A Wayne County legislator plans to tack on a novel amendment to an upcoming state budget loaded with red ink and relying on dwindling saved money and a proposed tax hike to barely get by.


A Wayne County legislator plans to tack on a novel amendment to an upcoming state budget loaded with red ink and relying on dwindling saved money and a proposed tax hike to barely get by.
The law, introduced by state representative Mike Peifer, would require the state government to sock away more money into its so-called rainy day fund during tax revenue surplus years.
Piling up more money during economically healthy times could alleviate a state deficit crisis like the one being experienced today, said Peifer (R-139th) in a phone interview with The Wayne Independent on Thursday.
“We’re not going to expand government,” he said. “We’re going to save for a rainy day.”
The state is now required to deposit 25 percent of surplus tax revenues - after spending  - into a contingency fund commonly known as the rainy day fund.
Peifer’s bill would increase that to 50 percent of surplus tax revenues, in effect doubling the amount of money the state would be required to save annually.
“We are so reliant on the economy for our revenues,” he said, adding that when the economy sours so does state personal income tax and sales tax collections. “We got to learn how to manage our cash flow. If you’re not working, you’re not paying income tax.”
With a much larger fund on hand, it may also prevent the General Assembly from turning to the taxpayers to balance the budget in times of ill-economic growth, said Peifer, who is a certified public accountant.
The fund has been dipped into during previous legislative sessions when tax revenues fell short of expectations. The fund has also been bolstered during sound economic and tax collection years.
It may be, however, nearly wiped out again this year, as the state struggles through the deepest U.S. recession since the Great Depression.
Gov. Ed Rendell proposed tapping $250 million from the fund to plug this fiscal year’s state budget, which is $3.2 billion in the red. The fiscal year begins in July.
The Democratic governor will also pull another $375 million from the fund for next fiscal year’s budget.
That leaves $125 million for rainy days or economic downturns down the road, according to a Wayne Independent analysis of the governor’s 2008 - 2009, 2009 - 2010 fiscal year budgets.
The governor also proposed raising the state personal income tax to 3.57 percent from 3.07 percent, which is expected to bring in an additional $1.5 billion in revenue and eliminate some state program cuts.
“If we would have had these surpluses (added to rainy day fund) ..., we’d be sitting on a billion and a half dollars ... which drives me crazy,” said Peifer.
The governor has further said that $3.4 billion in federal stimulus money will be used to fix the deficit crisis this fiscal year and to balance next fiscal year’s budget.