Pa. governor proposes lower sales tax on more items

HARRISBURG, Pa. (AP) — Gov. Ed Rendell today presented lawmakers with a $29 billion spending plan that would devote more money to schools, prisons and health care for the poor while taxing the sale of many services for the first time.

The proposal would increase spending by $1.1 billion, or about 4 percent, and relies on nearly $2.8 billion in federal stimulus money — some of which has yet to be approved by Congress — to augment state revenues amid a stubborn recession that continues to cut deeply into state tax collections.

“With help from Washington, our challenge to produce a balanced budget with no tax increase for the coming fiscal year is daunting, but doable,” the Democrat told legislators.

The budget’s biggest surprise — an expansion of the state sales tax — came as part of Rendell’s plan to prepare the state for an expected “fiscal tsunami” after he leaves office: a combined $5.6 billion deficit from the 2011 expiration of federal stimulus money and a 2012 spike in pension obligations.