PA Senate GOP Caving on Tax Hikes?

John Micek reports that there may be a compromise coming in the Pennsylvania state budget, but surprisingly (to me) it is not the $27.5 billion plan outlined by House Republicans (and originally proposed by “Blue Dog” Democrats), but a $27.9 billion budget that would include some tax hikes and table games.

You may recall that Pennsylvania Senate Republicans had set goals of

  1. Spending less than last year,
  2. No new taxes, and
  3. Long-term sustainability

As we noted, in July Senate Republicans increased the total spend number from last year (via accounting), and some were concerned that would increase what they might agree to in a budget. But at that time, Sen. Corman told Capitolwire (subscription) there was no way Senate Republicans would agree to spend $27.8 billion:

“Well, since they started saying that goal of spending less than last year,” said the House GOP member, “they have raised the spending number for last year by $300 million, up to $28.1 billion which gives them a lot more room to maneuver. Now they can go up to $27.9 billion or $28 billion and still say they are spending less than last year.”

That analysis is dead wrong, said Senate Appropriations Committee Chairman Jake Corman, R-Centre. …

He also said it didn’t matter whether this year’s spend was $27.8 billion or $28.1 billion, “because it would take more revenue than we [Senate Republicans] will approve to pay for that level of spending.”

On taxes, Senate Republicans softened their language from “no new taxes” to “no new broad-based taxes”, which would potentially give them political cover to approve the proposed cigarette tax hike and the tax on table games (for the uninitiated, that means taxing the casino’s take on newly-legalized poker, blackjack, roulette, craps, etc.), both of which Micek reports are part of the budget deal.

The reported deal would also increase, retroactive to Jan 1 of this year, the Capital Stock and Franchise Tax, which even Governor Rendell said, “hits Pennsylvania businesses – particularly manufacturers – hard.” I don’t know that Republicans can explain how that one isn’t broad-based.