Unsettling budget: Despite agreement, the state faces a tough road
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The end of Pennsylvania's budget adoption season -- typically celebrated along with the July Fourth holiday -- usually is a chance to reflect on which programs and services came out fiscal winners and losers.
This year is different, most strikingly because the 2009-10 spending plan took 101 days too long for lawmakers to enact it. Gov. Ed Rendell and legislative leaders decided to forgo the usually budget signing photo op, rightly figuring that this was no time for self-congratulations.
The $27.8 billion budget, which reduced overall state spending by cutting most line items, contains few winners, more losers and a lot of trepidation for the future.
In the tough negotiations, Mr. Rendell had insisted on more education dollars, and the budget maintains last year's funding levels for pre-kindergarten, Head Start and full-day kindergarten programs and bumps basic education funding up by $300 million. This is key in helping school districts avoid property tax increases, but even this positive development has a potential down side.
Due to shrinking state revenue, the new budget uses $2.6 billion in federal stimulus money to cover some general fund expenses. Of that sum, $655 million will be used for basic education. Another $31 million of stimulus money will go toward keeping funding level for state-related colleges including the University of Pittsburgh and Penn State. To make matters more confusing, the release of money for those institutions, as well as museums, is being held up until the Legislature votes on a proposal to add table games at Pennsylvania's casinos.
On top of that uncertainty for this year, the use of federal stimulus dollars for operating expenses means a big hole in the future when that money is gone, and at a time when other reserves have been tapped out.
The state rightly drained its rainy day fund of $755 million, necessary because, economically speaking, it has been a downpour. It also took $708 million from a fund intended to help physicians with medical malpractice costs, an effort that has been successful in retaining doctors, who now are threatening to challenge the state's authority to use the money for other purposes. And it moves to the operating budget money from other funds, including the tobacco settlement for smoking cessation programs.
All of which is the equivalent of emptying the family savings accounts to pay bills -- sometimes necessary, but never a good idea.
It's hard to predict what that will mean going forward, but one thing is clear. Legislators who had no appetite for broad-based tax increases -- understandable given the shaky economy -- and who also balked at reasonable levies on natural gas extraction and smokeless tobacco will be even less likely to support new or increased tax revenue sources next year. All of the seats in the House and half of those in the Senate are up for election.
You think this year's protracted budget debate was tough? Next year's could be much worse.
First Published October 14, 2009 12:00 am