Budget Deal Banking on Energy Tax (GOP Deal with the Devil Alert in Pennsylvania!)

AP, via Hanover Evening Sun ^ | July 12, 2007 | Marc Levy

[Virginia Ridgerunner]

HARRISBURG -- Electric-rate shock for consumers could produce a windfall for Gov. Ed Rendell's alternative energy agenda.

That essentially was the message a top Republican senator delivered to the Democratic governor during a private Sunday morning meeting that helped dissolve a partisan political stalemate and paved the way for an agreement less than two days later, according to other participants in the budget talks.

The idea floated by Sen. Dominic Pileggi - that spiraling electricity bills anticipated in much of Pennsylvania over the next four years will provide a gush of tax revenue - finally moved Rendell off a position that Republicans staunchly opposed.

"I think we reached an understanding on both sides of what was possible," Rendell said in a news conference Tuesday.

Pileggi agreed, saying the meeting "cleared some of the issues ... without going through intermediaries."

The reason for the expected receipts-tax windfall is the expiration of a vestige from the state's 1996 deregulation law - "rate caps" which have shielded Pennsylvanians from paying the true cost of electricity for a decade. By the time the last rate caps expire in 2010, 85 percent of the state's electricity customers likely will be paying substantially higher rates than they are now.

Pennsylvania's 5.9 percent tax on the gross receipts of electric utilities is passed down to consumers. A spreadsheet assembled by the governor's office figures that a "conservative" 15 percent increase on electricity bills when rate caps expire will generate $65 million in extra tax revenue in the 2010-11 fiscal year. That dollar figure rises in subsequent years.

The irony may be that spiking electricity prices end up financing programs designed to cut electricity costs and usage.

[Virginia Ridgerunner]

Pennsylvania GOP collaborating with Fast Eddie Rendell to screw Pennsylvania citizens again...

[Kay Ludlow]

Are they collaborating? I thought they were just pointing out to Guv Ed that even if they don’t agree on raising taxes to fund the spending he want, the $$$ will probably be there anyway because of the gross receipts tax. Now if they were agreeing to raise the rate of the tax, that would be collaboration; if they didn’t say anything, well, silence is golden; but they just pointed out the existing facts which the Guv’s staff apparently didn’t notice. Maybe they were too focused on how to spend the I-80 tolls...