Two thousand nine is scarcely a month old, yet it appears that Pennsylvania Governor Ed Rendell is already backing the wrong horse for the second time this year. In mid-January, Rendell's sporting hopes were dashed, when his beloved Eagles failed to advance beyond the NFC Championship game for the fourth time in five recent tries. Now, he's on the wrong side of history again, announcing last week that his forthcoming budget for FY 2009-2010 will not contain any increases in sales or income taxes, despite a projected budget deficit of some $2.3 billion. Instead, he expects that a combination of budget cuts and federal fiscal relief funds will be sufficient and, in his own words, he doesn't want to hear any "whining" about it.
Of course, as Sharon Ward, the Executive Director of the Pennsylvania Budget and Policy Center (PBPC) has recently explained, this is precisely the wrong approach for states to take in a recession. She notes that "Pennsylvania should actually be spending more, not less, to jumpstart the ailing economy" and argues in favor of tax policy changes that would generate additional revenue while making the state's tax system more fair, such as taxing dividends or closing corporate tax loopholes through the use of combined reporting.
Fortunately, Rendell's opposition to a needed tax increase may turn out to be as effective as the Eagles' attempts to stop Larry Fitzgerald. House Appropriations Committee Chairman Dwight Evans said this past week that he believes that "there will be some sort of a tax increase in order to solve this problem," though it may be the last resort.
For more on the options Pennsylvania lawmakers could use to generate additional revenue, see these recommendations from the PBPC.