Pennsylvania governor ready to veto budget plan
2009-09-13

Category Budget Nations U.S. States Pennsylvania Category Regions Source (Reuters)

HARRISBURG, Pennsylvania (Reuters) - Pennsylvania Governor Ed Rendell said on Saturday he is ready to veto a bipartisan budget plan proposed by lawmakers to end a 10-week deadlock because it is out of balance and contains cuts to education and healthcare spending.

Rendell said the $27.9 billion plan, announced on Friday by three of Pennsylvania's four legislative caucuses, contains unrealistic revenue assumptions, and would lead to a budget deficit of more than $1 billion by fiscal 2010-2011.

The Democratic governor, who argues the budget cannot be balanced without additional revenue, is at loggerheads with Republican and some Democratic lawmakers who refuse to accept higher taxes and insist the budget can meet a legal requirement for balance through spending cuts alone.

"This is an unworkable plan based on numbers that don't balance out," Rendell said, quoting state House Republican Leader Sam Smith, whose caucus has not signed on to the plan. "He is dead right."

Pennsylvania is the only U.S. state that has yet to agree a budget for the 2009-2010 fiscal year that began on July 1.

Like other U.S. states, Pennsylvania has suffered a sharp fall in tax revenue during the recession, and has to fill a projected $3.2 billion deficit to balance its budget this year.

Since July 1, the state has halted around $13 billion in funding for schools, social services and other agencies because of the budget stalemate, forcing some school districts to borrow to make up the shortfall. Rendell on August 5 signed a partial budget that allowed employees to be paid but stopped most other state spending until a budget deal can be reached.

At a rare weekend news conference, Rendell said the latest plan failed to meet his preconditions for a budget that was balanced in the current and next fiscal years, and contained no further cuts to health and education spending.

He said the "three-caucus" plan contains $147 million in cuts to education that he would not accept, and assumes an additional $247 million in education funding from federal stimulus money that made no allowance for the end of that funding after two years.

The plan makes an over-optimistic estimate for economic growth, and assumes twice as much revenue from natural gas leases as expected by his administration, the governor said. He attacked a projection of $100 million in revenue from taxing some gaming as "ludicrous."

Erik Arneson, a spokesman for the majority Senate Republicans, said lawmakers who authored the plan stood by their figures. "We are very confident in the budget and the revenue projections," he said. "The governor feels upset and angry because he wants higher taxes."

(Editing by Mohammad Zargham)