PA Budget Impasse Resolved but Long-Term Problems Remain

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After a tumultuous legislative session, including a one-day government shutdown, Pennsylvania has a budget. Governor Ed Rendell, who had included an array of tax increases in his budget proposal, ultimately got none of them in the agreed-upon budget. Among the tax hikes left on the cutting-room floor were a 1 percent sales tax increase designed to pay for property tax cuts, a 10-cent cigarette tax hike earmarked for health care spending, an innovative proposal to impose a 3 percent payroll tax on companies that don't provide health care coverage for their employees, and an equally innovative plan to impose a new profits tax on oil companies that would have used combined reporting to curtail tax avoidance by Big Oil.

Rendell's only notable success on the tax front, in fact, was pushing through new tax breaks to encourage filmmakers to shoot in Pennsylvania, at a cost of up to $75 million a year, although the real winner here was actor-turned-lobbyist Paul Sorvino.

But the next six months are not likely to be any easier for the legislature (or for Rendell). Lawmakers have agreed to a September special session to discuss Rendell's energy-independence plans, and Pennsylvania's perpetual property tax problems haven't gone anywhere.

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