Yesterday, Gov. Ed Rendell announced details of a $28.05 billion budget deal. Last night, we pointed out that the spending agreement relied on several unknowns, including federal funding for Medicaid. So legislative leaders might not really have a final deal. But here's what in the deal they do have:
Taxes. The agreement includes no broad-based tax increases, meaning that most Pennsylvania residents won't feel the pain directly in their paycheck. The budget does include an agreement to pass a gas severance tax by October 1, which would require drilling companies to pay for the privilege of mining gas under the Marcellus Shale. It does not include new taxes on smokeless tobacco and cigars, which were originally favored by Gov. Rendell.
Spending cuts. During his press conference, Gov. Rendell repeatedly called the budget “painful” because of double-digit spending cuts for many departments. We're still going through the budget for specific details, but the cuts include an 11 percent cut to the Department of Conservation and Natural Resources, a 10 percent cut to the Department of Labor and Industry, and an 11 percent cut to the Department of Agriculture.
Spending increase for basic education. Despite the cuts, some areas will get more funding. Gov. Rendell originally wanted a $350 million increase for the basic education subsidy. Republicans rejected that number and were able to cut it down to $250 million. Rendell also said that the budget agreement keeps funding for economic development mostly intact.