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Rendell's Budget Solution: Spend, Spend, Gamble
By Bradley Vasoli, The Bulletin
Gov. Ed Rendell, D, yesterday outlined a Fiscal Year 2009-10 budget proposal that calls for more legalized gambling, sweeping school-district consolidation and new taxes.
Mr. Rendell has proposed $29 billion in spending for the next fiscal year, a $700 billion increase over this year’s total expenditures.
The proposed increase comes at a hardly bountiful time for state coffers. With a $2.3 billion state-budget deficit projected by the end of June, the governor and other lawmakers have scrambled to identify ways to bring this year’s state spending into line with revenues. To this end, Mr. Rendell made spending cuts, instituted a hiring freeze and called for a 4.25-percent reduction in operational spending by the legislature.
“As this budget makes clear, all of us in government must share the pain to close the deficit that we face,” he said. “We are making progress in this regard, and we will need to continue to work together to bring this budget into balance.”
Mr. Rendell couched his heightened-spending plan for next year in fiscally conservative language, emphasizing the cuts he proposes making to some programs. But since his budget would represent a 2.5-percent increase in overall spending at a time when government revenues have lessened, he allowed it would necessitate some tax increases he called “targeted” and not “broad-based.” Those include a tax on smokeless tobacco and to any natural gas extracted from the Marcellus Shale.
“Pennsylvanians … believe that just like other resource-rich states such as Texas and Alaska, the minerals under our soil should be taxed when extracted,” Mr. Rendell said. “We have a Pennsylvania gold rush going on in the form of drilling for natural gas.”
He said West Virginia has imposed a similar tax that has not appeared to weaken the state’s natural gas industry, but critics say the proposal has the potential to overburden extraction in Pennsylvania as a similar one did in New York State.
“Certainly taxes on any level are going to have a discouraging effect,” Nathan Benefield, policy research director at the Harrisburg-based Commonwealth Foundation, told The Bulletin.
Mr. Rendell has also called for allowing counties to impose new sales taxes on top of the state’s current 6-percent rate, a move he said could alleviate some strain on county governments created by cutbacks in state grants.
Mr. Benefield said he considered that idea a way for the governor to get “off the hook” for tax hikes that would go toward funding the growth of local government.
School-District Mergers, Gambling Other Controversial Proposals
Contentious facets of the governor’s budget address did not end with tax policy. He came out for merging the state’s 500 school districts into 100 and said the State Planning Board should encourage other “local community mergers.”
“Almost everyone agrees that Pennsylvania has far too many school districts,” Mr. Rendell said. “This means there is an ever-increasing pressure to raise local property taxes.”
But Mr. Benefield said he believed school-district mergers appear unlikely to reduce the costs that drive up local and state taxes. The Pennsylvania General Assembly’s Legislative Budget and Finance Committee announced in June 2007 it found that larger school districts often spend more money than smaller ones.
“This is not going to be a dramatic ‘efficiency’ thing,” he said. “There’s no evidence that that would be the case.”
The governor said he thought the government also suffered from not realizing tax revenues from video poker machines, of which he said there are roughly 17,000 statewide and which he said should be legalized.
“Despite what some might think,” he said, “I do not view the legalization of video poker as the first step in an attempt to expand gaming in Pennsylvania. I remain opposed to any such expansion, and I have said so publicly many times. But we are not talking about an expansion, because video poker already exists and is thriving here.”
Ryan Shafik, director of communications at the Lincoln Institute of Public Opinion Research did not find Mr. Rendell’s suggestion impressive.
“He keeps looking for different revenue sources when he refuses to address the real problem, which is spending,” Mr. Shafik said.
Strain on Pennsylvania’s budget could lessen as a result of some other controversial quasi-fixes like federal aid and cuts to services. State officials expect about $65 million to come to the state through the American Recovery and Investment Act, a federal-spending plan President Barack Obama hopes to sign soon.
But the governor said that shouldn’t offset the revenue decline that many expect over the next fiscal year. He said government projections estimate commonwealth revenues to decline by $193 million during that time.
“We cannot get starry-eyed about the billions in federal relief that may come our way,” he said. “This recession requires that we make the difficult decisions, even with federal funds, to end this year and next year in balance.”
Programs Mr. Rendell proposes to reduce temporarily include libraries, drug and alcohol programs, school enrichment forums and childcare-center improvements. He also wants to make some permanent cuts, including closing the Scotland School in Franklin County, an institution long ago established to provide a free education to Civil War orphans. The school’s closing will yield about $1.4 million in annual revenue.
Mr. Shafik said this idea is part and parcel of a government mindset that cannot bring itself to cut “extraneous” business subsidies and therefore decides it must cut necessary programs.
“It’s sad, because they use these schools and other vital services as political footballs,” he said.
Even as the state makes reductions, it continues to hand out billions of dollars in business subsidies, some of which the Philadelphia Inquirer has reportedly eyed. The Bulletin wrote last week of discussions between the Rendell administration and Philadelphia Media Holdings on the possibility of a $10 million bailout, something that could draw heavy public scrutiny in light of present budget concerns.
Bradley Vasoli can be reached at bvasoli@thebulletin.us
Mr. Rendell has proposed $29 billion in spending for the next fiscal year, a $700 billion increase over this year’s total expenditures.
The proposed increase comes at a hardly bountiful time for state coffers. With a $2.3 billion state-budget deficit projected by the end of June, the governor and other lawmakers have scrambled to identify ways to bring this year’s state spending into line with revenues. To this end, Mr. Rendell made spending cuts, instituted a hiring freeze and called for a 4.25-percent reduction in operational spending by the legislature.
“As this budget makes clear, all of us in government must share the pain to close the deficit that we face,” he said. “We are making progress in this regard, and we will need to continue to work together to bring this budget into balance.”
Mr. Rendell couched his heightened-spending plan for next year in fiscally conservative language, emphasizing the cuts he proposes making to some programs. But since his budget would represent a 2.5-percent increase in overall spending at a time when government revenues have lessened, he allowed it would necessitate some tax increases he called “targeted” and not “broad-based.” Those include a tax on smokeless tobacco and to any natural gas extracted from the Marcellus Shale.
“Pennsylvanians … believe that just like other resource-rich states such as Texas and Alaska, the minerals under our soil should be taxed when extracted,” Mr. Rendell said. “We have a Pennsylvania gold rush going on in the form of drilling for natural gas.”
He said West Virginia has imposed a similar tax that has not appeared to weaken the state’s natural gas industry, but critics say the proposal has the potential to overburden extraction in Pennsylvania as a similar one did in New York State.
“Certainly taxes on any level are going to have a discouraging effect,” Nathan Benefield, policy research director at the Harrisburg-based Commonwealth Foundation, told The Bulletin.
Mr. Rendell has also called for allowing counties to impose new sales taxes on top of the state’s current 6-percent rate, a move he said could alleviate some strain on county governments created by cutbacks in state grants.
Mr. Benefield said he considered that idea a way for the governor to get “off the hook” for tax hikes that would go toward funding the growth of local government.
School-District Mergers, Gambling Other Controversial Proposals
Contentious facets of the governor’s budget address did not end with tax policy. He came out for merging the state’s 500 school districts into 100 and said the State Planning Board should encourage other “local community mergers.”
“Almost everyone agrees that Pennsylvania has far too many school districts,” Mr. Rendell said. “This means there is an ever-increasing pressure to raise local property taxes.”
But Mr. Benefield said he believed school-district mergers appear unlikely to reduce the costs that drive up local and state taxes. The Pennsylvania General Assembly’s Legislative Budget and Finance Committee announced in June 2007 it found that larger school districts often spend more money than smaller ones.
“This is not going to be a dramatic ‘efficiency’ thing,” he said. “There’s no evidence that that would be the case.”
The governor said he thought the government also suffered from not realizing tax revenues from video poker machines, of which he said there are roughly 17,000 statewide and which he said should be legalized.
“Despite what some might think,” he said, “I do not view the legalization of video poker as the first step in an attempt to expand gaming in Pennsylvania. I remain opposed to any such expansion, and I have said so publicly many times. But we are not talking about an expansion, because video poker already exists and is thriving here.”
Ryan Shafik, director of communications at the Lincoln Institute of Public Opinion Research did not find Mr. Rendell’s suggestion impressive.
“He keeps looking for different revenue sources when he refuses to address the real problem, which is spending,” Mr. Shafik said.
Strain on Pennsylvania’s budget could lessen as a result of some other controversial quasi-fixes like federal aid and cuts to services. State officials expect about $65 million to come to the state through the American Recovery and Investment Act, a federal-spending plan President Barack Obama hopes to sign soon.
But the governor said that shouldn’t offset the revenue decline that many expect over the next fiscal year. He said government projections estimate commonwealth revenues to decline by $193 million during that time.
“We cannot get starry-eyed about the billions in federal relief that may come our way,” he said. “This recession requires that we make the difficult decisions, even with federal funds, to end this year and next year in balance.”
Programs Mr. Rendell proposes to reduce temporarily include libraries, drug and alcohol programs, school enrichment forums and childcare-center improvements. He also wants to make some permanent cuts, including closing the Scotland School in Franklin County, an institution long ago established to provide a free education to Civil War orphans. The school’s closing will yield about $1.4 million in annual revenue.
Mr. Shafik said this idea is part and parcel of a government mindset that cannot bring itself to cut “extraneous” business subsidies and therefore decides it must cut necessary programs.
“It’s sad, because they use these schools and other vital services as political footballs,” he said.
Even as the state makes reductions, it continues to hand out billions of dollars in business subsidies, some of which the Philadelphia Inquirer has reportedly eyed. The Bulletin wrote last week of discussions between the Rendell administration and Philadelphia Media Holdings on the possibility of a $10 million bailout, something that could draw heavy public scrutiny in light of present budget concerns.
Bradley Vasoli can be reached at bvasoli@thebulletin.us
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