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Rendell gathers his forces for tax battle
Tuesday, June 23, 2009

HARRISBURG -- Gov. Ed Rendell spent yesterday trying to shore up votes for his plan to increase the personal income tax, but he may have more work to do for the plan to pass muster, even among fellow Democrats.

Democratic leaders in both chambers say they are behind the proposal to increase the tax from 3.07 percent to 3.57 percent but repeatedly declined to say whether the rank-and-file support it.

Senate Republicans oppose any broad-based tax increases and say many of their House brethren are like-minded.

"From conversations I've had with individual members, I know there's significant resistance in the House Democratic caucus to increase the personal income tax," said Senate Majority Leader Dominic Pileggi. "If there was support, there would be absolutely no need for the governor to make such a hard sell."

Mr. Rendell spoke with Democrats yesterday during an unprecedented joint meeting of House and Senate caucuses behind closed doors.

His aim was to sell his plan to balance the budget with a 16 percent income-tax hike that would expire in three years. The increase would amount to $250 per year, or $4.81 per week, for someone with a $50,000 salary.

The increase would provide $1.5 billion in revenue to offset the governor's $28.9 billion in proposed spending for next fiscal year, which begins July 1.

Several southwestern Pennsylvania Democrats told the Post-Gazette last week that they were wary of the proposal and would rather cut spending than raise taxes this year.

Republicans -- who control the Senate and make up almost half of the House -- largely oppose the tax increase and want to spend less than $27.3 billion, the amount they approved for the current budget.

In political campaigns last year, some of them pledged they would never vote to raise taxes.

Senate Minority Leader Robert Mellow, D-Lackawanna, said that's a disingenuous promise because hard times are unpredictible.

"You can't turn your back on people that elected you just because you made a campaign promise," Mr. Mellow said. "You could take a Draconian approach and slash and cut like we've never seen before," but that would decimate state police staffing levels, Medicaid and other programs, he said.

Republicans don't want to cut important programs, but neither do they want to burden Pennsylvanians who already are cash-strapped.

"We have the highest level of unemployment in Pennsylvania in many years, and there's significant evidence that the worst is yet to come," Mr. Pileggi, R-Delaware, said in an interview last evening. "When people are losing their jobs and having their hours cut back, for the state to reach into their pocket isn't the right thing to do."

Budget negotiations appear to be trudging along with the June 30 deadline looming and little incentive to take action until July 17, the first pay day for state employees after the budget deadline, Mr. Rendell said. If there's no authorization to cut payroll checks that day, credit unions have agreed to provide interest-free loans to state employees.

If it takes all summer to come to agreement, so be it, he said.

"There are some things worth fighting for and some things worth inconveniencing people for," said Mr. Rendell, who last July authorized a one-day partial shutdown of state government because there wasn't a budget agreement on the first payday of the fiscal year.

Speaking earlier in the day before the Pennsylvania Press Club, House Speaker Keith McCall, D-Carbon, described the current year's $3.2 billion revenue shortfall as "by far the greatest economic meltdown any of us have ever seen."

Drastic spending cuts would only transfer the burden to local governments and school districts who would have to raise property taxes to make up for decreased state funding, Mr. McCall said.

Tracie Mauriello can be reached at tmauriello@post-gazette.com or 717-787-2141.
First published on June 23, 2009 at 12:00 am