Rendell says income-tax hike would be temporary

STEELTON, Pa. - Gov. Rendell said yesterday that if he had to resort to pushing for a hike in the state's personal-income tax, he would want the increase to end after three years.

But he was cagey when pressed to give details, saying only that such an increase was "a serious" proposal to help deal with a projected deficit of up to $3.2 billion in the state budget for the next fiscal year.

Rendell said he was waiting for the most up-to-date projection of next year's growth in state tax revenue before making a final decision.

"But if, in fact, we have to raise taxes of any sort, it would be sunset," Rendell told reporters at a news conference in an old steel town near the capital. "And the reason we would need to do it for a short period of time is because of the recession."

He did say he would propose that any income-tax increase be reversed in 2012.

"That would be the first year that the [federal] stimulus money would drop off, and there has to be a cushion" for people who had been receiving assistance through the wide-ranging aid program, he argued.

Still, Rendell would not say yesterday by how much he might be considering raising the income tax. In 2003, his first year as governor, his administration persuaded the legislature to approve raising the tax from 2.8 percent to 3.07 percent.

Before that, the income tax was last increased in 1991, when it went from 2.1 percent to 3.1 percent for 12 months, then dropped to 2.8 percent, according to figures provided by the Rendell administration.

But any tax increase proposal faces a tough fight in the legislature this year.

Republicans who control the Senate have made it clear they do not support any increase in any taxes, but are particularly vehement about not raising any broad-based taxes such as income or sales.

Even some Democrats might be reluctant to vote for a personal-income tax hike, given that next year is an election year.

Senate Majority Leader Dominic Pileggi (R., Delaware) said in no uncertain terms yesterday that his caucus would not support a Democratic proposal to raise income taxes, even temporarily.

Promising that such an increase would be temporary, said Pileggi, "would largely be a fiction." He pointed out that the so-called Johnstown flood tax - a temporary tax on the sale of alcohol approved in 1936 - was never reversed. It is now 18 percent.

Pileggi also said it would be highly risky for Rendell to time the sunset to the year that federal stimulus dollars stop flowing to states.

"When stimulus dollars go away and we are asked to repeal the temporary tax, we will be facing a tremendous cliff," he said.

The deadline to enact a state budget for fiscal 2010 is July 1. But few expect it to be completed by then; in fact, no budget has been passed by that deadline since Rendell became governor.