Aid bill's defeat a blow to states

Rendell, other governors still plan to pressure Congress for the funds

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WASHINGTON -- After failing to garner the needed 60 votes Thursday, U.S. Senate leaders prepared to scrap a bill that would have extended aid to states, unemployment benefits and a host of tax provisions, potentially blowing an $850 million hole in Gov. Ed Rendell's budget.

The cloture vote to end debate and advance the measure fell short, 57-41, with Sen. Ben Nelson, D-Neb., joining a united Republican caucus to oppose more spending as Congress becomes increasingly debt-conscious.

Lawmakers in Harrisburg, backed up against their yearly budget deadline, had one wary eye on Washington on Thursday.

State Rep. Paul Clymer, R-Bucks, declared that the loss of anticipated Medicaid funding "could throw a bucket of cold water on all these negotiations."

Before a vote he expected to fail, U.S. Senate Majority Leader Harry Reid, D-Nev., said he would move onto another bill rather than continue to revise a measure Senate leaders have tinkered with for weeks. It is unclear if the state aid -- an extension of Medicaid reimbursements that originated in the stimulus bill -- can be resurrected.

Mr. Rendell was one of many governors who already included the Medicaid reimbursements in their fiscal 2011 budgets. The 6.2 percent reimbursement already had been extended through the end of 2010, but Mr. Rendell and others had been counting on it through the first six months of 2011.

Mr. Rendell has lobbied aggressively for the extension, including a trip to Washington last month. Thursday in Harrisburg, he warned of 20,000 layoffs of state, county and municipal workers, including teachers, if the $850 million in federal help does not come through.

Three legislative caucuses have come to agreement on an overall general fund spending figure of $28.2 million for the state, but Pennsylvania Senate Republicans say that's too much and that the proposal is irresponsible because it assumes the state will receive the funds, known as FMAP.

"Rendell budgets have always been based on hope -- hope that taxes come in according to his overly optimistic projections and hope that the feds come through," said Steve Miskin, spokesman for House Minority Leader Sam Smith, R-Punxsutawney. "We need a budget based on reality."

House and Senate Democrats say states including Pennsylvania frequently pass budgets that anticipate federal funds that have not yet been approved.

Senate Republican spokesman Erik Arneson said that's true, "but this is different because it's an extraordinarily large amount of money being debated in D.C. with the prospects of approval growing dimmer each day."

Mr. Rendell said it would be "Armageddon" if the funding doesn't come through. "We'd be back to ground zero" in budget negotiations, he said.

Mr. Rendell Thursday evening was on the phone with governors from across the country who plan to band together to pressure Congress to approve the funding.

"They're going to stress that the money is critical not only to the economy of Pennsylvania and many other states, but to the entire national economic recovery," Rendell spokesman Gary Tuma said.

He is hopeful the effort will be successful and is continuing to budget as if the $850 million is forthcoming.

Mr. Arneson blasted that approach. The congressional vote "makes it crystal clear that we can't rely on that money," he said.

Minority Appropriations Chairman William Adolph, R-Delaware, said that behind closed doors the governor's optimism for the funding is waning.

State House Speaker Keith McCall, D-Carbon, said there are contingency plans on the table in case the money doesn't come. He declined to elaborate.

U.S. Sen. Bob Casey, D-Pa., said Democrats must devise another way to get these programs through, perhaps as separate pieces of legislation, because of how critical they are to Pennsylvania and other states.

"Saying it's frustrating doesn't begin to describe it," Mr. Casey said. "If this doesn't pass now, it's a huge problem. If it doesn't pass over the next couple of weeks, it's more than just a Washington political issue to debate. It's going to be very harmful to the economy."

But after several revisions over several weeks, top Democrats said Thursday they were going to move on from the tax extenders bill for now.

Would they try to get the programs through another way?

"It's up to the Republicans," Mr. Reid said.

The majority leader initially was bullish on the FMAP funds, keeping them even when the House passed a tax extenders bill without them. But Republicans and centrists Mr. Nelson and Sen. Joe Lieberman, I-Conn., balked at the additional spending and voted against cloture on a previous version of the bill.

Wednesday night, Democrats emerged with a cheaper piece of legislation that included a scaled-back FMAP reimbursement to save $8 billion. All of the spending was paid for, except the cost of extending unemployment benefits -- which Democrats insisted is an emergency in these economic times. Republicans still were unwilling to budge.

Oft-courted centrist Sen. Olympia Snowe, R-Maine, took the Senate floor Thursday to denounce some of the tax provisions Democrats inserted to help pay for the bill as bad for small business.

Minority Leader Mitch McConnell, R-Ky., following the vote, scoffed at Democrats' claims of Republican intransigence.

"The only thing Republicans have opposed in this debate," he said, "are job-killing taxes and adding to the national debt."


Daniel Malloy: dmalloy@post-gazette.com or 202-445-9980. Tracie Mauriello: tmauriello@post-gazette.com or 717-787-2141.


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