Gov. Ed Rendells Ransom

PA Governor holds state workers and public services hostage for higher taxes and fees, despite $650M tax surplus.

HARRISBURG, PA – Nearly 25,000 state workers were furloughed and many public services were closed today because Pennsylvania Governor Ed Rendell refuses to sign a budget unless the General Assembly agrees to raise taxes and fees on working Pennsylvanians. The partial state government shutdown is occurring despite a $649 million tax surplus from the 2006-07 fiscal year.

“Governor Rendell is putting his own pet projects ahead of the needs of state workers, their families, and the people of Pennsylvania who need public services,” said Matthew J. Brouillette, president and CEO of the Commonwealth Foundation.

“It is a disgrace for this governor to hold state workers and taxpayers hostage over issues that are unrelated to the funding of core state government functions,” Brouillette said. “He should sign the Senate-passed budget, then allow each of his non-budgetary proposals to be considered independently.”

On June 20, the Senate passed (by a 49-1 margin) a $27 billion budget with strong bipartisan support—only one out of 21 Senate Democrats opposed the fiscal year 2007-08 spending plan. “The Senate’s near consensus on a budget that grows state government spending by $899 million should be sufficient for Gov. Rendell’s spending appetite,” said Brouillette. “Yet he continues to demand higher taxes, higher fees, and more debt for Pennsylvanians when the state is sitting on more than a half-billion dollars in unspent taxes.”

The Department of Revenue reports that the state General Fund has a $649 million surplus. “But instead of looking to return that surplus to taxpayers—the people who were over-billed by Harrisburg—Governor Rendell is demanding even more taxes and borrowing,” Brouillette noted. “It is shameful that this governor is willing to hold state workers and public services hostage until the General Assembly raises taxes to pay for his pet projects.”

Rendell continues to call for passage of an electricity tax to pay the debt service on a $850 million bond for his so-called “Energy Independence Fund.” This fund would create a new pot of money for Governor Rendell to hand out to politically selected companies. In addition, he wants billions of dollars in more debt to be paid for by higher Turnpike tolls and new tolls on I-80 in order to bail out mass transit, primarily in Philadelphia and Pittsburgh.

“There is absolutely no need for Governor Rendell to place artificial timetables on his legislative agenda items and hold up the budget. His actions are political gamesmanship at its worst—and it is harming working Pennsylvanians in the process,” said Brouillette. “It is time he stopped demanding the ransom of higher taxes, fees, and debt and allow people and state government to get back to work.”

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The Commonwealth Foundation ( is an independent, non-profit public policy research and educational institute based in Harrisburg, PA.

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