Battle Over Spending Cuts & Tax Hikes

State lawmakers have a month to negotiate and pass a state budget, if they want to finish the process before the June 30th deadline for the first time in Ed Rendell’s tenure as governor of Pennsylvania.
The state is facing a billion dollar revenue gap, and Senate Republicans say they want Governor Rendell to revise the 29 billion dollar spending plan he submitted in February. GOP leaders say the state needs to trim spending.
Senate Majority Leader Dominic Pileggi says one area Rendell could cut is basic education spending, where the governor is asking for a more than 300 million dollar increase.

"We have increases in spending in the Department of Public Welfare based on case load and utilization of services that we can’t simply ignore and not fund. But to make a discretionary increase in spending in any line, in any sector of the economy, is simply a luxury that we don’t have, given the available revenues."

Rendell agrees that spending needs to be trimmed, but he says targeted taxes on items like cigarettes, cigars and smokeless tobacco need to be part of the final equation, as well.
Rendell has dropped his idea for a broadened sales tax, which he spent much of the spring promoting during appearances across the state.

"It’s just very complex, and you’d be stepping on the toes of a lot of special interests, and I don’t think there’s an appetite to do that this year. My guess is that whoever’s governor may have to visit that next year. But we’ll see."

Pileggi says his caucus has the same “no taxes” philosophy it held last year, when the impasse stretched into October. He does say Senate Republicans are willing to consider a severance tax, which they rejected last year.
The House has passed a spending package, and is set to vote on a revenue bill early this month.
Senate leaders say they’re waiting to see how May revenue figures impact the deficit, but that they plan on passing their own budget bills within the next few weeks.