Tuesday, June 26, 2007

Rendell sacrifices 3 proposals for budget

Rendell sacrifices 3 proposals for budget

Turnpike lease, oil profits levy, sales tax increase off board in bid for compromise

Tuesday, June 26, 2007

By Tom Barnes, Post-Gazette Harrisburg Bureau

HARRISBURG -- Gov. Ed Rendell made three major concessions to legislative critics yesterday, dropping his controversial plans to lease the Pennsylvania Turnpike, tax oil company profits and raise the state sales tax by one full percentage point.

Mr. Rendell said he hopes the change in those stances will speed efforts to reach a compromise with the House and Senate on a new state budget for the fiscal year that starts Sunday.

Legislative leaders have told the governor there just isn't much support, even among Democrats, for the three major initiatives he announced in February.

The governor wanted to lease the turnpike to a private operator who would collect tolls and maintain the road, impose a new tax on oil company profits to fund mass transit and raise the statewide sales tax from 6 percent to 7 percent -- and from 7 percent to 8 percent in Allegheny and Philadelphia counties -- with some of that money going for property tax relief.

"It's encouraging that the governor now understands that his tax increases won't pass," said Erik Arneson, a spokesman for Senate Republicans.

And in another significant move, the Democratic governor put off until October discussion of three revenue-raising ideas that are part of his "Prescription for Pennsylvania" health care program.

At a Capitol news conference yesterday, Mr. Rendell said he'd like to reach a budget agreement with the state House and Senate on time -- meaning by Sunday, which is the start of the 2007-08 fiscal year.

While conceding it might take longer, he expressed his willingness to work into next month in order to get an acceptable budget. For him, that means a spending package that includes more funding for education, job training and economic development than is included in the $27 billion budget that passed the Senate last week.

House Republican spokesman Steve Miskin said his side also wants a new budget by the weekend, but it must be "a responsible budget that doesn't rely on increased taxes this year or next year."

To do that, Mr. Miskin said, the GOP will continue to try to control state spending.

"This administration has an insatiable appetite for more and more spending," he claimed.

In February, Mr. Rendell proposed a $27.3 billion budget, which the House approved last month. The Republican-controlled Senate deleted $400 million from the House budget but added about $100 million in programs that Mr. Rendell didn't want.

Haggling is still expected over that $300 million difference. Mr. Rendell said he wants more funding than the Senate approved for laptop computers in high schools, pre-kindergarten classes statewide, job training programs for young people and people who have lost their jobs, and more for economic development programs.

Mr. Rendell credited the good performance of the state economy for eliminating the need to increase the sales tax. He said the 2006-07 fiscal year, which ends Saturday, will end with a surplus of $500 million to $550 million, which is far more than had been anticipated when he made his original budget address in early February.

Mr. Rendell said there's another key measure that must be approved this week: a slots-related bill that is vital for both Pittsburgh and Philadelphia. The 2004 slots law created a "gaming economic development fund" that gets 5 percent of the gross revenue raised from slot machines. But separate legislation is still needed to permit that money to be spent, said Budget Secretary Michael Masch.

In Pittsburgh, the gaming money would help finance projects such as the new $300 million arena for the Penguins. In Philadelphia, it would go toward expanding that city's 14-year-old convention center.

Mr. Rendell said this authorization bill must be approved by the Legislature before summer recess or the state won't be able to sell bonds this summer for those two major projects, driving up borrowing costs and possibly delaying them.

The governor is also urging the Legislature to approve transportation funding of about $1 billion a year, not $750 million, as House members discussed last week. The funding would likely be in the form of a 20-year bond issue, providing $1 billion a year. The borrowed money would be paid back with revenue from Pennsylvania Turnpike tolls and tolls added on Interstate 80, starting probably in 2010.

He said $500 million a year from the bond issue should go for mass transit systems and $500 million for roads and bridge improvements.

Mr. Rendell said even $1 billion would be considerably less than the $1.7 billion he called for spending in February. But he conceded that since there isn't support for his plans to raise that money, he's dropping them.

"I've never said it's 'my way or the highway' " concerning raising the money needed to fix roads, bridges and mass transit, he said.

Mr. Arneson was glad to hear the governor was dropping the turnpike leasing plan and the oil company tax. Many legislators feared the latter idea would just lead to higher gasoline prices.

"We are committed to working on a [transportation] solution as quickly as possible," he said. "Moving away from the idea of taxing oil companies and leasing the turnpike was a big step forward."

Another concession was delaying action on funding for the governor's Prescription for Pennsylvania plan, which seeks to extend health insurance to 800,000 uninsured adults.

He wants to raise the cigarette tax, extend the sales tax to smokeless tobacco and require employers that don't supply health insurance to workers to pay a 3 percent payroll tax. Republicans and business interests have strongly opposed the payroll tax, and action on those ideas will have to wait until fall, he said.

But he still wants legislative action by Sunday on his plan to add a less than $6 a year assessment on household electric bills to pay for an $850 million "smart metering" program, which he said would allow residents to save about $70 a year on their electric bills. And he also wants to increase municipal dumping fees by $2.75 a ton in order to raise money for cleaning up hazardous waste sites.

(Bureau Chief Tom Barnes can be reached at tbarnes@post-gazette.com or 1-717-787-4254. )

Source: http://www.post-gazette.com/pg/07177/797199-85.stm


No comments: