Rendell stands firm on budget veto threat

Gov. Rendell today reiterated his pledge to veto what he called a fiscally “irresponsible” legislative budget plan expected to win the support of a conference committee later today.

Rendell, whose meeting with legislative leaders last night failed to produce a compromise, said the proposal violates the two basic principles for his signature: it cuts education funding and it does not contain enough recurring revenue to balance the budget in fiscal 2010.

“It will put us in dire straits next year,” he said at a news conference this afternoon. “The revenue estimates are wildly optimistic and, in some cases, made out of whole cloth.”

Three of the four caucuses in the General Assembly proposed a $27.9 billion budget on Friday that increases some limited taxes, such as an additional 25 cents a pack on cigarettes, and authorizes table games to end a two-and-a-half month budget stand off.

Members of the bipartisan conference committee from the House and Senate are expected to approve the plan and forward it to the General Assembly for a vote as early as the end of the week.

But Rendell called the plan “phony,” predicting economic growth where they won’t be any and off-the-mark revenue predictions needed to generate $1.2 billion to cover a budget shortfall. Supporters of the plan say they are confident their numbers add up.

But they may not have the votes in the House for an override. A spokesman for House Republicans – which opposes the plan - said caucus members are nearly unanimous in their opposition to the spending level of the “three-caucus” budget and its higher taxes.

Rendell also said he would “grudgingly” accept using economic stimulus funds to support education spending, the cuts go too deep in pre-kindergarten and education block grants that he attributes to improving test scores.

Rendell said the plan's revenue projections, including leasing more state land for natural gas drilling and instituting tax amnesty, are far short of his and others' estimates and said that it would lead to a $1 billion deficit next year.

Rendell called "ludicrous" the $100 million first-year estimate on increased limits on small games of chance and a tax on the games. He said with only 1,200 clubs offering small games of chance, he thinks the maximum it could generate is $4 million.

The plan also uses one-time revenue sources, such as draining the state's $750 million Rainy Day Fund to cover the deficit, that would not be available in future years.

Rendell also disputed the proposal's growth projection of .81 percent, saying his budget Secretary Mary Soderberg – the only state official by law able to make growth estimates - is projecting zero growth next year. He said the legislative proposal does not take into account the fiscal “tsunami” that will befall the state when economic stimulus funding runs out in two years.





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