Rendell budget plan: Shave sales tax, widen its scope
HARRISBURG - Gov. Rendell today unveiled a $29 billion state budget for fiscal 2010-11 that would trim the state sales tax but make it apply to dozens of previously tax-exempt items and services, from lawyers to licorice.
HARRISBURG - Gov. Rendell today unveiled a $29 billion state budget for fiscal 2010-11 that would trim the state sales tax but make it apply to dozens of previously tax-exempt items and services, from lawyers to licorice.
The overall budget plan - the last for the Democratic governor - counts on more than $2.7 billion in continued federal stimulus money and, as a result, would increase overall spending by 4.1 percent from the state's current levels.
Basic education subsidies to Pennsylvania's public schools would jump 6.4 percent, or $355 million, under the governor's fiscal blueprint.
In a speech to a joint session of the General Assembly this morning, Rendell called the spending package "a budget that works."
"It balances the needs of our citizens with the financial pressures that the national economic downturn has imposed," he said. "It readies our young people and businesses for the opportunities a reviving economy will bring."
To offset a decline in federal stimulus dollars, Rendell is asking the legislature to rewrite the state's sales tax structure, reducing it from 6 to 4 percent but making it apply to a host of products and services that have been tax-free.
Among the proposed 74 things Rendell would tax are personal hygiene products, candy and gum, dry cleaning, legal services and newspapers. Food and clothing and services such as health care and tuition would remain untaxed.
In all, Rendell estimates that the changes, planned to start in September, would produce $530 million in new revenue to the state. The money would be stashed into what Rendell is calling the "Stimulus Transition Reserve Fund," and help the state wean itself from an expected loss of more than $2 billion in federal aid in 2011.
Rendell also has proposed imposing a new tax on cigars and smokeless tobacco products and natural gas pumped from in the state.
The governor also has asked lawmakers to cut the state's Corporate Net Income tax paid by some businesses from 9.99 to 8.99 percent, while also closing what is known as the "Delaware Loophole" - a provision that allows companies to shelter profits from Pennsylvania taxes.
Rendell also vowed to meet early and often with lawmakers to avoid a repeat of his past seven years, when budgets were approved after the June 30 deadline. This fiscal year, the spending plan was overdue by 101 days.
"Ladies and gentlemen, we can disagree about what's in the budget, but let's agree today that we will get on with the budget and get it done on time for the people of Pennsylvania," he told legislators.
