While Pennsylvania Governor Ed Rendell was careful this morning to say he would not raise any broad-based taxes, He had no problem with counties starting their own sales taxes. The governor included this gold nugget for local governments in his new proposed spending plan for fiscal 2009-2010.

“I am proposing to give counties the ability to broaden their tax base by allowing them to impose a sales tax increase of up to one percent on top of the state sales tax and share 50% of those proceeds with our hard-pressed cities.”

So for counties and townships this could be a good thing (from a revenue point of view) but it gets dicey if one county jumps to seven percent with the surrounding counties hold the line. In fact, the State of Delaware has no sales tax.

Philadelphia and Allegheny counties already add one-percent sales tax to the state’s six percent. So it’s unclear whether the two counties would be allowed to an additional one-percent. (We learned later today that the sales tax option does not apply to Phila or Allegheny counties) Allegheny County which includes the City of Pittsburgh uses its proceeds to support everything from libraries and parks to its convention center. Philadelphia uses its proceeds for its general fund.

Keep in mind, everything Rendell proposed this morning will have to be approved by the full legislature before July 1st.

So we want to know what you think. Is this a good option for counties to raise revenues? Is a recession the wrong time to be raising sales taxes?

Related links:

Transcript of Gov Rendell’s Budget speech

Summary of Rendell’s 2009-2010 budget