HARRISBURG. House considers income tax boost

The income tax would rise from 2.8 percent to 3.25 percent Jan. 1.
HARRISBURG (AP) -- A plan to raise more than $1 billion, most of it through a boost in the income tax, is being floated to members of the state House by Republican and Democratic leaders seeking more money to expand education funding, restore budget cuts and plug a budget deficit.
Such an income tax boost would be the first since 1991. It would rise by 16 percent for six months, then roll back to a permanent 11 percent increase. But even if the proposal passes the House, it would head to a Senate that could seek to negotiate changes, or even a drastic reduction in the cost of the package.
Fitful and partisan negotiations over how to cover the deficit and a significant increase in education spending have dragged on for months.
Gov. Ed Rendell has vowed to hold up more than $4 billion in public education subsidies to pressure the Republican-controlled Legislature to consider his education plans, which include reducing class sizes through third grade and providing full-day kindergarten.
Stephen Miskin, a spokesman for the GOP House leader, Sam Smith of Jefferson County, said Republican leaders would seek enough votes to help pass the package as early as Monday.
"Our hope is that we can vote on Monday on the spending plan," Miskin said, calling it a "reasonable compromise" with Rendell. Democrats will likely have to supply most of the votes if the proposal is to pass the House, which has 109 Republicans and 94 Democrats.
Democratic House whip, Michael R. Veon, said he hoped that a successful vote in the House for the package would "convince the Senate that they should join us at the negotiating table and get this budget resolved."
Other taxes and fees
A grab bag of other new or higher taxes and fees would buttress the income tax revenue to reach $1.2 billion, Veon said. Those include a $220 million tax on gross cell phone receipts and $100 million from raising fines on reckless drivers, among other items, he said.
The income tax would rise from 2.8 percent to 3.25 percent on Jan. 1 before rolling back to a permanent 3.1 percent on July 1. The new portion of the income tax would produce an estimated $600 million in the first six months and $750 million annually after it lowers to 3.1 percent.
About $310 million of the money would be spent on education programs that Rendell has touted, and $140 million would go toward a general increase for education subsidies. Along with $450 million in federal emergency budget aid, the rest would be spent to cover the deficit and restore about $300 million in cuts in the budget bill that Rendell signed in March, Veon said.
Republicans' views
With the fiscal year 3 1/2 months old and public pressure mounting to reach a deal, Rendell has nearly halved the amount he was seeking for his education plans.
Still, one Senate Republican staff aide said the current agreement appears to be too expensive.
"We preliminarily believe the spending numbers are too high and that the tax increases that are proposed are also higher than is justified," said Stephen C. MacNett, the lead counsel to the Senate Republicans.
Rendell's proposals to raise the income tax have up to this point fallen flat without the support of Republicans, many of whom question the wisdom of raising the income tax at a time when employment in Pennsylvania is declining.
For the most part, Republicans have maintained that they were willing to raise smaller taxes and fees to pay for the general increase and to cover the deficit. But paying for Rendell's education plans would require boosting a broader tax, such as on income or sales, Republicans say.