HARRISBURG -- Gov. Ed Rendell this morning proposed three tax increases, including a hike from 6 percent to 7 percent in the state sales tax, to fund his 2007-08 budget.

		Listen in Audio from today's budget presentation:   Michael Masch, budget secretary Increasing the state sales tax Property tax relief Cuts in federal funds Gov. Ed Rendell Property tax reflief Raising taxes Handgun violence in Pennsylvania New handgun laws Turnpike privatization A tax on oil companies PDF document See selected allocations for Allegheny County in a list provided by Rep. Dwight Evans, Democratic Chairman of the Appropriations Committee. Online graphics See a breakdown of Gov. Ed Rendell's proposed 2007-08 budget. See a breakdown of general fund expenditures

He also wants to raise the cigarette tax by 10 cents a pack, to $1.45, and to tax smokeless tobacco and cigars at 36 cents an ounce. Now, the state does not tax smokeless tobacco, such as chewing tobacco, or cigars.

The third component Mr. Rendell is proposing is what he calls an oil company gross profits tax of 6.17 percent.

"Because of high gasoline prices at the pump, the nation's oil companies have recently enjoyed record profits,'' he said in his budget summary.

In exchange for paying the new tax, he would exempt oil companies from paying the state's corporate net income tax of 9.99 percent.

But even so, the state would realize a net gain in revenue of an estimated $760 million, which Mr. Rendell would spend on mass transit.

Also related to the state'e transportation crisis, Mr. Rendell would lease the Pennsylvania Turnpike to a private operator. He said it's difficult to estimate exactly how much revenue that would generate, but conservatively he expects $965 million a year, which he would use to improve roads and bridges on other state highways.

In addition to the new taxes or tax increases, Mr. Rendell is also proposing a $2.25 per ton increase in the waste "tipping fee" paid by garbage haulers, many of whom come from out of state. The current fee is $6.25 per ton.

Michael Masch, budget secretary, said the state will run out of funds for the cleanup of hazardous waste sites by July unless this new money is raised. Mr. Masch was unable to estimate how much more this would cost the average household.

Those are several of the means the governor proposes to fund an overall budget of $27.3 billion for the year starting July 1, an increase of $1 billion over the final 2006-07 budget.

Increasing the sales tax to 7 percent statewide -- and 8 percent in Allegheny and Philadelphia counties -- would generate $1.4 billion in new funds.

Mr. Rendell says he would use $900 million of the additional revenue over the next two years to lower property taxes for homeowners. That would be in addition to property tax relief of up to $1 billion expected in about two years, when all 14 casinos are open.

As always, public education for pre-kindergarten through grade 12, and public welfare, including medical assistance to low income people, are the top two expenses in the budget. Education would get almost $11 billion and welfare $9.7 billion.

In higher education, the University of Pittsburgh is budgeted to get $167.9 million in the coming budget year, up $3 million, while Penn State's proposed allocation is $332.9 million, up $5 million.

The schools will get a chance to make their cases for more funding later this month or in early March, when the House and Senate appropriations committees convene to review the Department of Education budget.

Those, along with the state correctional system, are among the few areas that would see significant funding increases. Corrections is up to $1.6 billion, compared to $1.42 billion this year.

The Republican-controlled Senate and the House, controlled by Democrats by one vote, now have to debate the budget, and much criticism of the sales tax increase is expected.