The Tribune-Democrat’s Feb. 13 editorial, “Hold  on to your wallets: Rendell proposes another big-dollar budget,” wrongly suggests there may be overall tax increases for Pennsylvanians in Gov. Ed Rendell’s 2009 budget proposal.

Let me be clear: The governor’s budget is fiscally responsible and does not include any broad-based tax increases to fund general government operations.

In fact, the state’s administrative spending is 2.3 percent lower than it was in 2003. Moreover, thanks to Rendell’s insistence that our state government do more with less, recurring state costs are now $1.2 billion lower than they were in 2003.

The governor’s budget actually includes targeted tax cuts for Pennsylvania businesses.

It also recommends strategic investments that will produce long-term financial savings and benefits for our citizens. Just as a smart homeowner must invest a small amount of money to fix a leaking roof before it collapses, Pennsylvania also needs to invest now to reduce costs in the long run.

The General Assembly recently allocated $40 million from the capital stock and franchise tax to fund hazardous site cleanups in 2008-09.

The governor’s budget fulfills the General Assembly’s obligation, cuts Pennsylvania business taxes by $100 million in 2009 by reducing the rate of this tax by 0.4 mills, and keeps this tax on schedule to be entirely phased out in 2011. As a former business owner, I have to say that it is illogical and misleading to characterize this $100 million tax reduction as a tax increase, as some business groups have done.

There are many other business-friendly items in the governor’s budget, including a proposed increase from $1,000 to $3,000 in the state job-creation tax credit, and a reduction in the interest rate on state loans offered to businesses. These initiatives will cut business tax liabilities and encourage more companies to expand and create jobs.

It is true that Rendell is proposing to increase the cigarette tax by 10 cents per pack and join 49 other states that tax cigars and smokeless tobacco products. The revenue will help pay for health-care coverage for more than 767,000 uninsured Pennsylvanians. These taxes will burden only those who use those products, but every Pennsylvania resident will benefit if Pennsylvania’s uninsured can access affordable preventive care because we all pay now to treat the uninsured when their untreated illnesses reach the crisis stage.

The governor is also proposing a “public benefits charge” on electricity use of just 0.0005 cents per kilowatt-hour, about $5.40 a year for the average residential customer, to provide funding for clean energy projects and companies, create jobs in Pennsylvania in the renewable energy industry, and reduce greenhouse gases – all without adversely affecting the state’s budget.

But state residents will actually save money under this proposal, because the governor’s energy independence strategy will save the average residential customer $73 per year by reducing electricity costs.

Rendell’s budget will also rebuild Pennsylvania’s crumbling infrastructure by providing funding to repair or replace 1,000 of the state’s most structurally deficient bridges and all 24 unsafe, high-hazard state-owned dams in the next three years.

As the people of Johnstown know all too well, dangerous dams can cause catastrophic losses, and Pennsylvania is one of the most flood-prone states in the nation. That is why the budget proposes a seven-cents-per-$100 assessment on property insurance premiums to finance $100 million in urgently needed flood mitigation projects over the next three years to prevent floods that can quickly destroy property and take lives.

The most significant investment in the governor’s budget is increased education funding to help ensure that our students are prepared to succeed in today’s competitive, high-skill economy. A study commissioned by the General Assembly this past year determined that Pennsylvania is not investing enough in its schools to ensure that our students have the tools to succeed, so the governor’s education budget increases school funding and introduces a new school funding formula designed to raise student achievement.

Rendell’s budget will make modest and reasonable investments now that will deliver real, long-term financial benefits to Pennsylvania families and businesses for years to come. The result will be affordable health insurance, energy independence, improved education, safer communities, business expansion and job growth.

Any objective observer would conclude that his budget is a sound investment in the safety and security of the people of Pennsylvania.



Thomas W. Wolf is secretary of the state Department of Revenue.

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