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Rendell may revisit drilling, income taxes

Gov. Rendell is to deliver his budget address in February.
Gov. Rendell is to deliver his budget address in February.

HARRISBURG - Gov. Rendell said yesterday that he would again propose a tax on natural-gas drilling, and hinted that he might resurrect his proposal to raise the personal-income tax to cope with the next wave of budget crises.

"We'll see," Rendell said during a year-end news briefing when asked if he planned to propose an income-tax increase in his Feb. 9 budget address.

But he said he would ask the legislature next year to approve a tax on natural-gas drilling in the Marcellus Shale - the vast and potentially hugely lucrative gas reserve that lies beneath much of the state.

Rendell retreated from that proposal last year after strenuous lobbying by gas interests that argued it would harm a deep-drilling industry in its "infancy."

But with hundreds of millions, if not billions, of dollars at stake, Rendell said a task force, led by Environmental Protection Secretary John Hanger, is being formed to explore issues relating to gas drilling, including taxes.

Rendell's unpopular proposal to hike the personal-income-tax rate by half a percentage point - from 3.07 percent to 3.57 percent for three years - was shot down this year by lawmakers of both parties who objected to a broad-based tax increase.

Instead - after a 101-day impasse - the legislature agreed to legalize table games as a way to raise revenue and close a gap in the 2009-10 budget, a promise that has yet to be delivered upon with only seven weeks until Rendell is scheduled to deliver next year's budget address.

Rendell said yesterday that had the General Assembly approved the income-tax increase, Pennsylvania would have been $2 billion ahead toward dealing with the coming fiscal "tsunami" as federal stimulus funds dry up and state pension fund needs grow.

"We would have been able to meet the challenge," he said.

Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi (R., Delaware), said that while Senate Republican leaders would be willing to review Rendell's gas-tax proposal, they remain opposed to an increase in the income tax. "I don't expect the General Assembly to have any more interest in an increase next year than it did this year," Arneson said.

Steve Miskin, spokesman for minority House Republicans, said the caucus would fight any proposed tax increase and would instead work to control government spending.

Among his legislative priorities for next year, Rendell said, are the consolidation of costly health-insurance plans for Pennsylvania school district employees, the passage of an alternative energy bill, and the phase-in of utility-rate increases across Pennsylvania to ease the burden to consumers as decade-old rate caps are lifted.

Rendell said that despite the trying economy, the budget legislation he signed in October preserved most economic-development funding, and invested hundreds of millions in education and health care for lower-income children without damaging the state's fiscal stability.

He called the budget impasse "unconscionable" and said that blame for the delay should be "shared by all" but that the end result was positive.

"The final product was as good or better than any other state in the union," Rendell said.

Rendell, who by law cannot seek reelection after two consecutive terms, also mused on his future after he leaves office in January 2011. About rumors of his ambition to become the next commissioner of Major League Baseball, Rendell said he would be ready to take the job if called up.

"I'd undoubtedly serve," said Rendell, adding that he understands that commissioner Bud Selig has no immediate plans to step down. "I think I'd market the sport of baseball very well," he said. "It's something it needs."

If baseball doesn't pan out, Rendell said, he would expand his roles as a teacher and sports commentator, finish his memoir, and possibly work with foundations or charities.

 


Contact staff writer Amy Worden at 717-783-2584 or aworden@phillynews.com.

 

Amy Worden Inquirer Harrisburg Bureau
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