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6/21/2009 3:32 AM

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No one likes to pay more taxes, so the popular reaction to Gov. Ed Rendell's proposal for a half-percent increase in the state income tax is largely negative. It stood at 2.8 percent when Rendell took office and this raise, to 3.57 percent, would be the second of his administration.

Rendell wants the rate increased for three years. But he will leave office at the beginning of 2011, and no one can predict when the economic situation will be a year beyond that. State government does not have a good track record when it comes to "temporary" taxes. A 10 percent tax on alcohol sales to pay for damages caused by the 1936 Johnstown flood is still on the books.

Raising taxes in a recession is generally a bad idea. This increase would take an additional $5 each week out of the take-home pay of a family earning $50,000 a year - at a time when many Pennsylvanians have seen their wages frozen or cut.

So it is easy to make the case against an increase. The hard part is deciding what programs the state should cut to make up a budget shortfall that was estimated at $2.3 billion in February and is now expected to be $3.2 billion.

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Every program has a constituency that expects to be heard in Harrisburg. As one example, we ourselves have complained that public libraries are not being funded adequately.

There is $750 million in the state's Rainy Day fund, and Rendell wants to tap $250 million of that this year and then $375 million in the next fiscal year. Unfortunately, Senate Republicans oppose taking anything from the fund, a position that is unrealistic. The Rainy Day fund exists to cover economic emergencies, and that is an accurate description of what the state is facing at the moment.

If the Senate Republicans are wrong on that point, they are correct in proposing to reduce the Legislature's operating funds by 10 percent, using $100 million of its reserve fund. In fact, this is the least they can do. It would leave "only" $100 million in the fund. Other states require that surplus legislative money be returned to the general fund each year. Only in Pennsylvania does it continue to accumulate and can be used for such mischief as the staffers' bonus scandal of a couple of years ago.

An Associated Press story last week called attention to the fact that Pennsylvania is one of several states that announced hiring freezes but then made wide exceptions. The state has brought in more than 1,000 new employees since Rendell declared the freeze last September.

Some of these hires are clearly discretionary - $128,000 for a fiscal director and $84,000 for a press secretary, for example. But many others are necessary - prison guards, nurses, etc. - and some are to maintain staffing levels required by law or union contract. Laws, of course, can be changed, but the realities of the legislative process are such that the present economic pinch could be long gone by the time any charges are made.

The Legislature is supposed to adopt a budget by June 30, a deadline that it frequently misses. The chances of working out a compromise on this within the next nine days are probably nil, but the hard choices have to be made.

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3 comments

Use common sense : 6/21/2009
The quickest way to cut the budget is to reduce redundacy and duplicity - fire ALL the politicians, retire all those bureaucrats who have in 20 years "service", and get rid of the public "service' unions so that the people are served instead of the unionist's and politician's pockets. Do things so that more businesses can afford to hire more people and get more people back to work. Not hard to figure.

ns

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Spendell : 6/21/2009
Rendell and his secretaries have lost any credibility they may have had. It's time for them to move-on before they do more damage.

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The State must live within the Budget : 6/21/2009
Why should any government be able to raise taxes just so all the programs "They Want" are funded. Let's go back to basics , don't spend what you don't have. Review the required expenses and cut those that will hurt the majority the most! Cut jobs ( layoffs) of those who don't provide a "required" function, cut operating expenses and cut the size of state government in general

PJM

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