Governor Edward G. Rendell today announced "Phase II" of his state budget plans before a joint session of the Pennsylvania General Assembly. As the governor indicated, many of the proposals in this next budget phase are "ambitious" and will certainly spark public debate in the coming weeks and months. Please note that NOTHING proposed in this budget directly addresses the cuts and eliminations outlined in the first budget phase.
The Governor said, "...I believe that we can be the comeback story of the decade. More importantly, we have no option but to try. In the end, the only way we can get out of our deficit and the horrible situation we find ourselves in is to grow our way out. If our stimulus plan succeeds in growing our economy, it will broaden our tax base. The increasing revenues from that growth will allow us to restore cuts and to do even more."
Proposed tax increases include the following:
- an increase in the state personal income tax from the current 2.8 percent to 3.75 percent, effective July 1, 2003. *Families can deduct the additional amount paid in state income taxes on federal tax returns.
- an increase in the beer tax - the first since 1947 - from 8 cents to 25 cents per gallon. This would generate an additional $55 million in revenue.
- a restriction on the Corporate Net Income tax deductibility of intangible and interest expenses paid to third parties - known as the Delaware Subsidiary Loophole. A task force will be convened to address the issues of closing business tax loopholes.
- enact a limited expansion of gaming - specifically, by legalizing slot machines.
- a modernization of the Pennsylvania tax system to garner revenues from the ever-growing wireless communications industry. Various components to the plan were discussed, and the governor predicts this would bring in $200 million in revenue this year and $300 million next year.
PLEASE continue to keep the pressure with legislators on the local level. For more information on "helpful hints" for doing that, refer to other doucments on the PCPA web site. Extensive information is in the special "Pennsylvania Budget Information."