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Gov. Rendell Cool To State Income Tax Hike

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May 27, 2009 8:26 pm US/Eastern

Gov. Rendell Cool To State Income Tax Hike

ROCHESTER (KDKA) ― In order to balance the state budget that takes effect on July 1st, Governor Ed Rendell has proposed a number of tax increases on things like smokeless tobacco and natural gas drilling.

But now rumors are churning that the budget deficit is so bad that a bigger tax increase is needed -- like raising the state's 3.07 percent flat income tax.

So KDKA Political Editor Jon Delano put the question directly to the governor.

Pennsylvania lawmakers are struggling to balance a $29 billion budget with a gaping deficit hole of $3 billion -- so could an income tax hike be in our future?

"Is it in the works as far as you're concerned?" Jon Delano asked Governor Rendell.

"Well, right now, I don't think so. We're tracking revenue, and revenues continue to fall lower than expected. That creates more pressure. Can we get through this coming budget without raising taxes? Yes," Rendell said.

The governor is cool to the talk of an income tax hike coming out of the office of House Appropriations chairman Dwight Evans -- but he's clearly worried about making ends meet in the state Capitol.

"We've $1.1 billion out of the state budget, and I'm prepared to announce next week the cuts of several hundred million dollars more. That in my judgment ought to do it, but I just don't know what the revenue is going to look like."

The Republican state Senate already passed a no-tax increase budget.
"We cut some, and he cut some, and we cut a little bit more," says state Sen. Elder Vogel, a Rochester Republican. "But in a tough budget year, a lot of families are being asked to tighten their belts pretty hard, and we think we can do the same and we're trying to do that."

Rendell pans the Republican budget plan.

"It's a budget that was a non-starter from the beginning. They knew it was ridiculous. It was just doing ideologically posturing. It was a budget that would destroy so many things in the state, including public education, and we're not going to let that happen."

And the governor says he'll nix a budget that cuts economic stimulus programs -- and he defends his proposed taxes on tobacco and Marcellus shale gas drilling.

But as for a broad-based income tax hike, Rendell remains hopeful he can avoid it but is non-committal.

"I can't predict where revenues are going to fall. If you tell me what the revenues are going to be at the end of the year, then I'll tell you, yes or no," he said. "Right now, we're going to do everything we can to avoid it. And I think we can."

While the governor appears to rule out an income tax hike for this year -- if at all possible -- he said he has no intention of leaving his successor a budget and tax crisis in 2011.

That means, he says, what happens next year will depend on whether more Pennsylvanians can get back to work, paying taxes, and bringing in more revenue to the state.

But politically, neither Democratic nor Republican legislators will be keen to raise income taxes, especially in an election year.

(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)

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