Governor's Budget Increases Spending, Taxes

Pennsylvania Governor Ed Rendell today unveiled his budget plan for fiscal 2009-10 and it totals $29 billion, a 2.5% increase over the original level of this year's spending plan. The budget would use $3.5 billion during the current and next fiscal years from Pennsylvania's anticipated share of the federal economic stimulus package. Rendell also wants to tap the state's $753 million "Rainy Day Fund." $250 million would be used to help offset the current $2.3 billion dollar deficit and another $375 million to help balance next year's budget.
Rendell proposes eliminating 101 line items and reducing another 346 to trim $977 million in spending. Similar proposals in the past have failed when lawmakers restored funding for the items during the budget negotiations.
The budget calls for the elimination of 2,600 state jobs. It hasn't been determined how many of those cuts would be through layoffs and how many via attrition.
The budget does call for some funding increases including a $300 million boost in appropriations for public education, an additional $65 million in capital funding for the 14 state-owned universities, and adding 2,400 beds in prisons and community corrections facilities.
Although he did not call for a broad-based tax hike, the governor is proposing new taxes on cigars, pipe tobacco and snuff, a 10 cents a pack increase in the cigarette tax, and a new tax on revenues from the extraction of natural gas from the Marcellus Shale Formation.
While Rendell is not calling for a statewide increase in the sales tax. He did suggest allowing counties to tack on another penny per dollar in the sales tax....and split the revenues with cities.
The governor also wants to legalize video poker machines and use the state's take to help thousands of college students pay tuition.
Under state law, a budget is supposed to be in place by July 1.