Pennsylvania's Taxing Budget

August 07, 1991

It has been a taxing year in Harrisburg. State legislators and Gov. Robert P. Casey have been locked in a bitter and prolonged battle over how to close Pennsylvania's $3.5 billion budget gap. In the end, reluctant lawmakers capitulated and gave the governor what he wanted -- including a whopping $2.8 billion tax increase. As a result, 100,000 state workers who haven't been paid in a month will receive overdue pay checks this Friday.

But Pennsylvania's citizens will pay a heavy price for this compromise. The personal income tax rate will soar nearly 50 percent this year. Gasoline will rise 8 cents a gallon, cigarettes 13 cents a pack. Sales taxes will extend to cable television, lawn care, long distance phone calls and computer services. Businesses got clobbered with a 10.5 percent net income tax.

Yet Governor Casey still had to cut $47 million from welfare and the local courts to make projected revenues equal expenditures. Seniors were especially hard hit. They will pay more for prescription drugs and for bus, train and Shared Ride travel. Local schools, meanwhile, fared better, gaining seven percent more in state aid.

What happened in Harrisburg could give Marylander's a taste of its fiscal future. What Pennsylvania went through this year, Maryland could experience next year.

In this state, there has been a similar gridlock between Gov. William Donald Schaefer and the General Assembly. The state's deficit is smaller, nearly $1 billion, but the "no new taxes" pressure from constituents is just as strong. Schaefer aides are already discussing broad program cuts that would save $300 million, even as legislators consider broadening the sales tax, raising the income tax and trimming state aid to local governments.

Given the huge imbalance between spending and revenues, it may take sweeping tax and spending cuts to put Maryland's budget back on track. Many states went through that agony this year, Pennsylvania being the latest. But General Assembly leaders decided to postpone the day of reckoning. It is still coming, though. Taxpayers had better be prepared for the worst: reduced services and higher taxes. That's what it will take to give Maryland a truly balanced state budget in these recessionary times.

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