Yesterday, Gov. Ed Rendell presented the Legislature with a $22.7 billion budget for fiscal 2004-05. The package is designed to jump-start economic development, protect open space and clean up the state’s land, air and water.
Sen. Robert Jubelirer took issue with the presented plan, stating the document includes a worrisome spending level and an array of environmental taxes that could harm the job picture.
“This is two years in a row where Gov. Rendell has proposed a substantial combination of spending, taxing and borrowing,” said Jubelirer. “There is certainly benefit in agreeing to do some of what he asks; there is undeniably significant risk to jobs and the economy in our area if we were to do all of it.”
The Democratic governor’s budget, the second of his administration, would rely more heavily on borrowing than his first budget, which depended on tax increases – an $800 million bond issue for the environment and more than twice as much in debt to invigorate local economies.
It calls for no broad-based tax increases beyond those in a $1 billion-plus package approved in December. But it advocates new fees on trash haulers to cover debt service on the environmental bonds and a new fee on the release of certain toxic materials to shore up the Hazardous Sites Cleanup Fund.
“If we can make our cities and towns more livable, offer sportsmen clean streams and healthy game lands, respond to growing needs to preserve farmland and open space and to repair the environmental damage of our industrial past, Pennsylvania will be a more attractive place for families and employers to come and to stay,” said Rendell.
Jubelirer said that state residents would be better served if the emphasis “was on improving performance and controlling spending.” He said the most common answers to the state’s biggest challenges are to hold onto manufacturing jobs and to attract new enterprises offering good employment opportunities. He denounced the governor’s ideas to push to expand environmental spending in the same way the last budget was built around broadening state education spending and programs.
“The early reaction pretty much sums it up – the environmental groups are cheering and the groups who are concerned about jobs are objecting,” said Jubelirer. “It is not that the governor has the wrong goals; it is that his methods and the amount of money he wants to spend work against efforts to build a stronger job base.”
Overall, the budget calls for a roughly 4.5 percent increase in spending from this year’s $21.7 billion. This year’s and next year’s budget each include more than $350 million in temporary federal aid for cash-strapped states, which was part of President Bush’s 2003 tax-cut package. The aid expires after next year.
Rendell said much of the spending growth is driven by fixed costs the state cannot legally avoid. He cited the Medical Assistance program, which provides health care for people who cannot afford it and whose projected 13 percent increase — $454 million — accounts for the lion’s share of the budget growth.
Rendell’s budget also includes increases of varying size for programs that had been previously cut, including public libraries, mass transportation and higher education.
He urged lawmakers to resolve their year-old differences on a package that would legalize and tax slot machines in the state to raise $1 billion to reduce property taxes across the state.
“The people of Pennsylvania have heard countless promises on this issue from Harrisburg in the past,” the governor said. “Now is the time to make good on these promises and to get this done.”
The largest share of the $800 million bond issue, which ultimately would require statewide voter approval, would be earmarked for state parks, forests, farmland and open space. Another $300 million would go toward environmental cleanups, particularly at abandoned mines where acid runoff has polluted streams. The remaining $170 million would go toward revitalizing older communities.
Pennsylvania is “sitting on a tourism gold mine,” Rendell said, noting that the state has 3.8 million acres of parks, forests and game lands — an area larger than Connecticut.
The $2 billion that Rendell wants to borrow for economic-development was first proposed last year, but the details are still being negotiated in the Legislature. The governor says the borrowing would attract as much as $6 billion in private investment to help existing employers and attract new ones.
Much of the new spending for next year, including a series of business-tax breaks, is offset by the increases in taxes on income, telephone usage and cigarettes included in the December compromise, although Rendell’s budget signaled an eagerness to reopen negotiations on some items.
For example, in December the governor accepted $175 million for grants that school districts may use next year for various programs, including his proposals to reduce class size or introduce full-day kindergarten. On Tuesday, he proposed boosting the total to $250 million.
Budget Secretary Michael Masch portrayed the $175 million as a minimum and noted that the governor is only proposing the increase for lawmakers’ consideration.
“Budget-making is a judgment-making process,” said Masch, the governor’s top budget adviser. “I don’t expect a rubber stamp on anything in the budget from the Legislature.”
Jubelirer said the governor’s address included several important points.
“As the sponsor of a local property tax relief plan that contains taxpayer protections, I see the emphasis the governor is putting on the issues as an advantage,” he said. “I do not like the link he has forged between slots and state-funded property tax reductions, but we do have a chance to pass a major package and end decades of public frustration on this issue.”
