Democrats, Republicans still at odds over state budget

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HARRISBURG -- A little more than $600 million. That's what separates two different state budget proposals, one developed by legislative Democrats and the other by Republicans. And a compromise could still be far off.

The six-member bipartisan budget conference committee yesterday held its first meeting in a month, with Democrats presenting a retooled 2009-10 budget proposal of $28.1 billion, and Republicans countering with a spending plan of almost $27.5 billion.

Rep. Dwight Evans, D-Philadelphia, said the new Democratic plan was $1 billion less than a House Democratic plan presented several weeks ago. But a lot of work remains before reaching compromise spending plan for the fiscal year that began July 1.

State revenue officials estimate they will have $26.4 billion in state and federal revenues to spend this fiscal year. This money consists of $24 billion in state tax revenues and $2.4 billion in federal economic recovery funds.

Spending more than $26.4 billion, as both budget plans call for, would require the use of recurring and/or one-time revenues. The latter category includes the state's $750 million "Rainy Day Fund'' for economic emergencies and a surplus of about $700 million in a fund that helps doctors pay medical malpractice insurance premiums.

Recurring revenues include the state's annual allotment of federal tobacco settlement money; an increase in the state sales tax rate; eliminating some of the dozens of exemptions to the sales tax; increasing the $1.35 per pack cigarette tax by up to 25 cents a pack; imposing a first-time excise tax on cigar and smokeless tobacco sales; temporarily halting the phaseout of a tax on business assets; or adding table games to casinos.

Republicans said they want to close the $600 million gap by looking for more spending cuts to lessen the need for higher taxes. They noted that recent audits done by Auditor General Jack Wagner, a Democrat, have identified "wasteful" spending in the Department of Public Welfare, and that agency should be examined for saving money.

The two sides agreed to analyze the competing budget proposals in an effort to reach a compromise, but no date for another conference committee session has been set. It will still likely be days or even weeks before a final 2009-10 budget is adopted.

Meanwhile, Mr. Wagner -- who's almost certain to be a Democratic candidate for governor next year -- held a news conference to tell legislators not to stop meeting until they reach a budget deal.

"We're in the 63rd day of a budget impasse," he said. "Children are back in school ... and we still have not resolved the budget problems." He said the impasse is "a black eye" for the state, which will become an even bigger embarrassment if a budget isn't ready by Sept. 24, when world economic leaders convene in Pittsburgh for the G-20 Summit.

Tracie Mauriello contributed. Harrisburg Bureau Chief Tom Barnes can be reached at or 717-787-4254.


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