Corman: Rendell must back away from tax hikes

BELLEFONTE - The chairman of the state Senate Appropriations Committee believes it's unlikely the state will have a budget in place by the June 30 deadline and has called on Gov. Ed Rendell to ease taxes on state residents amid the ongoing national recession.

Speaking briefly after a press conference on work at a new state prison next to the current State Correctional Institution at Rockview, Sen. Jake Corman, R-Bellefonte, on Monday said he is encouraged that House Democrats like Mike Hanna, D-Lock Haven, and Scott Conklin, D-State College, said they will not back Rendell's call to increase the personal income tax by 16 percent to help balance the budget. (See related story that says otherwise.)

Pennsylvania is facing an estimated $3.2 billion budget deficit for the 2009-2010 fiscal year.

"The sooner the governor gets that message from the Democrats in the House that shows he doesn't have the votes, then he can come down to better negotiations," Corman said. "Right now, we're off by $2 billion in spending numbers (between Rendell's proposed budget and Senate Republicans) which doesn't lead to a quick resolve. If he gets the message loud and clear from the House Democrats that there's no votes for it, then he has to rethink his spend number and we can come to negotiation."

As Senate Appropriations Committee, Corman is one of the key authors of the Senate Republican's $27.3 billion budget plan that relies on wide-ranging spending cuts, but contains no tax increases.

The governor proposes $29 billion in spending offset by program cuts, new taxes on tobacco, health care premiums and natural gas extraction; and a large withdrawal from the "rainy day" contingency fund.

Last week, citing plummeting revenue collections and the rising cost of social services, Rendell called for a 16 percent increase in the state personal income tax. The increase, which would be the biggest boost in the tax rate in 18 years, would expire after three years.

The longer Rendell stands firm on his tax increase, the less likely the state will meet its June 30 deadline to pass a budget, Corman said.

"It's a longshot, " Corman predicted. "The governor needs to get the message that there's no votes for a tax increase and once he gets that, things will move forward. My guess is he's not going to give up on it easily."

Corman said there are only two ways to balance budgets: Increase taxes or lower expenses, and he believes the latter is a necessary evil, despite the fact that many worthwhile programs will be cut or eliminated.

"There are some unfortunate reductions in some of the expenditures that do good, but hopefully, they will just be short-term reductions," he said. "Increasing taxes during this recession when people are having a tough time making ends meet is pretty tough to ask the people of Pennsylvania. We're hoping to do it by reducing expenditures."

Corman said there are "unfortuntate" cuts in severa areas proposed - including libraries, early childhood education and hospital funding - but hopes they will lead to only short-term pain and long-term financial stability.

"The problem with the governor's proposal is it raises taxes by $2 billion, it uses up all of our Rainy Day Fund and other one-time sources of revenue and leaves a $2 billion hole," he said. "That's just irresponsible of us to do that.. and he doesn't even address pensions. To think that this (tax increase) will be temporary would be naive.

"We're trying to put a fiscally-responsible budget together that not only balances today, but balances for the future so we don't have to go back to the people of Pennsylvania for more money," Corman continued.

Corman's district formerly included Clinton County. Redistricting gave him parts of Centre, Miffle and Union counties, and all of Perry and Juniata counties.

School districts across the state are trying to finalize their budgets for the next fiscal year by June 30, not knowing how much state funding they will receive.

Corman said school boards should count on Senate Bill 850, which holds funding steady for next year and, "if they get more, than that's a bonus."

"But in this recession, when we have a $3 billion deficit and the school districts get the same money as last year, that's a victory," he said.

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(The Associated Press contributed to this story.)