Rendell wants more bridge, business funds

February 5, 2008 9:27:39 AM PST
Gov. Ed Rendell proffered a state budget Tuesday designed to ease the pain of an economic slowdown while pumping hundreds of millions of dollars into rebuilding bridges, cleaning up industrial sites and improving the state's business climate.

The $28.3 billion spending plan would be about $1.1 billion more than the current year's, a 4.2 percent increase that the governor said was fueled by a rising number of state prison inmates and greater demand for health care services for the poor and elderly.

More money also would go to public education.

Rendell called it a slow-growth budget that "focuses on our future, calling for strategic investments in energy, health care and education."

The budget would require some targeted tax increases, including a dime-a-pack cigarette levy to help pay for a plan introduced last year to extend health benefits to 760,000 uninsured adults.

"It should shock the conscience of every Pennsylvanian to know that nearly 800,000 of our citizens lack health insurance," Rendell said in his budget address. "They pay a terrible price, but we do, too, because when they arrive at a hospital emergency room in need of treatment for which they cannot pay, we all pay the bill."

The Democratic governor wants to borrow $600 million over three years to rebuild bridges and is asking to increase the state's debt limit by $750 million for civic development projects.

He said he would not sign a bill repealing the law that added tolls to Interstate 80 without a way to replace the billion dollars a year it would generate for mass transit, roads and bridges.

His budget also provides $100 million to expand a program that helps prepare abandoned sites for use by businesses. And a proposed slowdown in the ongoing phaseout of the Capital Stock and Franchise Tax would free up $40 million for hazardous-waste cleanups.

For the third year in a row, Rendell asked the Legislature to let him borrow $500 million for construction of new facilities for medical research, a proposal dubbed the Jonas Salk Legacy Fund.

Another initiative to resurface after languishing in the Legislature is Rendell's "energy independence strategy," a plan to spend $850 million on clean energy promotion and greenhouse gas reduction by taxing electricity use. It would cost the typical state resident about $5 annually, $36 for businesses and $882 for industries.

"The state that becomes a leader in renewable energy will be a state that will have a vibrant economy for decades to come," Rendell said.

Rendell said a darkening economic outlook would be helped by giving 475,000 lower-income families one-time payments of as much as $400. He wants the General Assembly to let him withdraw $130 million from the state's "rainy day fund" budget reserve until the end of the fiscal year in June, when he would repay it out of the current year's surplus.

Rendell's budget secretary, Michael Masch, said the $130 million represents what the administration expects it will be required by law to pay into the rainy day fund at the end of the budget year. The law requires 25 percent of any surplus to be transferred into the fund.

Eligible families would be part of the state's current tax forgiveness program, which typically means they have at least one dependent and do not earn enough to pay income taxes. The income limit would be $32,000 for a family of four.

Republicans reacted coolly to Rendell's use of debt and the resuscitation of stalled proposals. They said the budget eliminates existing programs that will have to be added back in, driving the price tag far above what Rendell projects.

Rep. Mike Turzai, the House Republican's policy chairman, called Rendell's ideas "tired old initiatives."


Senate Majority Leader Dominic Pileggi, R-Delaware, said the governor's expansion of a job-creation tax credit and focus on infrastructure were "positives that I would in concept agree with," but that Rendell should determine which of the borrowing proposals are his highest priorities.

Pileggi said he prefers "a longer-term, predictable course that emphasizes fiscal restraints and has a focus that does stimulate the economy in a sustainable way," such as targeted business tax incentives or a reduction in the personal income tax.

The education increases would be spread around to several areas.

Basic education subsidies would increase by nearly 6 percent, or $291 million, the largest one-year increase in more than two decades, Rendell said.

Additional tens of millions of dollars are earmarked for a preschool initiative, the purchase of laptop computers, special education and reimbursements for charter schools.

Libraries, community colleges, higher-education grants and universities also would see increases in their state subsidies.

Rendell said the state should spend $2.6 billion over the next six years to repair an "adequacy gap" in how schools are funded.