Associated Press Writer

AUSTIN (AP) - Gov. Rick Perry said Friday that he believes expanding the state sales tax -- an idea pushed by some of his fellow Republicans -- would be a new tax, something he promises won't be needed to balance a $10 billion shortfall.

"If you were to pass a piece of legislation that says you no longer have an exemption, you would tax that item, that's a new tax," Perry said. "I don't think that one's too difficult for people to fathom."

Crushed by the shortfall and pressure to increase state funding for schools, more lawmakers are speaking about taxes. Some Democrats want to create brand new taxes such as a state income tax.

Perry supports legislators on both sides who want to close loopholes that allow businesses to get out of paying current taxes. The governor says that's different from a new tax because those corporations are supposed to be paying the taxes now.

But the governor differs with at least two key Republicans, Appropriations Chairman Talmadge Heflin of Houston and Senate Education Chairwoman Florence Shapiro of Plano, who have proposed expanding the sales tax. The tax now excludes some things such as legal and medical services, food and medicine.

Heflin and Shapiro believe the expansion, together with paring back local property taxes and business taxes, could be a good way to fund public education.

Texas, which does not have an income tax or a state property tax, gets most of its revenue from sales and automobile taxes.

The state loses out on $22.4 billion a year because of various tax exemptions, according to a Senate Finance Committee report.

If Texas started taxing services such as child care and salon visits, an additional $7 billion in revenue would be collected in fiscal years 2004-05, according to the report.

Perry, who would have to sign or veto any tax bill, repeated his belief Friday that lawmakers will be able to find enough cuts in the two-year budget to balance it without taxes.