Lawmakers miss deadline for state budget

HARRISBURG - Another year, another missed deadline.

In what has become a familiar storyline in the Capitol, the Rendell administration and the legislature are starting the new fiscal year today without a state budget completed on time. And today is just Day One of what is expected to be at least a weeks-long delay in finding common ground on a spending plan for the fiscal 2009-2010 year.

Gov. Rendell said yesterday that he did not believe a budget could be negotiated by the end of this week - or even by the end of next week.

"Because of the financial condition of the country, and for that matter, globally, this is a very tough budget," the governor told reporters.

But, he pointed out yesterday, he has presented a balanced budget to the legislature. The problem is, Republicans - and even some Democrats - don't like some of its proposals, namely the governor's call for a temporary, 16 percent increase in the state's personal-income tax.

"And I understand that," the governor said yesterday, "and I understand the philosophical differences that exist . . . but I believe our proposal is fair and equitable. It's the best balance."

The central sticking point in negotiations this year is how to plug a $3.2 billion budget shortfall.

Rendell has proposed a three-year hike in the personal-income tax from 3.07 percent to 3.57 percent, as well as new taxes on smokeless tobacco and natural-gas extraction. The governor is also pushing a 10-cents-a-pack increase in the cigarette tax, as well as using most of the state's $750 million Rainy Day Fund.

Republicans who control the Senate are dead-set against an income-tax increase, saying it would be a hardship for working families. A family making $50,000 would pay about $5 more a week in taxes. The GOP instead has advocated cuts and reining in spending.

"Budgets are about numbers, but they are also about choices," said Senate Majority Leader Dominic Pileggi (R., Delaware), whose caucus had proposed a $27.3 billion budget - that includes no tax increases - to counter Rendell's almost $29 billion proposal.

The two sides met for almost five hours Monday night, and were meeting again yesterday evening.

Rendell characterized Monday's talks as "productive," but stressed that the two sides still had many issues to resolve.

"I don't expect to get it done this week, or even possibly next week, but I expect it to get done," he said. "The numbers are the numbers. We can't change them, they can't change them. It is what it is."

Pileggi said he believes the negotiations could stretch into August.

Hanging in the balance are nervous school districts across the state awaiting word on how much aid to expect.

Philadelphia city officials, too, are anxiously awaiting word from Harrisburg on whether they will be allowed to temporarily raise the sales tax in the city by a percentage point.

Paychecks for lawmakers and tens of thousands of state workers are also at stake.

Starting July 17, most of the state's 80,000 employees will begin working without pay because that is their first payday of the new year.

Rendell said yesterday that 10 banks and credit unions have agreed to help workers with loans or lines of credit in the event of a protracted budget impasse: "We recognize this is not a panacea," he said, ". . . but we wanted to set up a safety net."