Rendell sees tough budget year to come

January 15, 2008 6:52:16 PM PST
Gov. Ed Rendell delivered a warning to top legislators Tuesday evening that the slackening economy will mean a tough budget year in which spending will have to be restrained, but expects not to raise taxes.

Legislative leaders met with Rendell at his offices for almost an hour, during which he raised the subject of the budget and economic forecasts.

"I'm just going to tell the boys that massive surpluses don't live here anymore," Rendell said on his way into the meeting.

On his way out, Rendell would not say whether he plans to roll out any major new programs with his budget proposal, which is scheduled to be delivered to the Legislature on Feb. 5.

He did say any spending increases will have to be modest. He also said he will order a $100 million cut in general government administrative costs and will ask for no general fund tax increases. And he poured cold water on Republican talk of an income tax reduction.

"Given these budget figures and these forecasts, it will be awfully difficult to achieve that," Rendell said.

The state continues to run a surplus, more than halfway into the fiscal year that ends June 30. Still, Rendell noted that the budget he will negotiate with the Legislature this spring will be the toughest since his first year in office.

Republican leaders said they welcomed Rendell's message of an austere budget, after fighting for the past year over the Democrat's energy and health care proposals, which he has sought to raise taxes or fees to support.

"He sent some clear signals that it would be a more modest budget," said House Minority Leader Sam Smith, R-Jefferson.