U.S. News

Pennsylvania ends 101-day stalemate over budget

PHILADELPHIA (Reuters) - Pennsylvania lawmakers agreed to a 2009/10 budget on Friday, 101 days after the start of the fiscal year, making the Keystone State the last in the United States to settle on a spending plan.

Gov. Ed Rendell acknowledged “unconscionable delay” in passing the $27.8 billion budget, but said it had succeeded in avoiding any broad-based tax increase, and had settled on an overall spending level almost $500 million lower than last year.

U.S. states have struggled to balance budgets this year as the recession has shrunk tax revenues, spurred job losses and stifled business expansion even as the broader economy has begun recovering.

Agreement follows months of conflict between the Democratic governor who fought to preserve spending on education and healthcare, and Republican lawmakers who successfully opposed any broad-based tax increase, including an income-tax hike that was originally proposed by Rendell.

The budget ensures recurring revenue for this fiscal year and next, and increasing basic education funding by $300 million while offsetting a $3.2 billion revenue shortfall, the sharpest in Pennsylvania since the Great Depression, Rendell told reporters after he signed the budget.

Rendell said public welfare spending had been cut to 2005 levels, the environmental protection budget was pared to its 1996/97 level, and administrative spending on the governor’s office is now nine percent below its 2003 level. At the same time, the state’s Rainy Day Fund has been drained of all its $750 million.

“It’s a responsible budget, given the economic condition of the nation and the state,” the Democratic governor said.

But Dwight Evans, Democratic chairman of the House Appropriations Committee, said he was “embarrassed” it took lawmakers 101 days to agree a budget. He blamed the international economic crisis that “left us little room for maneuver.”

Tax increases will be felt by people who smoke cigarettes or small cigars, or who gamble at table games.

The budget deal reflected compromise from both parties in the legislature.

“This is a day of relief, but it’s not a day to pat ourselves on the back or celebrate,” said Keith McCall, Democratic speaker of the state House, in a statement.

“The delay put an undue burden on a lot of people. This budget isn’t perfect, but it’s a worthy compromise that gets the job done.”

“This is a responsible budget that holds true to House Democrats’ key priorities of ensuring that our children, our seniors, our veterans and our most vulnerable citizens are protected,” said House Democrats’ majority leader Todd Eachus.

The new budget will spend about $100 million less than an earlier package agreed by Rendell and three legislative caucuses on September 18, and about $1 billion less than the governor’s original request of $28.97 billion.

Republican lawmakers were not immediately available for comment.

Editing by Jerry Norton