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55 county programs will run out of funds tomorrow

Wednesday, July 30, 2003

By Johnna A. Pro, Post-Gazette Staff Writer

HARRISBURG -- The Rendell administration said yesterday that state-funded programs, including 55 that provide services to the neediest people in Allegheny County, are closing down because of a stalemate over the state's bare-bones budget.

The lack of money is only a harbinger of what's in store in the coming weeks for mass transit, schools, libraries and other organizations and institutions now that the administration and the Legislature are in gridlock over the state's budget, said John Estey, the chief of staff to Gov. Ed Rendell.

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"Programs that the commonwealth funds today are shutting down," said Estey during a meeting with reporters. "We need some real breakthroughs in the next couple of weeks."

Among those going without funding will be 38 agencies that serve 10,000 Allegheny County residents, ranging from pre-schoolers to the elderly.

The programs include everything from counseling provided by the YWCA to services for Vietnam War veterans to after-school and summer camp activities.

The services were to be cut off June 30, but the Roddey administration and County Council used $300,000 from Allegheny County's reserve fund to pay for an additional month, believing that the state's budget would be settled by now.

But because that hasn't happened, the Roddey administration on Friday notified service providers that their contracts would be terminated as of tomorrow. An emergency meeting of the county and those providers will be held today.

"Unfortunately, we don't have the money to continue to advance them funds for August," said county spokeswoman Margaret Philbin. "It's awful."

The state's $21 billion budget, which took effect July 1, was a bare-bones spending plan that from the onset left welfare programs, libraries and mass transit agencies begging the state for more money.

After introducing the budget in March, the governor asked the Republican-controlled Legislature not to act on it until he unveiled his full agenda later in the month. Instead, lawmakers approved the spending plan with record speed.

Rendell subsequently signed the budget, but then vetoed the $4 billion education subsidy, forcing the Legislature to negotiate over his agenda, dubbed the "Plan for a New Pennsylvania."

While there was little hope for the funds that were cut to be restored, a reprieve came from the federal government. The Bush administration and Congress allocated money to the states to ease their budget woes, and Pennsylvania got $900 million.

Rendell pledged $300 million of that money to restoring cuts made in the state's spending plan. He said no program would get all of its money back, but that he would allow lawmakers to decide which programs to fund and to what extent as part of the overall budget negotiations.

That agenda includes property tax reform, increasing education spending and adding new programs, and implementing an economic development plan, all of which would be paid for, in part, with revenues from expanding gambling in the state.

But with negotiations over the budget at a standstill, there is no enabling legislation that would allow the administration to spend the federal money. That means it's sitting in a bank account collecting interest.

"The $900 million is sitting there and that's the frustration," said Allegheny County Chief Executive Jim Roddey. "We have no enabling legislation. I don't know what's going to happen. It's just a bad time for human services. The problem will be that provider employees will be laid off, some people will move in with family members. Others will be institutionalized. It's a huge disruption to peoples' lives."

Among the items cut from the state budget was the Health and Human Services Development Fund, which was slashed from $36 million to $3 million. Allegheny County's share of that money went from $4.6 million to $78,011. Separately, drug and alcohol programs were cut from $18.6 million to $7.2 million.

Roddey said the state could end up spending more money if people who use the county-based or home-based services, such as home health care for the handicapped, have to be moved to institutions. The most expensive of those programs costs the county roughly $9,000 per person a year, Roddey said, compared with $30,000 for an institution.

"It's not a very wise choice financially," Roddey said.

For the Rendell administration, the problem is compounded by the fact that the budget which is now in place includes about $400 million from what are called revenue enhancements, such as fee increases. Separate legislation is needed to put those in place, but lawmakers have yet to do that. That means that the state budget, skimpy as it is, is short $400 million, Estey said.

Programs that already saw their budgets slashed could see further cuts if the Legislature doesn't act soon.

"We don't have the revenue to pay for what the Legislature passed," Estey said.

Erik Arneson, chief of staff to Sen. David J. Brightbill, R-Montgomery, disputes that notion.

"There is plenty of general fund money for the spending we passed, including basic education," Arneson said.

Complicating matters even further is the fact that Rendell vetoed the basic education funding to force negotiations.

While some wealthy school districts may be able to sustain themselves for weeks or even months, some poorer districts will need their state allocations next month or in October at the latest.

Estey said the administration has contacted all districts in the past two weeks to assess their financial situations and contingency plans are being made to provide stopgap funding.

"We wouldn't let any schools close," Estey said.

Still, schools could open next month without knowing how much funding will be forthcoming from the state.

The biggest stumbling block in the negotiations is that only a handful of Senate Republicans support gambling to raise revenues and none support new taxes.

Rendell wants to increase the personal income tax, or implement a series of smaller tax increases, to pay for new spending for education.

Estey said Rendell hopes that negotiations will continue, but he hasn't ruled out the idea of calling a special session.

Senators recessed Monday night and aren't expected to be back until September, although they were told to be available with six hours' notice.

The House will be in session two days next week and members are to be available with eight hours' notice.