The great divide
In our view
Published Jun 18, 2009 00:01

Budget battles in Pennsylvania are rarely collegial. Rather than working to bridge the gap between revenue and expenditures, the two parties tend to migrate to their own aisles and throw barbs at each other.

Faced with the largest deficit in state history, lawmakers this year have reverted to form.

The state's $3.2 billion budget deficit requires spending cuts, innovative ways to generate revenue and, yes, tax hikes.

Instead, Republicans and Democrats have drawn up separate budgets that share little in common. And neither proposal appears to come close to completing a budget that must be balanced in 12 days.

Tuesday, Gov. Ed Rendell proposed a "temporary" increase in the personal income tax. He would raise the PIT by 0.5 percent from 3.07 percent to 3.57 percent. That would amount to an average payroll tax increase of roughly $260 per family per year over three years. But the PIT hike would raise only about $1.5 billion — less half of the $3.2 billion needed to make up for lost revenue.

Republicans reacted to the Rendell plan as expected. They oppose raising taxes in general and especially this year given the state's economy.

Their remedy is to cut spending. Senate Republicans last month outlined a $27.3 billion budget they said could be achieved solely through spending cuts. That plan would dramatically cut education and children's health insurance funding. Continuing those services at the local level would force counties, school boards and municipalities to raise property taxes.

Lest anyone forget, Lancaster County Commissioners — to their credit — publicly opposed the Republican budget proposal.

Democratic leaders, citing current revenue projections, said the GOP budget proposal would fall about $1 billion short of balancing the budget.

So how does the state bridge this gap?

The income tax is fairer than the property tax because it is based on one's ability to pay. But does anyone believe the "temporary" tag Rendell attached to it? Gov. Robert P. Casey raised the PIT in his final term. The tax ultimately was reduced by Gov. Tom Ridge, although it was never restored to its original level.

That said, it is exceedingly unlikely that Rendell will get the full personal income tax hike, even if it amounts to just $5 per family per week. It's not only Senate Republicans, who hold a 10-vote advantage, who oppose it. There are rumors that Blue Dog Democrats also are against it. Rendell, however, is likely to accept a marginal increase in the PIT if he can get it.

Look for deeper cuts in programs as well. Wednesday, Rendell ordered his staff to find an additional $500 million to trim from the budget. The Education Department reportedly is in line to take a $212 million hit. That includes Rendell's "Classrooms for the Future" program that supplies computers for high schools across the state.

According to the Pittsburgh Post-Gazette, other cuts include $24 million from the Pennsylvania Higher Education Assistance Agency which provides loans to college-bound students; $3 million from Probation and Parole; $11 million from Corrections and $43 million from Community and Economic Development.

Look for the government to tap new revenue sources as well. Rendell wants to tax firms that drill for natural gas in Pennsylvania's Marcellus Shale formations. Although natural gas prices have dropped, the belief is that when energy prices rise, drilling will take off. State Sen. Lloyd Smucker, R-Lancaster, said natural gas extraction from the shale has the chance to completely transform the state's economy. State Rep. Mike Sturla, D-Lancaster city, said if estimates are correct, Pennsylvania could supply the natural gas needs of the nation for 30 years. So why not tax it?

Some lawmakers have pushed to have municipalities that rely on the Pennsylvania state police pay for those services on a per capita basis. And some outside the Legislature have suggested that lawmakers and government employees take a pay cut this year. Those ideas are worth considering.

Nobody wins with this year's budget. Lawmakers need to put their ideology aside and spread the pain as thinly and as fairly as possible. It's a tough job, but it's the job they sought.

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