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The state House is set to vote on a 2009-10 General Fund budget (H.B. 1416) for the Commonwealth that proposes to spend nearly $300 million more than the budget originally advanced by Gov. Ed Rendell, and would include various business tax increases.

PA Chamber members are urging lawmakers to embrace fiscal responsibility and reject the plan. As the nation and the Commonwealth attempt to recover from the current economic crisis, new or increased taxes on those who employ residents will only serve to deepen the current recession and its impact on Pennsylvania’s job creators and families

House Bill 1416 would spend more even without including funding for community colleges and colleges and universities within the State System of Higher Education, which would essentially be held hostage.

Supporters of H.B. 1416 want to vote on the education funding bill separately, which could pave the way for an increase in the Personal Income Tax. The Rendell administration has called for a 16 percent increase in the PIT.

The budget would also include a 2 percent tax on virtually all health insurance plans in the Commonwealth, and would retroactively freeze the phase-out of the Capital Stock and Franchise tax back to January 2009. The freeze means that businesses that have already paid the 1.89 mill rate would have to make up the difference between that amount and 2.89 mills. PA Chamber members oppose a freeze in the CSFT, as well as the 2 percent health insurance premium tax included in the proposal as well. The Chamber believes other options that don't lead to higher health-care costs should be considered to replace a federal Medicare-only premium tax set to expire in October.

During initial debate on H.B. 1416 on Thursday, July 16, the House defeated an amendment that contained a House Republicans budget proposal. That plan would have restored to some extent some of the cuts contained in a Senate budget proposal, and would have eliminated so-called "walking around money" for legislative projects.

The House budget proposal that was rejected would have relied on a tax amnesty program to collect back taxes in the neighborhood of $100 to $200 million; transfer money from the Rainy Day Fund; lease additional state lands for Marcellus Shale drilling; and eliminate the sales tax vendor discount, among other revenue sources.

The plan also proposed to freeze the Capital Stock and Franchise tax phase-out, but would not have made the freeze retroactive.

The Chamber continues to urge lawmakers to pass a fiscally responsible budget, noting that 33 states have already adopted state budgets in the current economy without broad-based tax increases.