HARRISBURG -- State House Democrats banded together last night and pushed through a 2009-10 tax bill that calls for $1 billion in additional revenues, including a new tax on natural gas pumped from underground shale areas, a new levy on cigars and smokeless tobacco and a 25-cent per pack increase in the state's cigarette tax.
The 103-to-98 vote, mostly down party lines, capped off more than five hours of contentious debate over how to fund a $27.9 billion spending proposal.
The Democratic side of the aisle erupted in applause, but their celebration may be short-lived.
The Republican-controlled Senate is almost sure to reject the bill. That would send legislative leaders back to the negotiating table to hash out a state budget that's already more than three months overdue.
The bill would impose a severance tax on natural gas pumped from underground Marcellus shale throughout the state. The proposal also would levy a 34 percent tax and a one-time $20 million licensing fee on casino table games such as blackjack and poker. Additionally, it would increase the cigarette tax by 25 cents per pack and impose new taxes on other tobacco products.
Republicans are staunchly opposed. They prefer to raise revenue by extending the state sales tax to arts and cultural event tickets and imposing a 20 percent tax on small games of chance -- but not bingo games -- run by fraternal and veterans groups.
Senate Republicans were predictably unhappy with last night's House vote.
Erik Arneson, Senate GOP spokesman, said the bill does not have support to be passed in the Senate and that Senate leaders were reviewing their options.
"Although today's House action will delay the budget process, our focus continues to be enacting a final state budget," Mr. Arneson said. "Work will continue through the weekend to achieve that goal. At this time, the full Senate is on a six-hour call. If there is any legislative action the full Senate can take to hasten completion of the state budget, we will return to session on Saturday and/or Sunday."
One thing both sides agree on is the need to enact a budget soon. Pennsylvania is entering its 95th day without a spending plan in place.
"People are tired of this delay. Let's get something done," Rep. Nick Kotik, D-Robinson, said during last night's debate.
Both sides are feeling a sense of urgency.
"The people want this done and they want it done right," said Rep. Jeff Pyle, R-Armstrong. "Taxing them and telling them it's for their own good is not right."
Other House Republicans last night complained that Democrats are too focused on "raising taxes by $1 billion" when they should be focused on cutting state spending.
"In this economy, raising taxes is just not the way to go," said House GOP leader Sam Smith of Punxsutawney.
House Appropriations Chairman Dwight Evans, D-Philadelphia, called the budget impasse "a nightmare with no winners."
But he said the Democratic plan doesn't increase "broad-based taxes" like the income tax and sales tax, and hikes the cigarette tax by only 25 cents per pack, compared to a $3 per pack increase in Connecticut. He also said the plan includes a Republican idea of a "tax amnesty," waiving penalties for people who pay their back taxes.
Rep. Dan Frankel, D-Squirrel Hill, said it was fair for the state to impose a tax on natural gas pumped from areas of underground Marcellus shale. He said natural gas companies will make much money from the gas. He said that in the past, coal companies have "littered our landscape with scars" from abandoned mines, and the state needs money to make environmental corrections of damage caused by gas drillers.
Majority Whip Bill DeWeese, D-Waynesburg, said the tax is a small one on a "super-abundant mineral source." It has the potential to raise significant revenue without imposing a broad-based tax on income or consumer purchases, he said.
GOP leader Smith disagreed about the gas severance tax. "We're putting up a sign to the gas industry saying you're not welcome in Pennsylvania," he said.
Mr. Frankel said Pennsylvania is the only state that doesn't impose an excise tax on smokeless tobacco and cigars, a situation that he said makes no sense.
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