Gov. Rendell proposes targeted tax increases; no RTT

In his annual budget address yesterday, Gov. Ed Rendell outlined a series of targeted tax increases and service cuts designed to help the state persevere through tough economic times.

The governor proposed no realty transfer or broad based tax increases, but did recommend a tax on smokeless tobacco, a 10-cent per pack hike on cigarettes and a severance tax on natural gas extraction from the Marcellus Shale.

Rendell explained that if just 10 percent of the natural gas in the Shale is extracted, experts believe it could supply the natural gas needs of the whole country for two years. West Virginia has had a severance tax since 1987 and serves as the model for Rendell’s proposal.

One of the most surprising announcements was the recommendation to consolidate school districts in order “to relieve the local property tax burden all across Pennsylvania.” Rendell pointed out that consolidation is “not a new idea” and that the state had 2,700 separate school districts back in 1955. By July 2009, we will be down to 500. Rendell proposed creating a legislative commission to study the issue with the goal of reducing the number of districts to 100.

Some other highlights of the 1 ½ hour presentation include:

• Phase-in of the electricity rate cap increases;
• Expanding health care for the uninsured;
• Enacting a Green Building Code;
• Job-creating infrastructure investments for Rebuild PA; and
• Continued phase-out of the Capital Stock and Franchise Tax.

As always, the governor’s presentation is just the start of the long and often arduous process of enacting the state budget.

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Tags: increase, marcellus, RTT, shale, tax

This entry was posted on Thursday, February 5th, 2009 at 5:35 am and is filed under Government Affairs. You can follow any responses to this entry through the RSS 2.0 feed.