Gov. Ed Rendell, trying to gather support for a series of proposed tax code changes, told an East End audience today that Pennsylvania would need the extra revenue from expanded sales, tobacco and natural gas taxes to forestall an economic "tsunami" in 2012.

"The budget picture is not good news," he said at Borders bookstore. "There is a storm coming that will make what we have gone through the last two years seem like a light mist," thanks to an absence of federal stimulus money and a big increase in contributions to the state's employee pension fund.

The money would be socked away into a "stimulus reserve fund," which couldn't be touched until the governor is out of office.

Mr. Rendell, a Democrat, said several of the proposed changes ought to be no-brainers -- particularly revisions to the state's business tax structure, the extraction tax on Marcellus Shale natural gas, and a new levy on cigars and smokeless tobacco. As for the sales tax, the governor, in his February budget address, proposed reducing the statewide sales tax from 6 percent to 4 percent and expanding the tax base, allowing collection on 74 categories of goods and services that are currently exempt.

He also said that his proposal would reduce Allegheny County's sales tax rate from 7 percent to 4.7 percent, rather than 7 percent to 5 percent. That's because, in Allegheny County, there's an additional 1 percent sales tax collection, half of which is diverted to the Allegheny Regional Asset District. Since 1995, RAD has been spending the extra half-percent on sports stadiums, libraries, parks and cultural programs.

The other half of the 1 percent levy goes to the county and its municipalities.

Reducing Allegheny County's extra 1 percent sales tax to 0.7 percent eliminates any would-be windfall for RAD and the county. Last year, RAD took in $79 million; expanding the sales tax base without reducing the RAD's half-percent take would expand RAD revenues by tens of millions of dollars, and would have the same effect on county and municipal revenues.

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