Budget controversy possible
HARRISBURG – Harrisburg is bracing for a tough 2007 budget year, complete with a roughly $2 billion budget gap, a crunch in transportation funding needs, and Gov. Ed Rendell bent on reforming the state’s crumbling health care system. As Rendell delivers his annual state budget address today, all eyes will be looking at the bottom line: what can be achieved with limited state dollars and does it require a tax increase.
There’s speculation that Rendell may be proposing a hike in the sales tax to pay for more property tax relief and other programs. His health care initiative, Prescription for Pennsylvania, includes a proposal for an increase in cigarette taxes and the first ever tax on cigars and chewing tobacco.
Senate Republicans are already promising not to play ball if Rendell cuts established programs out of the budget to make way for new initiatives, as he did last year, forcing lawmakers to spend their political capital renegotiating those items back in.
Rendell Spokeswoman Kate Philips declined to confirm speculations of a tax increase, but she said that the state is being forced to absorb millions of dollars in health care costs that the federal government has shifted to the states.
Philips agreed that may have an impact on advancing the governor’s health care initiative.
“Sure. It makes every aspect of the state budget more difficult because you have to cut corners, be creative and be wise with your investments,” she said.
Several legislative leaders affirmed they’d heard an estimated $2 billion budget gap in a roughly $26 billion-plus budget, raising a perpetual concern over the duration and tediousness of budget negotiations, which have gone past the June 30 deadline for three years in a row.
House Democratic Leader Bill DeWeese is proposing an early start, with a House vote on June 1 and Senate action by June 15.
“We’re trying to do everything we can to avoid the brinksmanship of past years,” DeWeese said. “We are going to have a serious challenge. This is not going to be an easy budget.”
Meanwhile, Senate Republicans have sent out a clarion call for fiscal restraint, offering to start with the Legislature. Senate Republican leaders are proposing to slash at least $75 million from an estimated $215 million in legislative reserves, sending the money back to the state budget.
The Legislature’s reserves don’t need to be returned to the state Treasury at the end of the fiscal year, unlike all state agency departments. Lawmakers have defended the practice as allowing legislative independence from the governor during tight budget years.
“Certainly we need to have a reasonable amount of reserves in case we do have a stalemate with the budget. We have to pay our bills too,” said Senate President Pro Tempore Joseph Scarnati. “But it has to be reasonable.”
Scarnati also hinted that the governor’s health care initiative is not a sure thing.
“We’re going to peel the onion back and find what we can do and can’t do,” he said. “We will tie every thread through this budget and through every issue with fiscal responsibility and that’s our mandate. It’s not about cooperation. We’ll be as cooperative with the governor as he is fiscally responsible.”
House Republicans are also flagging the idea of a sales tax increase. Steve Miskin, spokesman for House Republican Leader Sam Smith, said a sales tax increase is acceptable only if all the money goes towards property tax relief and not other items in the budget.
“He’s saying he wants a sales tax for property tax relief but he doesn’t want it all for property tax relief. He wants to plug his holes,” said Miskin.
Alison Hawkes can be reached at 717-705-6330 or ahawkes@calkins-media.com