Deal on Pa. budget averts threatened shutdown


First Posted: 6/30/2008

HARRISBURG, Pa. (AP) _ State lawmakers and Gov. struck a deal on a new state budget early Monday, averting possible furloughs of 25,000 state workers and a partial government shutdown amid a slowing economy that has stifled the flow of state revenue.

The agreement on a $28.2 billion spending plan, a 3.8 percent increase over the past year’s spending, is attached to plans for more than $2 billion in borrowing, but without any broad-based tax increases. Huge amounts of money will flow to public schools, alternative energy projects, bridges, dams and water and sewer facilities.

Rendell, flanked by a dozen top state House and Senate lawmakers from both parties in his conference room, announced the agreement after 1 a.m., calling it "a good budget" that advances the state’s infrastructure and energy needs.

"This was a very difficult budget because, as all of you know, the country is in the middle of an economic recession," Rendell said. But, he added, Pennsylvania still had a small surplus left over, unlike many other large states, and "we continue to make progress even in a tough budget year."

Many details about the agreement were missing or vague after more than six hours of talks that began Sunday evening, and the fine print will be hammered out in the coming days. Writing and passing the package of budget-related bills will keep legislators in Harrisburg for much of the week.

The budget accord was announced less than 24 hours before the expiration of the fiscal year at midnight Monday. Last year, a protracted budget stalemate resulted in a one-day furlough of more than 20,000 workers, idling state parks, drivers license centers and other official functions.

"With all the talk about furloughs of state workers, whether it had to happen, didn’t have to happen … I’m glad that we’re not going to need to continue that discussion this year," said Senate Majority Leader Dominic Pileggi, R-Delaware.

The spending increase is about $120 million less than Rendell had sought when he proposed his original budget in February, even though declining revenues attributed to the economic doldrums left an approximately $550 million hole in revenue.

However, budget negotiators filled that hole by scrapping a scheduled $138 million transfer into the state’s "rainy day" contingency fund, finding unspent money in various programs and tapping state liquor store and lottery revenue to help pay some bills.

In his original budget proposal, Rendell had asked for a whopping 6 percent boost, or $291 million extra, for public schools to pay for instruction and operations, but ran into Republican protests that the distribution scheme unfairly favored Philadelphia, Rendell’s hometown and the state’s largest school district.

Early Monday, Rendell could not immediately say how much of that money will be in the final agreement, saying only it would be "basically the same."

The deal also involves about $2.5 billion in borrowing over the next few years, including $800 million for civic redevelopment projects; $800 million for aging dams and municipal water and sewer facilities; $350 million to fix about 400 of the state’s most dangerous bridges; and $500 million for clean and alternative energy projects.

Voters will decide whether to borrow an additional $400 million to address drinking water and sewer needs.

Also part of the budget deal was legislation that would require that alternative fuels made from organic matter, such as soybeans and deadwood, be added to each gallon of diesel or gas sold in Pennsylvania in increasing amounts as in-state production of the alternative fuels reaches certain levels.

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