Pa. governor insists income tax hike plan not dead
Pa. governor insists income tax hike isn't dead as House Dems work to drum up support for plan
By Mark Scolforo, Associated Press Writer
On Friday July 17, 2009, 3:50 pm EDT
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HARRISBURG, Pa. (AP) -- Gov. Ed Rendell said Friday he has not abandoned his proposal for a temporary increase in the state's personal income tax, calling it the fairest and easiest way to balance Pennsylvania's overdue budget.
The idea of increasing any broad-based tax has run into stiff headwinds from Republicans as well as a fair number of Democrats worried about how it might affect the economy or their own re-election prospects, prompting rumors that the proposal was dead.
A weak revenue year and the possibility of deep cuts to government programs has led Rendell and his Democratic allies to float a number of tax increase proposals. And that's a major sticking point as negotiators attempt to find common ground on a state spending plan already 17 days past due.
"When you look at what will be necessary to cobble together the kind of money we need, it is abundantly clear to me ... that the fairest and in some ways the easiest way to meet the revenue needs" is to increase the income tax, Rendell said at a Capitol news conference.
He said he hoped lawmakers would agree, but was willing to sign any budget legislation that provides sufficient money to protect his spending priorities, such as education.
The Democratic-controlled House rejected a Republican budget bill Thursday, and on Friday began consideration of a Democratic plan that did not include a funding source for nearly $1.3 billion in support for the State System of Higher Education, student loans, community colleges and a post-secondary technology school in Lancaster.
It was expected to pass with little or no GOP support and be sent to the state Senate, where it probably will be altered to more closely resemble the budget plan passed in early May with no Democratic votes.
Also Friday, slightly more than 33,000 state employees were cashing partial paychecks because the state lost legal authority for much of its spending when July 1 arrived without a budget.
Rendell also announced steps to help state workers avoid financial catastrophe, including the addition of 20 financial institutions willing to provide special low- or no-interest loans and more aggressive attempts to educate the government work force about the aid that is available.
"The short-term effect on state employees cannot be the tail that wags the dog," Rendell said. "But having said that, we are deeply concerned about the welfare of our state employees."
David R. Fillman, executive director of Council 13 of the American Federation of State, County and Municipal Employees, called it "another dark day in the history of Pennsylvania."
"Employees who were hired to do a job and expected pay every two weeks have come up short," said Fillman, whose union represents about 44,000 state workers. "It's totally disgusting."
A spot check of some of the state's largest agencies showed no indication that absenteeism was any higher than normal, the state Office of Administration said.
In Philadelphia, Mayor Michael Nutter announced the city was delaying all payments to vendors who have contracts with the city and to review all new capital projects. With $197 million on hand right now, the city will continue to pay workers and make debt service payments.
Faced with its own $1 billion, five-year budget deficit, the city has asked the state Legislature to approve a temporary increase in the city's sales tax and allow the city to delay payments to its pension fund.
Until a state budget is passed, the city also will be without millions of dollars in reimbursements for such programs as child welfare and juvenile detention.
Nutter said he hopes that city vendors will understand and promised that the city will pay once a state budget is passed.
"You're just not sending a check right now," he said. "It's a delayed payment."
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