So Gov. Rendell and one of his biggest supporters in the Legislature, state Rep. Dwight Evans, D-Phila, are starting the drum beat for a personal income tax hike.

Evans was the first out of the gate saying in media interviews and through his media spokesperson that Pennsylvania may have no choice but to raise the rate of one of its two major tax revenue -- the sales tax or more likely the income tax. Evans told the Pittsburgh Tribune-Review that the current “economic straightjacket” the state is in due to the national recession is worse than drops in state revenue experienced during the tenures of Republican Gov. Dick Thornburgh and Democratic Gov. Bob Casey. “The bottom dropped out” on Pennsylvania tax collections, Evans told the newspaper. (Editor’s note: only Republican Gov. Tom Ridge did not raise any broad-based taxes during his tenure, but he had the good fortune to govern during an era of national prosperity.) Rendell joined the chorus last week when he told KDKA-radio in Pittsburgh that a personal income tax hike could become necessary but he would advocate that it be temporary and sunset after two to three years and return to the current flat rate of 3.97 percent. Rendell made similar remarks Wednesday at an economic development announcement outside Harrisburg but said he is holding off until year-end revenue figures are better determined. Currently that shortfall is expected to be in the $3.2 billion range.

Dwight Evans

In May, the Senate Republicans who have vowed there will be no broad-based tax increase during the recession passed a $27.3 billion budget that cuts spending by $1.7 billion while Rendell has proposed a $29 billion budget that relies on federal stimulus money and a few targeted tax hikes.

Sen. Jake Corman, R-Centre, chairman of the Senate Appropriations Committee, told the Tribune-Review that its budget reflects what Pennsylvania families and businesses are currently facing – living within its means. He said the $27.3 billion plan: “reflects one thing: what we have to spend. Period.”

Each side is ratcheting up the pressure on the other.

To complete close the $3.2 billion gap with a personal income tax increase would likely mean having to raise the current rate by a full percentage point from a 3.07 percent flat rate to 4 percent or higher. Each .01 percent increase in the tax raises about $300 million.

Since the Senate budget was passed, the administration has made numerous announcements about its impact, including the proposed closing of several popular state parks.

Its latest tact is to warn about huge local property tax increases by school districts that will likely result from the Senate budget which has no net revenue gain for state spending on education. Rendell’s education secretary and U.S. Sen. Bob Casey Jr. began a bus tour of the state to draw attention to the education budget, which until now has gone up each of the six years Rendell has been governor.

Lowman Henry, president of the conservative Lincoln Institute, called the threat to state parks “the oldest bureaucratic trick in the book.” He said the Rendell administration’s threat to close so many state parks is an attempt to frighten the public into tolerating higher taxes.

Henry noted that the Department of Conservation and Natural Resources which runs the state’s 120-park system had a budget of $120 million last year and even the $19 million cut proposed by the Senate should not result in as many closing as the administration is threatening to do.

On Monday, the Democratic-controlled House Appropriations Committee, headed by Evans, rejected the Senate budget bill along party lines by a 20-14 vote.

Afterward, the Senate Republicans said they would not attend any further budget discussions with the administration and the House Democratic leaders until the House passes a spending plan –either the governor’s or its own as a point of reference for talks.

So both sides’ positions are hardening which does not bode well for passage of a budget by June 30, the end of the current fiscal year, a deadline that has been missed in each of Rendell’s six years.

The governor has said he will make $400 to $500 million in additional cuts to his budget and has tentatively said they will be announced next week. The House Democrats said they will then take Rendell’s revised budget and consider it for a vote. But all signs point to a protracted budget battle.

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Pressure Point 2
Specter greeted warmly at state Democratic party function but Sestak still gearing up for 2010 primary challenge

So the nation’s newest member of the U.S. Senate Democratic caucus was warmly welcomed into his new party at the Democratic State Committee meeting in Pittsburgh last weekend.

U.S. Sen. Arlen Specter of Philadelphia, who has been a Republican for more than 40 of his 79 years, was given glowing introductions and presented with a blue tie with tiny yellow donkeys by Gov. Rendell and colleague, U.S. Sen. Bob Casey Jr. of Scranton.

Specter, hogging the media spotlight as he has done his entire career, was grateful and gracious to the crowd and spoke fervently of how he was driven from the GOP by right-wing extremists who has ostracized him because of his independence. He got five standing ovations. Specter said he shared core values with many in the Democratic Party “even when may party was against me, even when it might cost me an election,” Specter said, a reference to the most controversial vote of his career in February to support President Obama’s stimulus package. Specter and the two moderate senators from Maine were the only Republicans in the entire Congress to back the proposal.

Arlen Specter

As he did for Bob Casey Jr. in 2006, Rendell is working to clear the field for Specter, a long-time friend and Philadelphia neighbor who gave the young Ed Rendell his first job out of law school as an assistant district attorney for the city.

To that end, Rendell has been putting pressure on Specter’s most likely primary challenger, Delaware County Congressman Joe Sestak, who was thinking of entering the Senate race before Specter’s party switch.

If he runs against Specter, Sestak “will get killed” Rendell said on MSNBC’s Hardball with Chris Matthews. So far, Sestak is not dissuaded. He made the rounds at the Pittsburgh state party meeting and while his public stance is that he will make a decision in a month after consulting with this family, he privately told a number of Democrats he getting in. As this publication has pointed out previously, the retired Navy vice admiral has little to lose even if he runs and doesn’t win. His background would allow him a lucrative living as a defense industry lobbyist. He has a $3 million campaign war chest, a good start in what would likely become a nationally followed Senate primary.

Joe Sestak

The Philadelphia Daily News said much the same in a front-page article Thursday about Sestak headline: “Joe won’t take no”: “Having transitioned directly to Congress after 31 years in the Navy, Sestak, 57, doesn't owe many favors to politicians and power brokers, which makes it nearly impossible to rein him in, even in the face of such a daunting challenge. His closest advisers are relatives,” the article said.

"Joe is like a ballplayer who is loved by the crowd," Cliff Wilson, chairman of the Delaware County Democratic Party told the newspaper. "When he gets out on the field the crowd goes crazy, but back in the dugout he's not the most popular player with his teammates.”

In the interview, Sestak said he has been traveling the state and interest in his candidacy has been expressed by 25 of the state’s 67 county Democratic organizations. He said he gets by on little sleep from his days in the Navy. For instance, he awoke 1:30 a.m. on Monday to drive six hours to Pittsburgh for meetings with reporters and then went to Washington, D.C. the same evening.

Despite his military background, Sestak has been brandishing his liberal record and Democratic credentials in an effort to attack Specter from the left, especially among party regulars who might be suspicious of his switching sides. He contends that the nomination should not be handed to Specter as a free ride.

A recent statewide poll by Susquehanna Polling and Research found that 63 percent of the Democrats it surveyed said Specter should face a challenger. Only 28 percent favored no primary opponent.