Rendell proposes income-tax hike

Gov. Rendell's proposal to increase the state income tax to cover a gaping deficit ran headlong into a Republican wall of opposition, proving quickly to be a new flash point in an already contentious budget process.

The governor yesterday asked the legislature to approve a temporary 16.5 percent hike in the personal income-tax rate to help manage a continued decline in revenues and a projected budget deficit of $3.2 billion.

"The simple truth is, we have no good choices," said Rendell, who hopscotched across the state to highlight economic development efforts that would be cut under the Senate Republicans' budget proposal. "There are no shortcuts out of this crisis, no magic bullets, no painless path out of this morass. We can do the easy thing for the moment or the right thing for Pennsylvania's future. The fairest plan is to spread the pain across the board."

At a morning stop in Cranberry, a Pittsburgh suburb, Rendell - who has called an emergency cabinet meeting today to discuss the budget crisis - announced that he would propose raising the income tax rate to 3.57 percent from 3.07 percent for three years to raise about $1.5 billion per year in new revenue.

One expert estimated that would total about $5 a week for a family making $50,000.

Senate Republicans, who passed their own $27.3 billion no-tax budget, which was defeated in a House committee last week, said they were not surprised by Rendell's announcement, but swiftly denounced it as a raid on the paychecks of working-class families.

"This is not the time to take more money out of working families' pockets," said President Pro Tempore Joe Scarnati (R., Jefferson). "He has proposed almost a 17 percent increase in the income tax when working families are struggling to stay at zero percent increase in wages and benefits in this economic downturn."

Senate Majority Leader Dominic Pileggi (R., Delaware) said he believed Rendell's tax proposal ends any prospect of the budget's being finished by the June 30 deadline.

"There is no support in our caucus for an increase in the personal-income tax," he added. "To the extent that that's the foundation of the governor's proposal, it's going to be very difficult to advance in any way."

At an afternoon stop in Montgomery County, Rendell told reporters that despite what Republicans say, a tax hike is "inevitable."