Pa. lawmakers consider tapping surplus funds

Facing a growing budget deficit, Pennsylvania lawmakers must consider tapping the state's $750 million "rainy day fund," State Rep. Dwight Evans (D., Phila.), chairman of the House Appropriations Committee, said yesterday.

"This is more than a rainy day; it's a hurricane," Evans said.

The legislature also should consider using its own $240 million surplus fund and the approximately $700 million in legislatively controlled grant money, familiarly known as "walking around money," he said.

Pennsylvania's budget shortfall may be about $2 billion by the end of the fiscal year on June 30, as tax revenues are lagging about 7 percent below projections so far. The state budget is $28.3 billion.

The financial woes of Pennsylvania and other states will take center stage in Philadelphia tomorrow, when President-elect Barack Obama and the nation's governors gather to discuss increased federal aid for states.

Last Monday, Obama asked Congress to ready a stimulus program for him to sign as soon as possible after he takes office Jan. 20. Estimates of the spending range from $500 billion to $700 billion over two years, and Democratic congressional leaders have said some of it could help cash-strapped states provide health care to the poor and pay for road and bridge projects.

Pennsylvania would like to get a commitment of $750 million to $1 billion from Washington, Evans said.

Gov. Rendell is to brief legislative leaders Dec. 9 on the grim state of Pennsylvania's finances.

Rendell already has ordered two spending reductions at state agencies, issued a hiring freeze, and banned state-employee travel and the purchase of new government vehicles.

As the leader of state House budget efforts, Evans said the state should borrow money to spend on road, bridge, and mass-transit projects. That would create needed jobs and shore up the state's crumbling infrastructure, he said.

He said he would reintroduce a bill to lease the Pennsylvania Turnpike to a private operator. A proposal to lease the turnpike to an American-Spanish consortium for $12 billion died in the legislature this year.

Targeted tax increases, but not a general tax increase, also may be considered, Evans said.

"Everything is going to be on the table," Evans said. "We're not going to try to protect anything. . . . I'm not going to say no to anything."

At the same time, the state needs to spend on such things as education and transportation as "investments for the future," Evans said. He said cutbacks for hospitals, nursing homes and the poor should be "the very, very last places we go." He said cuts there would simply transfer the burden to local governments and to overstretched private charities.

"At some point, this will pass, and we will be looking at the future. We need to make Pennsylvania a competitive place to live and work," Evans said.

The state's "rainy day fund" has been tapped before. In 2002, the legislature approved a $750 million withdrawal from the fund, and in 2003, it approved draining the remaining $250 million from the fund.

Contributions over the last five years have brought the fund balance back up to $750 million. A two-thirds majority of each legislative house is required to approve any withdrawal.