Rendell and Senate leaders said yesterday that neither side won in the nine-month standoff that has left Pennsylvania as the only state in the nation without a completed budget. But, they agreed, it was a deal both sides could support.
"Many people predicted we would never get there," said Rendell, "and we got there significantly."
In all, Pennsylvanians will face about $1 billion in new taxes, including an increase in the personal income tax from 2.8 percent to 3.07 percent, the first such increase since 1991. A household with taxable income of $50,000 a year will pay an additional $135 in income taxes.
The Senate also voted to increase the cigarette tax by 35 cents to $1.35 per pack, largely to help finance a state fund that offers secondary malpractice insurance for health-care providers. Other new taxes included a gross-receipts tax on cellular phones and land lines. Those taxes are levied against manufacturers and providers, but are typically passed along to consumers.
The tax bill passed by a 30-19 vote, with 14 Republicans joining 16 Democrats in voting yes.
Sen. Rob Wonderling (R., Montgomery), who voted against the tax hikes, said state spending had risen at twice the rate of inflation in recent years, and he wanted to wait for two or three quarters to see whether the economy would improve before increasing taxes.
"I don't think the time is right to lay taxes on individuals and businesses," Wonderling said.
With the additional tax revenue, the state would be able to plug a structural budget deficit, fund Rendell's early-childhood-education initiatives, and restore cuts to programs Rendell slashed in March.
Funding for hospitals and SEPTA would be fully restored, while 90 percent of funding for drug and alcohol rehabilitation programs would be restored.
