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Governor, lawmakers reach budget accord
Saturday, September 19, 2009

HARRISBURG -- The 80th day was the charm for the long-delayed 2009-10 state budget.

After several weeks of grueling negotiations and battles over spending priorities and revenue sources, Gov. Ed Rendell and General Assembly leaders last night announced a tentative agreement on a $27.9 billion spending plan for the fiscal year that began 80 days ago on July 1.

Perhaps the most notable element in the package is allowing the state's slots casinos to add table games such as blackjack, poker, roulette and dice. Officials hope that move will raise up to $200 million this year for state coffers.

"We can say with a great deal of satisfaction that we have a budget agreement," said Mr. Rendell, surrounded by Senate Republican leaders and House Democratic leaders. Senate Democratic leaders also support the tentative budget, but House Republicans don't.

Mr. Rendell apologized to state residents for the amount of time it's taken state officials to reach a budget deal. Pennsylvania is the last state in the nation to complete a budget for the current fiscal year, and many social service and human service agencies, as well as counties, are hurting financially because they still haven't gotten the state funds they count on to operate.

"We have subjected [citizens] to a lot of angst, worry and tension that need not have happened," he said. "I apologize for the delay."

But he said he had to be firm about getting sufficient spending for important items like education, health care and economic development. Mr. Rendell will get the $300 million increase in spending he sought for basic education, bringing it to $5.5 billion this year.

Republican leaders were firm that the state spend less overall this year than last fiscal year (when $28.2 billion was spent) and that no broad-based taxes, such as the income tax or sales tax, were raised.

However, the tentative budget is still a "three-caucus agreement," and its passage isn't a slam-dunk. So far it has no support from House Republicans, who complained the bottom line is too high. They favor spending $27.5 billion this year, and if none of the 99 House GOP members come on board, Democrats will have to get at least 102 of their 104 members to vote for the budget. Some House Democrats have said privately they have concerns about the proposal.

"We will not be part of the announcement because we believe the spending is too high and because it includes tax increases," House GOP spokesman Steve Miskin said. "This is one of the worst times to take more money out of people's pockets. People are struggling."

House Democratic Leader Todd Eachus of Luzerne said he will work to bring House Republicans on board by "making sure they understand the value of this plan."

Because of the lengthy process of printing the hundreds of pages of budget documents, explaining them to legislators and then voting, it could be 10 days to two weeks before the budget is actually adopted.

Mr. Rendell wouldn't list specifics of the revenue sources or the spending in the proposal, because he wanted to talk to rank-and-file legislators before they read details in the news media.

"This may shock you, but newspapers aren't always entirely accurate," he quipped. But he did confirm that the budget includes legalization of table games at casinos. The license fees and the tax rates for table games still have to be worked out.

Mr. Rendell said he never pushed for adding table games this soon after the 2004 law legalizing slots. But the sharp drop in state revenues due to the ongoing recession made table-game revenue an attractive option for many legislators, who didn't want to raise broad-based taxes.

The budget deal includes no increases in the 3.07 percent personal income tax rate or the 6 percent sales tax rate. It does include an increase -- believed to be 25 cents per pack -- in the current $1.35 per pack cigarette tax. It also removes a sales tax exemption on tickets for museums, concerts and operas and increases prize limits and taxation on "small games of chance," such as bingo and charity raffles.

Additionally, it calls for leasing thousands of acres of state forest land to companies drilling for natural gas beneath the Marcellus shale. Some critics have said that could be bad for the state's environment. Democrats preferred to impose a tax on drilling companies rather than lease land, but Republicans prevailed on that point.

The proposal would drain the state's $750 million "Rainy Day Fund," meant for fiscal emergencies, and would transfer to the general fund a one-time $755 million surplus in a fund that subsidizes medical malpractice insurance.

"We now have a spending plan that does not include a broad-based tax increase, no personal income tax increase and no increase in the sales tax," said Sen. Jay Costa Jr., D-Forest Hills. "The second important thing is that we continue to make strong investments in education by driving out money through the basic education formula, particularly for the Pittsburgh area."

The budget agreement gives Pennsylvanians what they wanted, said Senate President Pro Tem Joe Scarnati, R-Jefferson.

"They wanted to see compromise ... and they didn't want to see any bickering," he said. "Although there were compromises made, none of us compromised our principles."

Mr. Costa said the budget could have been done months ago, but "the will to get it done wasn't as strong as we would have liked. The will was there today, though, and that's what's important."

Tom Barnes can be reached at tbarnes@post-gazette.com or 717-787-4254. Tracie Mauriello can be reached at 717-787-4254.
First published on September 19, 2009 at 12:19 am
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