Thursday, July 03, 2008

Compromise Struck On The State Budget

(previously published at

State legislators and Rendell administration officials struck a compromise in Harrisburg at around 1 a.m. yesterday on what the governor described as "a very difficult budget" to pass.

The new budget represents a 3.8 percent increase over last year's, but is about $120 million less originally proposed in February.

Discussion of the handshake agreement will continue over the next several days, but the $28.2 billion plan avoids a repeat of the feared furloughs of 25,000 state employees and shutdown of government services.

"The governor is pleased that the parties were able to reach a consensus on an outlet for a budget ... and [Gov. Rendell] is looking forward to signing the legislation," said Chuck Ardo, the governor's press secretary.

Some of the give-and-take by lawmakers involved compensation for a lower-than-expected surplus by cutting $545 million in funds, all without requiring any broad-based tax or fee increases, and not dipping into the state's budget reserve.

In order to do this, the state will transfer at least $60 million from surpluses in special accounts, such as the liquor store system and recycling fund to cover general spending. In addition, the state lottery fund will be used to support $50 million in nursing home costs, including a "one percent cost of living increase for human service providers and for the nursing homes," said Republican Sen. Ted Erickson of Delaware and Chester counties.
With this in mind, reaching a budget agreement this year was "an achievement in and of itself," according to Senate Majority Leader Dominic Pileggi, R-Delaware.

Still, "it was generally a pretty good agreement in light of the lack of surplus money available," said Gary Tuma, press secretary to Sen. Vincent Fumo, D-Phila., "although there were other items he would have liked to see addressed, such as health care." "Some of the governor's proposals had to be scaled back in a way that preserves most of his agenda, like education funding and energy proposal, [but] a consideration of some of that is being put off to the fall."
Rep. Dwight Evans, D-Phila., chair of the House Appropriations Committee, struck a similarly circumspect note, saying that the compromise required "everybody [having] to give up something."

These sacrifices apparently include the state foregoing its annual contribution to its reserve fund, the "Rainy Day Fund."

However, the large amount of borrowing from some projects to fund others struck some organizations as unnecessary and a big concern.

"Unfortunately, this budget doesn't reflect the needs of Pennsylvanians today," said Matthew Brouillette, president of the Commonwealth Foundation, a nonprofit public policy organization based in Harrisburg.

"The use of the borrowing is effectively using credit card to run government and the growth in spending exceeds what most Pennsylvanians are budgeting for in their family budgets. We would like to see more fiscal restraint in holding the line on both borrowing and spending [since] higher spending today usually leads to higher taxes tomorrow."

Much of this borrowing takes place in the area of clean energy projects and infrastructure maintenance such as replacing aging municipal water and sewer facilities.

Mr. Rendell noted that the budget includes $350 million to repair about 400 structurally deficient bridges and $800 million for water and sewer system upgrades over the next several years.

"There was some progress on some of the governor's signature items and less on others, but overall he is pleased that the budget protects the progress we've made and allows us to invest in our children, alternative energy and future economic development," said Mr. Ardo.

Budget allocations also include around $290 million for school districts.
Lawmakers will be in session today and tomorrow, putting bills on the calendar that will then be addressed on Thursday and Friday before the final stage budget gets signed.

Heather J. Chin can be reached at

©The Evening Bulletin 2008

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