For Immediate Release
July 10, 2007
Updated July 11, 2007
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Budget Agreement Includes None of Governor's Proposed Tax Increases

(HARRISBURG) – Pennsylvania taxpayers have been spared more than $2.5 billion in tax increases sought by the Rendell Administration, and furloughed state workers are returning to work under an agreement reached late Monday on a 2007-08 state budget, Senate Republicans announced today.

All of Gov. Rendell's seven proposed tax increases were rejected, including a sales tax hike, an electricity tax, a payroll tax on job creators, and a tax on trash collection. In addition, Republicans insisted that more than $300 million in available funds be set aside in the event of unforeseen fiscal issues in 2007-08.

"We said from the beginning that we are not going to allow the governor to increase the tax burden on Pennsylvania families," said Senate President Pro Tempore Joe Scarnati (R-Jefferson). "It took a little longer than we wanted, but we finally convinced the administration that we would not back down on that core principle."

The $27.178 billion spending plan represents a modest 3.3% increase over the final 2006-07 budget. In addition, $317.5 million of funding for mass transit was moved into a dedicated fund. If you include this amount in the spending level, the total is $27.495 billion, which represents a growth rate of 4.5% over the final 2006-07 budget.

"We have made a good start on controlling state spending, and it is clear that we have more work to do next year," said Senate Appropriations Committee Chairman Gib Armstrong. "Pennsylvania taxpayers could no longer afford the excessive rate of growth in state spending that we have seen in recent years."

While the administration sought to link passage of the budget to the approval of Gov. Rendell's energy legislative package, Republicans successfully argued that the issues should be considered separately.

"There are ideas for crafting a sound energy policy on both sides of the aisle, but using the budget deadline and the jobs of state employees to force legislation through the General Assembly is not appropriate," said Senate Majority Leader Dominic Pileggi (R-Delaware). "We will now work to address this important issue in a more thoughtful way."

Sen. Armstrong also said the governor could have avoided the impasse without furloughing state employees and disrupting government operation.

"We informed the governor early on that we would not agree to any new taxes and we would not support a spending level that would lead to tax hikes next year," he said. "In the end, our pro-taxpayer position prevailed."

Work is now underway to draft the final budget document and addressing other pending issues, which will take several days. 

CONTACT: Tim Nyquist, 717-787-7084; Erik Arneson, 717-787-4712; Dave Atkinson, 717-787-6535