Senate Republicans Will Study Rendell Budget Proposal

Governor proposes new taxes, eliminating sales tax exemptions

Senate Republicans will carefully study Governor Rendell's $29 billion General Fund budget request for Fiscal Year 2010-11 and remain committed to enacting a fiscally responsible spending plan in a timely manner while protecting the interests of Pennsylvania's taxpayers, according to Senator Bob Robbins (R-50).

Senate Republicans are holding to the same basic conservative principles they maintained during last year's deliberations -- the budget must be balanced without a broad-based tax increase and should be delivered on time, said Senator Robbins.

"In these difficult economic times, this is not the time to increase spending or raise taxes," Senator Robbins said. "Just like families and businesses, we need to tighten our belts and live within our means."

In particular, Senate Republicans will consider the Governor's proposal to impose new taxes and eliminate sales tax exemptions to create a Stimulus Transition Reserve Fund. Rendell proposes to impose new taxes on Marcellus Shale natural gas extraction and on "other tobacco products" – cigars and smokeless tobacco. Rendell also proposes the elimination of the 1 percent fee granted to vendors for collection of Pennsylvania's sales tax.

Rendell's plan calls for a decrease in Pennsylvania's sales tax from 6 percent to 4 percent coupled with the elimination of 74 current exemptions to that levy. The Governor also wants to close the "Delaware Loophole" through combined reporting by multistate and multinational firms of their income and expenses for tax purposes.

The Governor's budget proposal also includes a $1.15 billion (4.1 percent) increase in spending and projected 3.2 percent increase in revenues in the upcoming fiscal year.

"We also need to look at every program, every department, and every area of state spending and ensure that the financial resources of the Commonwealth are invested wisely," Senator Robbins said. "State spending was intensely scrutinized last year, and we must continue that approach this year. We must look in every department and in every program, just as we did with Senate Bill 850 last year, to find areas where savings can be realized."

Senate Republicans will continue to carefully monitor revenue collections over the coming months. As of the end of January, state revenue collections are $374.4 million below projections for the year-to-date. The Governor is now projecting a total $525 million shortfall for the current fiscal year, which ends on June 30.

The Senate's review of the budget proposal will formally begin on February 16 with three weeks of hearings conducted by the Senate Appropriations Committee. The state's current fiscal year ends on June 30.

Contact:

Michael Hengst
(717) 787-1322