Obituary for the Pennsylvania Income Tax Hike

Rendell’s personal income tax hike plan is dead, declared PA House Republicans yesterday.  Brad Bumsted has the obituary in the Pittsburgh Tribune Review.

Despite not having votes for the tax hike, or any legislation introduced, or having even stated when the tax hike would go into effect, Rendell’s spokesman Chuck Ardo, sounding (and looking) a bit like a Mary Shelley character, declares, “It’s Alive!”

Regardless, neither the tax hike nor a budget will be done today, tomorrow, or Sunday, as House Democrats decided to cancel session on those days to … head to the beach?  Let state workers’ outrage grow?  Issue more dishonest rhetoric? Tell voters they don’t get it?  I’m not really sure what they were thinking.

House Democrats are threatening to pass a version on Monday that cuts SB 850 by $1.7 billion, admittedly to “spark a public outcry that will send the Republicans to the negotiating table.”

Of course, the idea that SB 850 needs to be cut by $1.7 billion is simply another scare tactic, which we debunked yesterday.  The only thing “out of whack” is how much Gov. Rendell overspent last year (2008-09); the state’s unpaid bills are as high as $1.5 billion. That is, there was a $3.2 billion shortfall in collections last year, Gov. Rendell proposed $557 million in “freezes” (we are unsure how much was actually spent), and there is a bit over $1.1 billion in stimulus money to offset that shortfall. The rest will have to be made up.

Of course, this is not a flaw in SB 850, but a sum of cash they need to come up with. Cutting the proposed spending of SB 850 won’t create more money to pay last year’s bills. Raising the income tax for the next three years doesn’t do it. Neither does spending $1.6 billion more than SB 850, as Rendell has proposed.