State funds start flowing, but table game dispute delays some payouts
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HARRISBURG -- More than 4,000 county agencies and social service programs across the state were breathing easier yesterday, as state Treasurer Rob McCord began sending out their long-delayed state allocations for fiscal 2009-10.
But another group of state funding recipients, including some prominent universities, museums, medical groups and art programs, were still sweating things out, as their allocations continue to be delayed while legislators try to resolve differences over a bill to add table games to slots casinos.
The delayed payments are for 28 institutions in a strange-sounding category called "nonpreferred appropriations," and include such major venues as the University of Pittsburgh, Penn State University, the Carnegie Museums, the Children's Institute of Pittsburgh, Temple University and a dozen other groups in Philadelphia.
According to budget documents, Penn State is to receive nearly $334 million from the state this year; Pitt, $168 million; Temple, nearly $173 million; the Carnegie, $226,000; and the Children's Institute, $431,000.
"We are trying to be patient, but the delay does impose some real hardships on the university and its students," said Pitt spokesman John Fedele.
Barbara Fellencer, an aide to Rep. Dwight Evans, D-Philadelphia, House Appropriations chairman, said, "There is no statutory requirement that nonpreferred institutions get state funding. There has to be surplus money in the budget for the nonpreferreds to be funded at all. That's why they're called nonpreferred."
The total funding for all 28 nonpreferred institutions this year is nearly $730 million, down from $756 million last year. To balance the 2009-10 budget, legislators would like an agreement on table game revenue, expected to produce $200 million for the state this fiscal year.
The funding allocations for each institution are listed in the just-approved budget bill, House Bill 1416, "but the authority to spend that money is contained in separate pieces of legislation, one for each institution," she said. Each authorizing bill must be approved by a two-thirds vote of the House and Senate.
Pitt, Penn State, Temple and a fourth "nonpreferred" university, Lincoln, are called "state-related" schools. They aren't state-owned, as are the 14 universities in the State System of Higher Education (Slippery Rock, Edinboro, etc.), but those four schools do get some state funding every year.
"Legislators are holding state-related universities hostage until the table games bill is enacted," said Tim Potts of Democracy Rising PA, a citizens group. "They are saying they will use the table games revenue to support higher education. It's making the universities be cheerleaders for table games."
As for table game legislation, disagreements persist regarding the proper tax rate and how much a one-time, upfront license fee will be. Tax rates range from a low of 12 percent -- the rate favored by casino officials -- to a high as much as 35 percent. The rate contained in Senate Bill 1033, by Sen. Robert Tomlinson, R-Bucks, is 14 percent -- 12 percent for the state and 2 percent for host localities. Other tax rates being discussed are 18 percent and 21 percent, the latter contained in House Bill 21 by Rep. Bill DeWeese, D-Waynesburg.
Casino officials don't want the license fee to be more than $10 million. Mr. Tomlinson's bill calls for a $15 million fee and some legislators want a $20 million fee.
"There are still some differences (of opinion) with the table games legislation," said Bill Thomas, an aide to House Majority Leader Todd Eachus, D-Luzerne. He said the table games bill would likely be voted on the same day as the nonpreferred appropriations, but couldn't say when that will be.
While the "nonpreferreds" aren't getting their money yet, many county agencies, school districts, human service groups, child care providers and veterans organizations were finally getting their annual state appropriation yesterday.
The mail room at state Treasurer Rob McCord's office was noisily clattering, as nearly 1,400 overdue checks were being stuffed and mailed out to the agencies, some of which were forced to lay people off because of a lack of money, or else borrow money, at interest, to keep their programs going.
Besides the paper checks, nearly 3,000 direct deposits will be made by today into the bank accounts of other social agencies and school districts. More checks and direct deposits will be made as the week goes on, and they all should arrive by early next week, Mr. McCord said.
"We wanted to make sure that these agencies and the people they serve, who were hurting (due to the budget delay), receive the payment as soon as it's physically possible," he said.
Tony Ross, director of the United Way of Pennsylvania, said he was glad the money is finally going out.
He recently warned that important social services, such as drug/alcohol programs, mental health programs, aid for senior citizens and child care agencies were cutting back on services due to a lack of needed state funds.
Some county agencies, school districts and social service groups want the state to pay the interest on loans they took out while awaiting their state money. This issue hasn't been decided yet.
Tom Gentzel, director of the state's School Boards Association, said his group will make a request for interest payments after school districts get their overdue money.
"The question of interest on the money that was delayed is a really legitimate question," he told the Associated Press.
Erik Arneson, an aide to Senate Republicans, said, "We are certainly willing to review the (interest payment) requests from counties and nonprofit organizations."
First Published October 14, 2009 12:00 am