State budget passed -- and on time

No new taxes in $28 billion spending plan

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HARRISBURG -- State lawmakers Wednesday adopted a $28.05 billion budget and for the first time in eight years met the deadline for passing a complete general-fund spending plan.

The new fiscal year starts today with a budget that's 0.6 percent higher than last year's and includes no tax increases.

The spending plan includes more money for basic education and economic development and cuts to nearly every other area.


This document shows the basic education funding by the state to public school districts. The list is categorized in alphabetical order, first by county and then by school district.

Republicans who opposed called the budget irresponsible because it increases spending at a time the economy remains unstable.

"It may be a small increase, but it's still a move in the wrong direction in my mind," said Rep. Jim Christiana, R-Beaver.

Rep. Mike Turzai, R-Bradford Woods, supported the budget because it calls for no new taxes and it's $1 billion less than what Gov. Ed Rendell requested in February.

"It's essentially a flat-line budget," he said. "This is a step in the right direction" toward fiscal responsibility, he said.

House Democratic Leader Todd Eachus, meanwhile, said the spending plan invests tax dollars where they will do the most good -- in education, economic development and social programs.

House approval came on a 117-84 vote, with nearly all Democrats and more than a dozen Republicans saying yes.

The Senate earlier voted, 37-13, with conservative Republicans such as Jane Orie of McCandless urging bigger spending cuts.

The budget is tenuous, though, because it relies on $850 million in federal aid that might not come through.

Last week, the U.S. Senate failed to pass a six-month extension of Medicaid reimbursements that were initiated by the federal stimulus bill.

It is not clear if or when the legislation can be resurrected. If not by July 12, Mr. Rendell said he will consult with Pennsylvania legislative leaders about putting money in reserve. That would prompt immediate service cuts and 22,000 layoffs at all levels of government statewide.

Mr. Rendell was in Washington Wednesday with other governors to lobby for the extension.

The state is required to pay for Medicaid, so if the money doesn't come through, funds would have to be shifted from other line items.

That concerns Mr. Christiana.

"All we have is an empty promise from Washington. We're going to have to [tell school districts and other recipients of state money] not to spend it because we might have to take it away," he said.

House Democrats said lawmakers collaborated and cooperated to come up with a budget that could be passed on time.

"This was a perfect example of people working together and understanding the message we received last year. People were mad we were 100 days late," said House Speaker Keith McCall, D-Carbon.

Many social service groups suffered by the delay in getting their state funds last year. State workers felt some pain, too, as their paychecks were withheld until the impasse was resolved.

Mr. Rendell said he will wait to sign the budget until lawmakers have passed a fiscal code, school code, tax code, an economic-development borrowing bill and other enabling bills.

Those votes could occur by the end of the week. However, Senate Finance Chairman Pat Browne, R-Lehigh, is threatening to hold the borrowing bill in his committee because he says House Democrats reneged on a deal to re-authorize the independent legislative budget office he created last year.

In a separate deal that was part of budget negotiations, Republicans agreed to take up a bill in the fall that would impose a tax on energy companies that extract natural gas from the Marcellus Shale.

The budget is not dependent on that tax; rather the revenue from it would help fill a gap in next year's budget when federal stimulus funds run out.

Republicans, meanwhile, stood firm in their refusal to consider other revenue sources. Mr. Rendell and House Democrats wanted to enact a tax on cigars and smokeless tobacco, increase taxes on cigarettes and close a loophole that businesses use to avoid paying the corporate net income tax.

Senate Majority Leader Dominic Pileggi, R-Delaware, said it was important not to increase taxes under "the worst economic conditions since the Depression of the 1930s."

Minority Appropriations Chairman Jay Costa, D-Forest Hills, said: "Given the economic times we are facing, we recognize we need to make some belt-tightening. But we have made investments in education and economic development to reinvest in our communities and bring companies to Pennsylvania."

He said line-item cuts couldn't be avoided because 2009-10 revenue was $1.2 billion short of projections.

Environmental groups expressed concern over a cut -- for the second year in a row -- in the Department of Environmental Protection budget.

"I don't see how any legislator can pretend that DEP can do what it's required to do, with this level of funding," said Myron Arnowitt of Clean Water Action.

Other areas cut by 7 percent or more include libraries, state parks, the Department of Agriculture and the Department of Labor and Industry.

In Western Pennsylvania, the Carnegie Museum will receive no money from the state's general fund for the second year in a row. The University of Pittsburgh will receive $160.5 million, the same as the fiscal year that ended Wednesday.

The Children's Hospital of Pittsburgh of UPMC and the Children's Institute of Pittsburgh, which last year received $200,000 and $215,000, respectively, will get nothing from the general fund in the new budget.

"By controlling spending, we were able to balance this budget without any new or increased taxes," said House Minority Leader Sam Smith, R-Punxsutawney. "At no time did we lose sight that our choices would be affecting local communities. As we worked through the line items, we tried to be mindful of the depth of the cuts and minimize the impact on Pennsylvania's most vulnerable citizens."

Bureau Chief Tom Barnes: or 1-717-787-4254. Tracie Mauriello: or 1-717-787-2141. Washington correspondent Daniel Malloy contributed.


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