August 5, 2009 / 5:41 PM / 10 years ago

Pennsylvania gets stop-gap budget, Philly left out

HARRISBURG, Pennsylvania (Reuters) — Pennsylvania Governor Ed Rendell on Wednesday signed an $11 billion “stop-gap” budget for fiscal 2010 that lets state employees and vendors get paid, but requires lawmakers to resume negotiations on education and other major state spending.

Senate Majority Leader Dominic Pileggi, a Republican, reiterated that budget negotiations should take precedence over a bill that would allow Philadelphia to deal with its own financial crisis by raising the city’s sales tax and deferring pension payments.

“The budget needs to come first,” Pileggi said.

Philadelphia Mayor Michael Nutter, who was in Harrisburg again on Wednesday seeking support for the measures, warned he will have to lay off around 3,000 workers and close some city agencies — unless the measures are approved by August 15.

Rendell, the Democratic governor, vetoed $12.9 billion worth of spending line items in a budget bill that was first approved by the Republican-controlled Senate in early May. He urged legislators to return to the bargaining table more than a month after missing the July 1 budget deadline.

“We have work to do and we must get back to doing it post-haste,” Rendell said at a news conference.

Pennsylvania is without a full budget because lawmakers failed to agree on a way to close a $3.2 billion shortfall, which was caused by the recession and a plunge in revenues.

RAISE REVENUE VS. CUT SPENDING

Rendell said the budget can’t be balanced without revenue increases, while Republicans insist on spending cuts.

Pileggi, the Senate majority leader, attacked the stop-gap budget as a ploy by the Democratic governor to win support for tax increases among state-funded organizations whose funding will be eliminated or reduced under the new temporary budget.

“I don’t think the governor is going to engage in serious negotiations until that crisis hits,” Pileggi told reporters in a video news conference. He predicted it could take “weeks” before a budget deal is struck.

In recent days, Democratic legislators have abandoned Rendell’s plan to temporarily raise the state income tax, and are now considering a range of other revenue-raising measures. The list includes: a municipal sales tax; the legalization of table gaming at Pennsylvania’s slots parlors, and the taxation of natural gas extracted from the state’s massive Marcellus Shale field.

Bob Caton, a spokesman for Democratic House Speaker Keith McCall, said Democrats have been spurred by public opposition to the broad-based income-tax hike, and are looking instead for “temporary and narrowly based revenue sources.”

Johnna Pro, a spokeswoman for House Appropriations Committee Chairman Dwight Evans, said Democrats are looking at about 30 revenue options to close the budget gap.

“Our position is we are not going to continue to cut,” she said.

Editing by Jan Paschal

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