2009-02-05 / Local & State

Rendell Says He Wants Dime-A-Pack Cigarette Tax

By Mark Scolforo ASSOCIATED PRESS WRITER

HARRISBURG, Pa. (AP) - Cigarette smokers in Pennsylvania could soon be paying a dime a pack more as part of Gov. Ed Rendell's plan to balance the state budget.

Rendell revealed the idea and other details of his coming budget proposal during a conference call Thursday with about a dozen reporters at medium-sized newspapers around the state. He also has been conducting TV news interviews in advance of Wednesday's budget address.

The current cigarette tax is $1.35, and the additional levy should raise about $50 million a year. The governor said he also favors $50 million in taxes on smokeless tobacco and cigars, which are not currently taxed.

Rendell plans to seek $150 million a year in new taxes on the extraction of natural gas from the Marcellus Shale rock formation.

He will again push for a plan, known as the "pharmacy carveout,'' to have the state reap savings in its various health care programs by directly purchasing pharmaceuticals from drug companies. The idea has previously stalled in the Legislature.

And he told the reporters the General Assembly should dedicate its entire $200 million surplus to the budget. That was a change from last week, when Rendell said the figure should be $175 million.

"Families are hurting and everyone needs to pitch in,'' Rendell said. "I will not be sympathetic to lobbyists and campaign contributors.''

He noted the state faces an increasing unemployment rate and has a growing waiting list for subsidized adult health insurance.

The most recent estimates say current fiscal year revenue collections will end up $2.3 billion below projections, and that billions more will be needed to balance next year's spending plan.

"We can't tell Pennsylvanians that they're out of luck and on their own,'' he said. "We have $2.3 billion in red ink this year and there's more to come next year. This is something no Band-Aid can fix.''

The governor says he expects to cut 100 of the state budget's 750 line items, including funding for anti-drug education, health literacy and a summer program for artistically and academically talented high school students.

Rendell spokesman Barry Ciccocioppo said Friday that some of those programs may not be permanently eliminated.

"He hopes that when the economy picks up that some of the line items that he'll propose eliminating on Wednesday will be restored,'' Ciccocioppo said.

The governor said the state appears likely to get about $7.6 billion from the federal stimulus package being negotiated in Congress. That would include $4 billion for health care, $2.4 billion for education and $1.2 billion for infrastructure, he said.

Rendell declined to disclose his proposed total budget for 2009-10; the current year's general fund budget is $28.3 billion.

In his budget address, Rendell is expected to specify how much of the $750 million "rainy day'' contingency fund he wants to draw down this year and next. He may also delve further into the topic of state workers' furloughs or layoffs.

Earlier this week, his aides formally notified public employees' unions that furloughs could begin in a month. The administration also wants to draw nearly $200 million from a reserve in the state workers' health plan. The governor also recently announced that as many as 2,000 state jobs could be cut.

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