For three long months Gov. Ed Rendell and lawmakers had disagreed on how to solve Pennsylvania’s $2.7 billion over-spending problem for the fiscal year that began July 1. However, a tentative deal appears to be at hand as Gov. Rendell and legislators agreed on a budget over the weekend. The bad news: The $28 billion dollar budget raises taxes, creates new taxes and uses federal stimulus money to shirk needed reforms and cuts, setting the stage for future budgetary woes.
First, the budget will add 25 cents per cigarette pack, expand gas-drilling leases on state land, and authorize table games such as blackjack and poker at casinos.
Second, new sources of revenue include sales taxes on theater, dance and performing arts tickets — purchases traditionally exempted from the tax. In addition, the state would rewrite the definition of cigarettes to include small cigars, known as cigarillos. These two items would be taxed for the first time in the state’s history, taking an additional $130 million dollars from the economy and family budgets.
Third, the state would spend $400 million less under this budget than it did in fiscal 2008-09, yet increases spending on basic education needs by $300 million — something Gov. Rendell has touted. He said the inclusion of federal stimulus funding allowed the overall size of the budget to drop by about $2 billion. An overall “drop in the size of the government” sounds good on paper, but who exactly is paying for it in this case – again, the taxpayer. Washington can’t give anything to Pennsylvania other than what it has already taken from Keystone State taxpayers. With intergovernmental aid transfers, such as the federal stimulus money given to states, the true cost of government can be obscured.
An alternative to this budget compromise is a plan put forth by the Pennsylvania House Republican Caucus. The plan has no tax increases but ensures nearly $2 billion in recurring revenue will be available over the next three years to balance the state budget.