Rendell presents proposal to boost state economy

HARRISBURG - One week after President Bush announced his federal economic stimulus package, Gov. Rendell put forth his own plan to boost the state's economy, including immediate payments to lower-income families and a menu of incentives for businesses.

Rendell, speaking at a news conference in the Capitol yesterday, said he would seek payments of up to $400 each for nearly 500,000 lower-income families as a way to lessen the blow from the national economic downturn.

To qualify for a payment, a family of four would have to earn no more than $32,000.

"This is a short-term plan I am hoping to be a remediation for any possible effects of a recession," he said.

Rendell, who will make his sixth budget address to a joint session of the General Assembly today, took the unusual step of announcing the highlights of his budget early because of competition from Super Tuesday coverage.

The total general fund budget for the 2008-09 fiscal year will be $28.3 billion, a 4.2 percent increase over last year, administration officials said.

The increase is driven in large part by rises in medical-assistance costs and the growing prison population, Rendell said.

The budget calls for no broad-based tax increases, but does include a property-insurance premium fee of 7 cents-per-$100 of coverage that would fund flood-prevention programs. It also renews Rendell's request from last year for a 45-cent-a-month surcharge on residential electric bills to pay for energy-conservation measures. The rate would be higher for businesses.

As part of his "Protecting Pennsylvania's Progress" stimulus initiative, Rendell said he would ask the legislature to authorize millions in new spending for bridge and dam repair as well as to expand grants, loan programs, and tax breaks for businesses.

Late yesterday, two top Republicans in the state Senate questioned whether the stimulus plan would give the intended boost to the state economy.

"We have been looking at how we both can provide stimulus to the economy and at the same time provide some assistance to those people affected by the downturn," Senate Majority Leader Dominic Pileggi (R., Delaware) said. "I'm not sure that simply sending checks out to a defined group of people accomplishes either one of those objectives."

Rendell called for $700 million to repair 1,000 structurally deficient bridges in the next three years and $137 million to improve dams and fund other flood-prevention projects in flood-prone communities.

Rendell hopes the construction would promote hiring and enhance the overall business climate with proper infrastructure.

He asked for approval to borrow $750 million for the Redevelopment Assistance Capital Program, touted as a way to leverage $1.5 billion in community and economic-development projects.

Rendell also wants to increase tax credits for businesses that create new jobs and extend the life of the Keystone Opportunity Zone, which offers tax abatement for new and expanding businesses.

The overall cost of the new initiatives is $2.3 billion, of which $900 million would come from state funds and the other $1.4 billion from bonds.

The $130 million rebate program, funded through a portion of the Rainy Day Fund, will target working families hit hardest by increases in fuel, medical care and food bills, Rendell said.

Senate Republican leaders were skeptical.

"I certainly can't tell you that $130 million going to low-income households is going to do what we are looking for," said Senate President Pro Tempore Joseph Scarnati (R., Jefferson).

Rendell said the rebate funding source, the state Rainy Day Fund, would be replenished in July with a portion of the state surplus, which is expected to reach $427 million.

In addition to the stimulus package, Rendell will propose a landmark increase in funding for regular school districts of 5.9 percent, or about $291 million on top of the nearly $5 billion currently spent, as The Inquirer reported on Sunday.

Rendell also renewed a call on the legislature to pass several major health-care and energy initiatives proposed in last year's budget: the $850 million energy conservation program and the $1 billion million Jonas Salk Legacy Fund for medical research.

Under Gov. Rendell's 2008-09 budget proposal:

Spending would grow by $1.1 billion, or 4.2 percent, to $28.3 billion.

Public schools would get an additional $291 million, an increase of 5.9 percent.

$600 million would be borrowed over three years to replace aging and crumbling bridges.

$130 million would be drawn from budget reserves to provide payments of up to $400 to 475,000 low-income families.

$100 million would be borrowed to make abandoned sites ready for occupation by new businesses.

$100 million would be spent over three years on flood-control projects, to be paid in part by a surcharge on property-insurance premiums.

Low-interest loans for municipal infrastructure projects would grow by $13 million to $30 million.

$20 million, double the current spending, would be allocated to increase the number of police officers.

SOURCE: The Rendell AdministrationEndText