Governor’s budget includes $2.5 billion in tax hikes

Consumers would pay more for retail purchases, utilities

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Senator Bob Regola, R-39^th District, today emphatically rejected Governor Rendell’s request for $2.5 billion in new and increased taxes as part of his proposed 2007-08 Fiscal Year state budget.

“The Governor’s request for this massive tax increase is simply unacceptable,” said Senator Regola, the prime sponsor of the proposed Taxpayer Protection Act. “These taxes would increase the costs of retail goods and utility services. They will cut deep into family budgets and quite possibly cost jobs. I cannot and will not support these tax increases.”

Governor Rendell’s budget for Fiscal Year 2007-08 includes proposed tax increases (including a 16-percent increase in Pennsylvania’s Sales and Use Tax) totaling more than $2.5 billion on an annual basis. Further, a new tax projected to cost employers $60 million in FY 07-08 would cost nearly $2 billion annually after four years.

The $27.2 billion general fund budget for FY 07-08 includes nearly $1 billion ($947.9 million) in new spending, which represents a 3.6 percent increase over the $26.3 billion state general fund budget for FY 2006-07. However, with adjustments for $211 million in supplemental appropriations, the budget total is $27.4 billion, a 5.25 percent increase in spending over the current fiscal year.

That amount would be well over the limit imposed by the Taxpayer Protection Act championed by Senator Regola, would limit state spending to the average inflation rate plus the average percentage change in state population over the three preceding years.

This budget proposal continues the destructive trend of runaway government spending,” Senator Regola said. “We can’t keep spending beyond our means or we will pay the price in the future for our largesse today.”

The Governor requested an increase in Pennsylvania’s sales tax, from 6 percent to 7 percent statewide, a 16-percent increase in the tax rate. Philadelphia and Pittsburgh would see their sales tax rate increase from the current 7 percent to 8 percent. Under the Governor’s request, the sales tax increase would cost Pennsylvania consumers an additional $1.24 billion in FY 07-08.

“A penny on a dollar increase in the sales tax may not seem like much, but tell that to all of the families across Pennsylvania who are struggling to make ends meet,” Senator Regola said. “This increase would also impact retailers in Pennsylvania and in the long-term that could mean the loss of jobs.”

The Governor’s proposed mass transit/oil tax is expected to cost oil companies $760 million, a charge that would be borne by consumers on heating oil bills and at the gas pump. An energy use tax, based on electric usage, will cost consumers $75 million, while a $2.75 per-ton municipal waste disposal fee will take an additional $61.4 million out of Pennsylvanians’ pocketbooks.

The Governor also wants tobacco users to pay more taxes. An additional 10 cents-per pack tax on cigarettes is projected to cost smokers $61 million annually, while new taxes on smokeless tobacco, loose tobacco, and cigars is estimated to cost consumers $30.3 million annually.

The budget includes a 3.5 percent increase ($166.6 million) for basic education subsidies for a proposed total of $4.95 billion in FY 07-08. Special Education funding would increase by $29.4 million (3 percent) for a proposed total of just over $1 billion in FY 07-08.

The budget includes a proposed $100 million increase in Department of Education’s Accountability Block Grant Program for a total of $350 million. Of that new money, the Governor is proposing $25 million be used for full-day kindergarten and $75 million go to pre-K programs.

State System of Higher Education universities will see a 3.5 percent ($16.4 million) increase for a proposed total of $483.9 million. Community colleges would see a $9.2 million (3.5 percent) increase to $273.8 million, while Pennsylvania’s state-related universities would receive an additional 2 percent each: Penn State, $5.1 million ($263.5 million total); University of Pittsburgh, $3.2 million ($164.3 million total); Temple University, $3.3 million ($172.4 million total); and, Lincoln University, $270,000 ($13.7 million total).