John Baer: On-time budget, but at what cost?

Rendell: Seven late budgets
Rendell: Seven late budgets
Posted: June 30, 2010

IT'S STATE fiscal-year deadline day: Do you know where your taxes are going?

With New Jersey's budget in the books, Pennsylvania's pushing to break its seven-year streak of late budgets as lawmakers and Gov. Ed look to dodge politically punishing headlines like those from the fiascoes of budgets past.

"We have reached a budget agreement," Rendell said yesterday afternoon, but an agreement he described as "not without pain."

If it holds, then today or tonight the state will have its first on-time budget since Rendell took office, largely for two reasons: There's no interest like self-interest (the House and half the Senate face voters this November), and there's no money to fight over.

The agreement includes no new taxes, an overall increase of $182 million (less than 1 percent more than the current budget) and a total spending plan of $28 billion.

It includes significant cuts to libraries, state parks, state health centers and the departments of Agriculture, Labor and Industry, and Environmental Protection.

Republicans get their essentially level-funded, no-tax budget. Rendell gets a basic-education spending increase of $250 million, most of the $354 million he sought.

But this budget also carries risk.

It relies on $850 million in still-uncertain federal funding for Medicaid assistance. If Congress does not approve such funding or approves only some of it, much deeper cuts, including in the new education money, as well as thousands of layoffs of teachers and state workers, could follow.

As Rendell put it, "The pain would be excessive."

He and other governors head to Washington today to lobby for the money. He said that the fate of the funds should be decided within 10 days.

Another unresolved issue is taxing natural gas from Marcellus Shale.

Rendell and legislative leaders could not reach agreement on the size of a tax or how it would be shared with local governments and environmental programs. So the issue is put off until the fall, with the hope that a tax can be agreed to and implemented next January.

The governor congratulated legislative leaders but said he's disappointed they did not approve his requests for taxes on smokeless tobacco and cigars or for closing the "Delaware loophole," which allows corporations making profit here but headquartered elsewhere to avoid paying the state's corporate net-income tax.

If all goes as planned, the Democratic House today or tonight will approve a budget bill and send it to Rendell for his signature.

Rendell, when asked, said, "This will pass."

But plans have fallen apart in the Capitol before, and relying on the Democratic House is like using an untested bungee cord: Things could come down hard in a hurry.

Regardless of when this budget's done - today, tonight, tomorrow, next week - it is a temporary respite from still-looming fiscal nightmares.

Senate GOP Leader Dominic Pileggi said this week that there already are deficit projections of $4 billion to $5 billion next year because federal stimulus funds are set to run out and huge public pension payments come due.

Pileggi even questioned the no-tax pledge that fellow-Republican and gubernatorial candidate Tom Corbett took: "I don't see how he can do it, frankly."

This should serve as impetus to enact cost-savings such as proposed this week by the Senate Government Management and Cost Study Commission.

The commission cited potential savings of $458 million through a variety of changes from alternative sentencing to state prisons to consolidating administrative functions of school districts to fewer and better used state vehicles.

If projected shortfalls are real, this Legislature should start now on these savings and others, such as selling state stores and reducing its own costs. That way maybe next year we get something other than an uncreative, cut-and-paste, rely-on-risk budget. That way maybe we get some innovative leadership.

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