Rendell proposes wide-ranging cuts to fill $280 million budget gap

HARRISBURG - Gov. Rendell on Wednesday proposed cutting nearly 2 percent from most state agencies, trimming education funding, and using new natural-gas tax revenue to close a $280 million gap left by a final federal-funding package that contained a smaller-than-anticipated amount for Pennsylvania.

Under a plan he presented to legislative leaders, Rendell proposed cutting 1.9 percent from state agencies, the legislature, judiciary, and independently elected offices such as attorney general and treasurer. He said $50 million should be cut from the basic aid the state sends school districts.

He also proposed using $70 million in taxes on gas extracted from the lucrative Marcellus Shale reserve, which have yet to be approved by the legislature.

In commenting on the shortfall, Senate Majority Leader Dominic Pileggi (R., Delaware) said he would review the proposal and respond in the next few days.

Rendell controls only the state agency funding. The other funding reductions would have to be approved by the legislature, as would the gas tax - a proposal agreed upon as part of the final state budget deal signed by Rendell last month.

Pennsylvania's current budget, signed into law July 6, included receiving $850 million in federal funding. But the legislation signed into law by President Obama on Tuesday contained roughly $600 million for Pennsylvania, forcing Rendell to seek the additional cuts. That number could be reduced further because of lower-than-projected medical assistance payments, the Rendell administration said.

The governor asked legislative leaders to respond to his proposal by Monday. His chief of staff, Steve Crawford, said the governor would move forward immediately to identify agency cuts and potential layoffs.

At least 200 state workers are already expected to lose their jobs as a result of earlier budget cuts, and Crawford did not expect the number to be much higher.

A spokesman for House Majority Leader Todd Eachus (D., Luzerne) said Democrats were committed to "adequate" school funding as well as ensuring that large oil and gas companies pay their fair share through a new tax on natural gas removed from the Marcellus Shale.

"The governor gave us a menu of options for making up the projected $280 million budget shortfall, and we will examine and deliberate on those options over the next several days," Eachus spokesman Brett Marcy said.

Rendell also resurrected a proposal to generate $70 million by eliminating the discount businesses get for paying sales tax on time, an idea that was immediately vetoed by Pileggi.

"Now is not the time for new taxes," he said.

House Rep. Curt Schroder (R., Chester) - along with 26 other House GOP legislators - is offering his own idea to close the budget gap: eliminate legislative discretionary spending accounts, known as "walking around money" - or WAMs - that finance community projects and local development.

"When red ink drips off every page of the budget, it is inexcusable to have legislative play money to the tune of $100 million in the budget," Schroder said. "I call on the governor to do the right thing and eliminate this unnecessary funding first before cutting other areas."

A spokeswoman for House Appropriations Committee Chairman Dwight Evans (D., Phila.) denied the existence of such special legislative accounts and said all decisions on funding for community projects such as athletic fields, museums, and fire houses are reached in consultation with the governor.

"He is entitled to his opinion, however wrong it may be, because there is no such thing as a WAM," said Johnna Pro. "There is funding in various departments, mostly the Department of Community and Economic Development, and it's awarded by the administration."

As for the House Democrats' shaving their budget further, as the governor requested, Pro said, "We're looking at it."