Stalemate Over, Rendell Signs Budget

Pennsylvania Gov. Ed Rendell has signed the key pieces of legislation necessary to end a 101-day state budget stalemate, the longest in the nation this year.

A spokeswoman for the governor says Rendell signed the bills Friday night after the state Legislature held a flurry of votes on the $27.8 billion budget's primary appropriations bill and a key companion bill.

The budget agreement cuts spending by more than 1 percent to help resolve Pennsylvania's multibillion-dollar, recession-driven shortfall.

The companion bill taps more than $1.5 billion from the state's reserves.

However, approval of nearly $700 million in discretionary funding for universities and other institutions is being held up in the House. Lawmakers must settle disagreements on a bill to legalize and tax table games at slot-machine casinos. Table games are expected to produce $200 million in taxes and fees for the state treasury.

 

Highlights of the 2009-10 spending plan signed by Gov. Ed Rendell

      
THE BIG PICTURE:

-$27.8 billion in overall spending (includes $700 million in
discretionary funds held up in House)

-Relies on taxes, fees, federal stimulus money and surpluses

-Cuts overall spending by 1.8 percent from last year's expected
final spending of $28.32 billion

-Maintains current state tax rates on personal income and sales

-Relies on an estimated $200 million in fees and taxes from legalizing table games at slot-machine casinos

-Relies an estimated $60 million from anticipated leasing of
state forest land for natural gas exploration

      
SPENDING:

-Boosts spending on public school operations and instruction by nearly $299 million, or 5.7 percent

-Cuts Department of Community and Economic Development by 11 percent to $707.9 million

-Cuts Department of Environmental Protection by nearly 27
percent to $159 million

-Boosts Department of Corrections by 11 percent to $1.8 billion

-Cuts Department of Public Welfare by nearly 1 percent to $10.5
billion

TAXES:

-Increases the state tax on cigarette sales by 25 cents a pack, to $1.60, to raise $97 million

-Imposes a new sales tax on ``little cigars'' at the same rate as cigarettes to raise $16 million

-Raises the capital stock and franchise tax that some businesses pay from 1.89 mills to 2.89 mills to raise $374 million

-Imposes a new 5.9 percent gross receipts tax on some managed care organizations to raise $316 million, replacing an expiring assessment

-Redirects 2 percent of slot-machine gambling revenues into the state's general fund for four years; the money currently benefits Pennsylvania's race horse industry

-Transfers revenue generated by an existing 25-cent portion of the state cigarette tax from a special fund that helps doctors and hospitals buy medical malpractice insurance coverage to raise $171 million
      
      
SURPLUSES:

-Transfers $755 million from the ``rainy day'' contingency fund

-Transfers $808 million from medical malpractice insurance
coverage funds
       _ Transfers $143 million from the Oil & Gas Lease Fund
       _ Transfers $150 million from the Tobacco Endowment account
       _ Transfers $44 million from an automobile insurance fund
      

ONE-TIME REVENUE ITEMS:

-Accelerates the deadline for sales tax collections to raise $217 million in 2009-10

-Accelerates the deadline for income tax collections to raise $159 million in 2010-11

-Generates an estimated $190 million from a program that allows the repayment of back taxes without the penalty fees or half of the interest payments that normally apply

CONSIDERED, BUT DISCARDED:

-Imposing a new severance tax on natural gas extraction based
on both the value and volume of the gas

-Legalizing and taxing video poker terminals in restaurants and
bars

-Imposing a new sales tax on the price of admission to live stage performances, museums, zoos and parks

-Raising the state personal income tax by 16.3 percent for three years

-Imposing a new excise tax on sales of loose tobacco and chewing tobacco

-Raising the weekly limits on small games of chance fundraisers
and imposing a 20 percent tax on ticket sales
      

Copyright Associated Press

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