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Senators discussing mix of taxes to help close Pennsylvania's budget gap

| Wednesday, June 25, 2014, 7:15 p.m.

HARRISBURG — Taxes on natural gas, cigarettes, snuff and cigars, and forgoing a scheduled business tax reduction are part of the potential budget plan under discussion by Senate leaders of both parties, Minority Leader Jay Costa said on Wednesday.

Costa, D-Forest Hills, said lawmakers need to raise money to fill gaps between tax collections and spending in a House-passed, $29.1 billion budget that includes $380 million from privatizing liquor sales, something the Senate isn't likely to embrace.

He said the House version isn't a real budget: “It's built on smoke and mirrors.”

The House approved its plan 110-93.

“It's being held together by tape and rubber bands,” said Rep. Joe Markosek of Monroeville, ranking Democrat on the House Appropriations Committee.

The state's deficit is potentially $1.4 billion. Markosek said the deficit may be closer to $1.7 billion.

House Majority Leader Mike Turzai, R-Bradford Woods, called it a “compassionate and prioritized” budget.

“Education will be at its highest level ever — $10.3 billion,” Turzai said, calling the proposal an “exceptionally responsible budget.”

The Senate is expected to amend the budget and send it back.

“We fully expect it to be changed by the Senate,” said House Minority Leader Frank Dermody, D-Oakmont.

Costa predicted budget negotiations may last beyond Monday's midnight deadline — through July 1 and 2.

“The ongoing discussions include talks about the overall spending level, individual line items, and potential revenues needed to support the spending plan,” said Senate Republican spokesman Erik Arneson. “Nothing has been agreed to.”

Asked about the list of potential tax hikes that Costa rattled off, Republican Gov. Tom Corbett's spokesman Jay Pagni said: “Revenues and the particular components will be part of the discussion as we move forward in negotiations.”

Corbett isn't ruling anything out — or in, Pagni said.

Costa said he believes a 5 percent tax on Marcellus shale gas extraction, on top of the existing 2 percent impact fee, is needed to help close the gap.

“New energy taxes to fill a budget gap is short-sighted, will put Pennsylvania at a disadvantage when competing for capital investment and will hamper economic growth at a time our state needs jobs most,” said Marcellus Shale Coalition President Dave Spigelmyer.

Some mix of taxes is expected to be in a tax code bill that accompanies the budget, Costa said.

The capital stock and franchise tax, a levy on business assets, is slated to be reduced from 0.89 mills to 0.67 mills. If lawmakers postpone that reduction, it would be the sixth delay in 10 years, according to the Pennsylvania Manufacturers Association.

Brad Bumsted is Trib Total Media's state Capitol reporter. Reach him at 717-787-1405 or bbumsted@tribweb.com.

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