Rendell on state tour to promote tax hike

PITTSTON TWP. – Spending, by his own estimate, about $4,000 of taxpayers’ money, Gov. Ed Rendell flew around the state on Tuesday to promote an increase of one-half of 1 percent in the state income tax for three years and a simultaneous freeze in a 2.9 percent business tax to help bridge a projected $3.2 billion budget deficit.

“I’m sad to tell you that we simply can’t cut our way out of this problem,” he said during a stop at the Wilkes-Barre/Scranton International Airport. “People aren’t going to escape a tax increase. They’re going to get a tax increase, and it’s going to be called a property tax increase.”

Rendell wants to increase the current 3.07 percent income tax to 3.57 percent to generate about $1.5 billion in revenue annually through fiscal year 2012. For households that make the state-median income of roughly $48,000, he said the increase would amount to about $5 a week.

“That’s less than a cup of coffee a day … and it goes away in three years, so I think it’s a good deal,” Rendell said.

Opponents, however, say Rendell, a Democrat, is turning the state toward the “big-government mentality of Washington,” according to U.S. Rep. Jim Gerlach, R-Chester County. “We should be talking about how government can live within its means, cut spending, root out waste and find ways to get our economy moving again to create jobs – not raising taxes,” Gerlach stated in a news release.

Rendell likened the shortfall to the “heart-wrenching” predicaments of the very families he plans to further burden.

“Families have cut out luxuries, and now they’re cutting out necessities, and it’s just not enough,” he said. “And so it is in our state Capitol. We make cuts after cuts, and it’s still not enough. We’re struggling the same way that Pennsylvania families are.”

He suggested that these increases could be mitigated slightly by itemizing federal tax returns, and he pointed out that about 40 percent of households in the state are exempt from the increase, either because they’re retired or they earn less than $32,000 annually.

Rendell defended his use of the state jet on Tuesday, saying “There’s no way the governor can get around in one day without flying. … I only use it when I’m flying on state business, and letting people know about this is clearly state business.”

He plans to meet with his top aides today to find another $500 million to cut from his budget plan, on top of $1.5 billion in cuts he has already proposed. He wouldn’t say where the additional cuts would be made.

“But what I won’t do, however, is take the politically expedient decisions that gut essential health and safety protections, put more people out of work and shortchange the future of our children,” he said.

The state Senate’s proposed budget cuts too deeply into various programs he felt were essential, Rendell said, including health, education and business development. To illustrate his point, representatives were on hand from school districts and a corporation that have benefited from Rendell-backed programs for which the Republican-controlled Senate wanted to cut funding.

“Now that we’re moving in the right direction, it would be irresponsible to stop now,” said Scranton School District Superintendent William King. “I applaud the governor for doing the best he can to protect public-education funding.”

Scott Shafer, the plant manager for Mission Foods in Scranton, said his company was able to grow through the state’s Opportunity Grant Program.

Rendell said he continues to favor new taxes on tobacco and natural gas extraction, dipping into the state’s “rainy day” contingency fund, and postponing a planned three-year phase-out of the state’s corporate stock and franchise tax.

The governor claimed that, after the increase, Pennsylvania’s tax rate would still be the third-lowest among 40 states that also have a personal income tax, citing information compiled by the Federation of Tax Administrators.

However, a report on the group’s Web site detailing 2008 personal income tax rates shows that Pennsylvania was one of just seven states with a flat income tax, and the rate under Rendell’s plan would be the third-lowest only when compared with the highest tax rates in all states.

There are 29 states whose minimum income tax rate was lower than the 3.57 percent Rendell proposes, according to the group’s report.