Budget with no tax rise on move

HARRISBURG - A Democratic budget proposal that requires no new taxes but drops $1.3 billion in funding for some colleges and student-loan programs has been routed on the fast track for passage in the Pennsylvania House.

The House voted yesterday, 193-3, to suspend an internal rule that requires a two-week waiting period, clearing the way for debate on the proposal today and possible passage as early as tomorrow.

The bill under consideration is a $29.1 billion tax-increase-free spending plan offered by Rep. Dwight Evans (D., Phila.), chairman of the Appropriations Committee. But the proposal leaves out the funding for some universities, community colleges, and student loans without a way to pay for it. The legislature would provide that money in a separate fund.

When he raised the idea of doing this on Monday, Evans said he would entertain any ideas for restoring the funding. At this point he has no timetable for doing so.

He also acknowledged he was making the move out of frustration over the House and Senate Republicans' rejection of any tax-increase proposals to close the spending gap and reach a budget accord. A portion of the Democratic rank and file has not embraced raising taxes.

"Doing a budget is about choices," said Johnna Pro, Evans' spokeswoman. "The general fund is balanced . . . and it doesn't have a general tax increase. We need to find a way to fund higher ed because it's so important. So we created a dedicated fund."

The money Evans wants to remove is the Higher Education Fund. It pays for some or all of the operations of the 14-member State System of Higher Education - which includes West Chester University and Cheyney State University - the Pennsylvania Higher Education Assistance Agency, Pennsylvania's community colleges, and Thaddeus Stevens College of Technology in Lancaster.

Funding would be unaffected for the four state-related universities - Temple, Pennsylvania State, Pittsburgh, and Lincoln - because their money comes from an annual appropriation outside the general fund.

Gov. Rendell yesterday signaled his support for Evans' strategic approach to the now-three-week-long budget standoff.

"Chairman Dwight Evans and the House Democratic leadership have offered exactly the kind of bold and creative thinking we need to solve big challenges," said Rendell. "I join Chairman Evans in making clear that one principle we all must agree upon is that we cannot have a final state budget without providing for proper funding for educating our young people, including, of course, public higher education in Pennsylvania."

The proposal was swiftly lambasted by Republican leaders in both chambers. They called it a "scam" and accused House Democrats of holding colleges and students hostage in the interest of budget negotiations.

Senate Majority Leader Dominic Pileggi (R., Delaware) said the proposal, whether real or strategic, has "no merit."

"Anyone inside or outside the General Assembly can write down a list of expenditures - but to pass a spending plan the third week in July without having any idea where the funding comes from for it is simply irresponsible," he said. "It doesn't advance the process or address the core issue, that is, what is the proper level of spending and how can we pay for it."

Rep. Mario Civera of Delaware County, the ranking Republican on Appropriations, said Monday that Evans' approach was "playing with children's lives" and called it dishonest. "It was ridiculous what they did."

Stephen Curtis, president of Community College of Philadelphia, said yesterday that state funding for community colleges needs to come from the general fund, not from a special fund, especially one whose funding source has yet to be identified.

"I believe the funding for my college - which is really for the residents of the city - needs to be in the base budget," not a special fund, he said. "We are at a moment in time when students are turning to us more than ever."

Curtis said the state provides about $38 million, or 28 percent, of the school's budget, which helps support low- and middle-income students, who represent the majority of the student population.

Kenn Marshall, spokesman for the State System of Higher Education, said officials there were taking a "wait and see" approach to the proposal.

He said that "as long as the funding level is the same, where the funding comes from is for the legislature to decide." State funding represents about $447 million, or a third of the total budget. The state system is also expecting $51 million more in stimulus funds this year, Marshall said, and how to make that up in future years is a concern.

Among the entities that would be cut out of general fund appropriations is the Pennsylvania Higher Education Assistance Agency (PHEAA), whose current $407 million appropriation helps pay for grants for college students.

Keith New, a PHEAA spokesman, said the agency's "interest is in a stable source of funding for students," but said he could not comment beyond that because it was a policy issue and he represents an administrative agency.

The Senate Republicans' $27.3 billion no-tax budget proposal, which passed that chamber in May, has been rejected by House Democrats and Rendell as cutting too deeply into health care and education programs. Both sides agree the proposal is more than $1 billion short of being balanced given declining revenues.

Nor has either chamber taken up Rendell's $29 billion budget proposal, which fixes a $3.3 billion revenue shortfall with a temporary 16 percent increase in the state income tax.

Under Evans' proposal, the general fund budget, which operates the rest of state government, would be funded without a tax increase. It would rely instead on a mix of existing revenue streams, including emptying the $750 million Rainy Day Fund and using federal stimulus money.