Published: June 21, 2009 12:08 am      

Budget deadline nearing

With a June 30 deadline looming for passing a new budget, state lawmakers have found little common ground on how much Pennsylvania’s fiscal package should be, where cuts should be made and what taxes – if any – should be raised or enacted.

Gov. Ed Rendell’s proposal last week for an increase in the state’s personal income tax has little, if any, support from area state lawmakers, including members of his own Democratic Party.

The Republican-controlled Senate passed a $27.3 million spending plan in February for 2009-10 – less than the governor’s proposed $29 billion budget – but the Democratic-controlled House appears to be in turmoil over how to proceed.

In fact, state Rep. Carl Metzger, R-Berlin, contended that under House rules and procedures for budget hearings and adoption, it will be virtually impossible to meet the June 30 deadline.

“The governor is using state employees as pawns to get more state taxes,” Metzger said in reference to unpaid days for state workers without a new budget in place.

As for Rendell’s proposal to increase the personal income tax by one-half percentage point to 3.57 percent, Metzger said, “We can’t afford that right now. He’s very out of touch with the people. (Many) people in Bedford and Somerset counties are out of jobs.”

The proposed state income tax level – which represents a 16 percent tax increase – would drop back to 3.07 percent after three years, the governor has suggested.

State Rep. Gary Haluska, D-Patton, said that both House Democrats and Republicans “are in the middle waiting for some movement” between the governor and the state Senate “as efforts are made to get the GOP senators to reach a compromise. ... Now starts the process of who’s going to blink first.”

The “mood” of the House is not to raise taxes without getting some agreement with the Senate, Haluska said.

Although nobody wants to raise taxes, the situation is boiling down to raising taxes and keeping many programs or letting the programs fall by the wayside, he said.

Both Haluska and state Rep. Bryan Barbin, D-Johnstown, said that before taxes are raised, the state should look at using the $750 million “rainy day” contingency funds that have been squirreled away. They also urge closing what is known as the “Delaware loophole.”

Under the loophole, major corporations such as Exxon and Chevron avoid paying corporate taxes on business they conduct in Pennsylvania by shifting it to their corporations in Delaware, where there is no corporate tax, they said.

Haluska and Barbin said state lawmakers need to look at cutting – Barbin suggested by as much as a 50 percent – in the non-preferred appropriations to such things as clinics, museums, public television and the state-affiliated universities: Penn State, Pitt, Temple and Lincoln.

Closing the Delaware loophole would pump $500 million into the state’s treasury, and cutting the non-preferred appropriations would add an additional $500 million, Barbin said. An additional $750 million could come from the rainy day fund, he said.

“So before I vote to raise anybody’s taxes,” Barbin said, “we need to close the loophole, cut the non-preferreds and use the rainy day fund.”

Barbin said that the governor is expected to meet Monday with House and Senate leaders on the budget.

“There’s been no really good dialogue (yet),” he said.

Barbin said that the chances of getting a budget passed by June 30 appear “pretty slim if we’re not any further along than this.”

State Rep. Frank Burns, D-East Taylor, said that he wants to see the state pass “a fair budget that reflects the best interests of the people of the region and that makes spending cuts where necessary.” But Burns said that “it’s too early to make further observations until after I have reviewed all proposals.”

Attempts to reach Sen. John Wozniak, D-Westmont, for comment on the budget Thursday and Friday were unsuccessful. His office said that he was unavailable.

At the end of last week, however, Rendell said that there’s enough time to get a deal before the fiscal year ends, and he suggested that the state budget can’t be balanced without new taxes.

The governor has said that he continues to favor new taxes on tobacco and natural gas extraction and also dipping into the state’s rainy day fund.