taxes, sales taxes and other revenue.

The business lobbyists said that increasing any taxes on business is not the way to make up for the lost revenue, because it could cause companies to fold, lay people off or leave the state, costing more jobs loss of state revenue.

In 1991, the Legislature increased the corporate net income tax and the personal income tax rate, which hurt employers and citizens, said Mr. Taylor. Among the taxes imposed was a tax on computer sales and on rental cars.

"It is critical that we do the things necessary to foster a business-friendly environment, such as creating a more competitive tax structure and reforming our legal system,'' said Gene Barr, a business and industry chamber vice president.

He said the current 9.9 percent rate of the corporate net income tax is one of the highest in the nation.

The business groups urged the state to look for ways to save money, such as combining departments, agencies and programs, having the auditor general do more performance audits of programs and reinstate "sunset" dates on programs, so they don't go on indefinitely.

Mr. Rendell is set to make his 2009-10 budget address next week and will outline a variety of steps to cut spending and increase revenue to erase the $2.3 billion deficit. State agencies are worried about budget cuts and employees are worried about layoffs, while some legislators fear that some sort of tax increases may be inevitable.

Mr. Rendell is likely to propose taxing the sale of cigars and smokeless tobacco, as well as suggest a surcharge on extracting natural gas from areas of Marcellus shale in the state. The business groups said they oppose those moves also.

The natural gas extraction is a new industry in the state that could mean many jobs, and slapping a tax on it isn't the right first step, Mr. Taylor said.