Gov. Ed Rendell, trying to gather support for a series of proposed tax code changes, told an East End audience on Thursday 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, during a meeting at a 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.

Money from the expanded taxes 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 currently exempt from the tax.

He said his proposal would reduce Allegheny County's effective sales tax rate from 7 percent to 4.7 percent, rather than from 7 percent to 5 percent. That's because, in Allegheny County, there's a 1 percent sales tax collection on top of the state tax, 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 would eliminate any would-be windfall for RAD and the county.

Last year, the asset district took in $79 million. Expanding the sales tax base without reducing the RAD's half-percent take would expand its revenues by tens of millions of dollars, and would have the same effect on county and municipal revenues.

At least one member of Allegheny County's legislative delegation said Thursday that he'd be in favor of preserving that windfall to some extent.

"We cannot continue to sell the nonprofit organizations, theaters, cultural arts groups [and] libraries short," said state Sen. Jim Ferlo, D-Highland Park. "I, for one, want them to get the full value of any increase ... We've anted up God knows how much for sports teams. So let's have an equal balance for the [arts]."

The governor said that if and when the idea of broadening the sales tax picks up steam, both Allegheny County and Philadelphia -- whose sales tax rate would drop from 8 percent to 5.3 percent -- "may be knocking on the door," asking to keep a bit of the theoretical windfall.

Any changes to the county's 1 percent tax would require a partial rewrite or repeal of Act 77 of 1993, the law that enabled the RAD tax and the local tax relief fund.

In trying to sell the sales tax revisions, Mr. Rendell noted repeatedly that lobbyists have carved out a nonsensical array of sales tax exemptions.

Helicopters, the governor said, are exempted because one particular chopper manufacturer in Pennsylvania sells a lot of its product to the United Arab Emirates, which didn't want to pay the Pennsylvania sales tax. And while the popcorn at a movie theater is taxed, the candy you buy is not.

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