Rendell rejects legislative budget compromise
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HARRISBURG -- Gov. Ed Rendell cannot support the proposed $27.9 billion budget that Senate and House leaders outlined today.
After appearing at the City-County Building this afternoon on an unrelated matter, Mr. Rendell said he would veto the proposed budget because he said it makes cuts in education programs and the Children's Health Insurance Program.
"I won't countenance that," he said.
He also said the budget isn't balanced for this year or for next and would result in a $1 billion deficit next year. In addition, he said, it overestimates recurring revenue and depends on economic growth when "it doesn't look like there's going to be any growth."
He said there has been progress on the budget and promised to work with legislative leaders, but said he won't compromise on funding education or children's health insurance.
"This would be ruinous to the people of Pennsylvania," he said.
Rendell aide Steve Crwford in Harisburg said the spending proposal by Senate Republican and Democratic leaders and House Democrat leaders -- which is already more than two months late -- fails on three key criteria, he said.
It makes reductions in key education programs, such as pre-kindergarten programs and school accountability block grants; it reduces important health care programs, such as the Children's Health Insurance Program; and it seriously overestimates recurring revenue for fiscal 2009-10 by as much as $500 million, he said.
Without enough sustainable, recurring tax revenue this year, the state would need to enact a tax increase next summer to fill a deficit, and Mr. Rendell doesn't want to do that, Mr. Crawford said.
Legislative leaders this morning announced a tentative agreement on a $27.9 billion budget proposal.
Senate Republican and Democratic leaders, along with House Democrats, said the tentative deal would use $1.1 billion in recurring revenues -- including $200 million from legalizing table games at state casinos -- to balance the spending package, which is slightly less than the $28.2 billion spent in the fiscal year that ended June 30.
The proposal also avoids any increases in the personal income tax or the state sales tax, but does continue a tax on business assets that was supposed to be phased out. It also increases the $1.35 per pack cigarette tax by 25 cents per pack, lets more state forest land be leased for Marcellus shale natural gas development, cancels $75 million in tax credit programs (possibly including the film tax credit program) and calls on the Department of Public Welfare to reduce costs by $60 million.
The plan calls for collecting $200 million from table game revenues this fiscal year, which started July 1. Most if not all of that money would come from one-time table game licenses sold to the state's nine casinos. The fee for licenses had been set at $10 million, but that would have to be increased if the $200 million level is to be reached.
State House Speaker Keith McCall apologized to state residents for the delay in enacting a new budget -- it's 73 days late so far and won't be adopted for at least another 10 days. But he said both Democrats and Republicans had important "principles" they wanted to uphold, such as increasing education funds by $300 million and not increasing broad-based taxes, so it took a while to reach an agreement.
He said the state hasn't faced such hard economic conditions, where revenues have dropped off sharply, since the 1930s. The state ended fiscal 2008-09 with a $3.2 billion deficit, which will be paid off using $2 billion in one-time revenues and $1.2 billion in federal Medicaid funds.
The legislators said the thought $1.1 billion in recurring revenues for 2009-10 would satisfy Mr. Rendell.
House Republicans said they weren't given details of the budget until today and are still studying whether they can support it. If the 99 Republicans in the House withhold support, it would take virtually all of the 104 Democrats to approve it.
Senate approval seems assured since both parties endorsed the plan.
A major environmental group, Penn Future, also condemned the proposed House-Senate budget plan as "bad news for Pennsylvania's economy, environment and taxpayers."
Penn Future President Jan Jarrett said the proposal "gives a big sweetheart deal to the multi-national gas drilling industry," by opening up thousands more acres of state-owned land for drilling. But state officials recently shelved plans to enact a wellhead tax on natural gas taken from the ground, which the industry had lobbied against.
The joint House-Senate budget conference committee will meet Monday to vote on the budget proposal, but the full House and Senate probably won't vote until the week of Sept. 20 because of the time needed to print the voluminous documents.
More details in tomorrow's Pittsburgh Post-Gazette.
First Published September 11, 2009 12:49 pm
