Rendell: Widen sales tax to ease budget crunch

HARRISBURG - Gov. Rendell said yesterday that he would support an expansion of the state sales tax as a way to end the budget crisis.

Numerous products and services - including sports tickets, dry cleaning, and toothpaste - are exempt from the 6 percent sales tax, and Rendell said it was time to consider taxing them.

"We need to look at a lot of exemptions," he said at a news conference, giving candy and gum as examples.

He agreed that food and clothing should remain exempt, but said there was no reason that candy and gum should be classified as food.

The state is now 55 days into the new fiscal year without a budget.

House Minority Leader Sam Smith (R., Jefferson) said in a statement that he strongly objected to expanding sales taxes during the recession. But Senate Republican leaders said they would be open to considering expanding the sales tax on limited items.

The expanded-sales-tax proposal cropped up in 2006, when Rendell and legislative leaders were trying to find a way to bring greater property-tax relief than would come from slot-machine revenue.

Rendell said yesterday that budget negotiations were progressing on an agreed-upon spending plan that would total about $28 billion.

"We're relatively close to agreeing on a spend number," Rendell said.

That assessment surprised Senate Republican leaders, who said they hadn't met with Rendell in three weeks.

"The governor's report of an imminent agreement is news to us," said Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi (R., Delaware).

While Arneson characterized the meetings among legislative leaders as "productive and ongoing," he said, "We are far from the end of this process."

Rendell, too, conceded that there was no agreement on how to raise revenue - with the Senate Republicans firmly resisting various tax-increase proposals - and that as a result the current spending figure would leave a sizable debt next year.

He said that of the 40 states that completed budgets this year, 33 had done so with a mixture of revenue generators and spending cuts.

"We need to do the same," he said. "The reluctance to do that has caused this problem."