Pa. House sets right tone on state budget

In addition to joining Mayor Nutter in endorsing state Sen. Anthony Hardy Williams for governor, state Rep. Dwight Evans (left) got a budget through the state House.

It didn't get much attention, but the House in Harrisburg approved a budget this past week, 100 days before the deadline of June 30.

That alone is a positive step compared with the fiasco of last year, when partisan wrangling delayed completion of the state budget for 101 days. State workers' livelihoods were disrupted, and agencies that rely on state funds were thrown into turmoil.

The Democrat-led House has approved a $29 billion budget that would increase spending 4 percent without raising taxes. It would accomplish that mainly with the addition of $2.7 billion in federal stimulus aid.

This Democratic budget probably doesn't stand a snowball's chance in the Republican-led Senate. But at least the snowball is in the Senate's hands earlier than last year. That means the legislature can proceed with its partisan feuding sooner, and, it is hoped, resolve its differences sooner.

House Appropriations Chairman Dwight Evans (D., Phila.) calls it a "very conservative budget" because it provides significant increases in only three areas - prisons, debt service, and a $354 million boost for K-12 education requested by Gov. Rendell. It also represents the easiest path for Democratic legislators - and a handful of Republicans who voted for it - in an election year.

But Senate Appropriations Chairman Jake Corman (R., Centre) points to sluggish tax collections as a good reason to be more cautious with the level of spending. Holding down spending this year would put the state in a better position next year to adjust to the loss of stimulus money from Washington.

This year, Pennsylvania is facing a relatively small budget deficit, projected at $550 million. Compared with New Jersey, which is confronting an $11 billion gap on a similarly sized budget, Harrisburg's problems are minor.

But as Rendell has been warning, Pennsylvania is headed for a crisis in the budget year that begins on July 1, 2011. The state will lose federal stimulus money just as a huge increase in pension costs kicks in for the state and school districts.

Also, Pennsylvania's transportation needs will take a hit of at least $400 million if the federal government doesn't soon approve a plan to place tolls on Interstate 80.

Rendell proposed last month to prepare for the gathering budget storm by raising $2.2 billion in taxes over the next two years from natural gas drillers, consumers of smokeless tobacco, and corporations with out-of-state headquarters, and through an expanded sales tax.

These steps make sense, for tax fairness and to save for the looming budget crisis. Senate Democrats pledge to try to eliminate the so-called Delaware loophole for corporations, but there appears to be little appetite elsewhere in the legislature for these tax measures.

Evans hasn't ruled out a tax on natural gas drillers, but said, "I don't see the political support."

Last year's state budget contained painful cuts across most departments. But given the challenges ahead, Harrisburg needs to pay more attention this year to preparing for another harsh period for the state's finances.