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For Immediate Release
February 4, 2009
Contact: Arnie Kriner
570-322-6457

Senator Yaw:  Legislature to Face Tough Choices on Proposed State Budget

Senator Gene Yaw (R-23) said the $28.9 billion state budget proposed today by Governor Rendell presents tough choices as Pennsylvania feels the fall out of the national economic downturn.

With January's revenues collections at $261.7 million below projections for the month, year-to-date revenues stand at $13.3 billion with a collections shortfall of about $1.08 billion (7.5 percent). The Governor is now projecting a $2.3 billion shortfall, and that is just over 8 percent of the total revenues that Pennsylvania had expected to take in during the current fiscal year.

"While the budget does not include any large scale tax increases on working families and job-creators, it does include significant new spending," Yaw said.  "While we are fortunate to be receiving money from the federal economic stimulus plan, we cannot count on that money in future budgets, so we need to prioritize spending and make hard choices."

The budget proposal anticipates additional revenues from:

• A 10 cent-per-pack increase in Pennsylvania's cigarette tax, to a proposed total of $1.45 per-pack.
• A new tax on cigars and smokeless tobacco.
• A new tax on extraction from the state's Marcellus shale natural gas reserves.
• A proposal to use $250 million from the Rainy Day Fund in Fiscal Year 2008-09 and $375 million in Fiscal Year 2009-10.
• Revenues generated from video poker machines in establishments holding liquor licenses.
• Anticipation of $2.4 billion in federal relief funding.

Yaw said that he will look carefully at the proposal to tax the state's Marcellus shale natural gas reserves – much of which is in his senatorial district.

"This is a tremendous resource for Pennsylvania, so we want to make sure it is managed properly," he said.  "I also want assurances that the counties that will be affected by drilling are properly compensated."

Yaw expressed concern that funding for the Department of Agriculture's General Government Operations was reduced by $1.7 million, or 5.4%, and funding for agricultural research was cut by $1.37 million, or 73.3 percent.

"Agriculture is a huge employer in this area and is the second largest industry in the state," Yaw said.  "As we examine this budget in the months ahead, I think we have to look carefully at where to make cuts so that they don't hurt our economy or cost the state jobs."

The senator said the Legislature and the Governor must work together in the months ahead to craft a realistic and fiscally responsible spending plan that will help Pennsylvania weather the national recession.

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