Thursday, January 28, 2010
Rendell sounds budget warning at Chamber of Commerce event
Philadelphia Business Journal – by Bernard Dagenais Staff Writer
Gov. Ed Rendell told a group of business leaders in Philadelphia Tuesday that the budget pain felt by Pennsylvania in recent years can be expected to intensify.
In his final appearance at the Greater Philadelphia Chamber of Commerce’s Conversation with the Governor event, at the Kimmel Center for the Performing Arts in Center City, Rendell said the state faces a $450 million to $500 million budget deficit because income is coming in below expectations. Rendell said he had set aside $212 million to help offset the shortfall but next year will require further cuts.
The situation will be worsened by declining federal stimulus dollars, which add up to $2.8 billion this fiscal year, $1.9 billion next year and will be zero in the 2012 budget year.
While Rendell spoke of the merits of raising the personal income tax from 3 percent to 3.5 percent, which he proposed and then abandoned in the face of heavy opposition last year, he stopped short of outlining his plans for his Feb. 9 budget address. He said it made sense to tax natural gas to be taken from the Marcellus Shale, tax cigars and smokeless tobacco, and eliminate a 1 percent vendor sales tax discount. The new revenue would add up to $250 million per year, he said.
He predicted bigger steps will be needed in future years. “The day of reckoning is coming,” he said. Taking more aggressive action now could help shield the state from major problems once the governor has left office, he added.
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Rendell’s dire budget talk comes after a 101-day budget stalemate last fall that caused the state to temporarily operate without a budget, ceasing to pay employees for part of the time and putting additional strain on social services that rely on state funding.
