Governor's Budget Includes $2.5 Billion in Tax Hikes

State Universities could see 3.5 percent increase in funding

Governor Rendell's proposal for more than $2.5 billion in new or increased taxes as part of his 2007-08 state budget would dramatically impact families and could cost jobs, according to Senator Don White.

The Governor's budget address was rather overwhelming today, as he put forth proposals on a number of issues including health care, controls on guns sales and potentially leasing the Turnpike to raise money for highway and bridge projects," Senator White said. "The task now is to look at the details behind all of those plans."

Senator White said he was particularly interested in seeing what happens with the Turnpike leasing proposal, which the Governor estimates would generate $965 million annually for highway projects.

However, Senator White also expressed concerns over the size and range of new and increased taxes proposed by the Governor as part of the budget.

"Even a small tax increase often has a dramatic impact on jobs and our economy," Senator White said. "The Governor is requesting major new taxes and significant increases in others. To say that we must be cautious and prudent in our consideration of these tax increases would be a major understatement. The Governor's tax increases would take money away from families as they would pay more when they shop and when they pay their utility bills. I don't see much support at this point for the Governor's proposal."

The $27.2 billion general fund budget includes nearly $1 billion ($947.9 million) in new spending, which represents a 3.6 percent increase over the $26.3 billion general fund budget for FY 2006-07.

Of local interest, Senator White noted, was the fact that State System of Higher Education universities, which includes Indiana University of Pennsylvania, is slated to see a 3.5 percent ($16.4 million) increase for a proposed total of $483.9 million for FY 07-08.

The budget includes a 3.5 percent increase ($166.6 million) for basic education subsidies for a proposed total of $4.95 billion in FY 07-08. Special Education funding would increase by $29.4 million (3 percent) for a proposed total of just over $1 billion in FY 07-08.

The budget includes a proposed $100 million increase in Department of Education's Accountability Block Grant Program for a total of $350 million. Of that new money, the Governor is proposing $25 million be used for full-day kindergarten and $75 million go to pre-K programs.

The Governor's requests for new/increased taxes include:

An increase in Pennsylvania's sales tax, from 6 percent to 7 percent statewide. Philadelphia and Pittsburgh would see their sales tax rate increase from the current 7 percent to 8 percent. The sales tax increase would cost Pennsylvania consumers an additional $1.24 billion in FY 07-08.
A new mass transit/oil tax is expected to cost oil companies $760 million, a charge that would be borne by consumers on heating oil bills and at the gas pump.
An energy use tax, based on electric usage, would cost consumers $75 million.
A $2.75 per-ton municipal waste disposal fee would take an additional $61.4 million out of Pennsylvanians' pocketbooks.
An additional 10 cents-per pack tax on cigarettes is projected to cost smokers $61 million annually.
New taxes on smokeless tobacco, loose tobacco, and cigars would cost consumers $30.3 million annually.