By Brad Bumsted
STATE CAPITOL REPORTER
Sunday, October 11, 2009

HARRISBURG -- It took 101 days to pass a state budget, longer than the Battle of the Bulge and more time than it took the Marines to capture Iwo Jima during World War II.

There was no heroism, though, in the state budget battle of 2009.

Several legislative leaders apologized to citizens, Gov. Ed Rendell called the delay "unconscionable," and former state senator U.S. Rep. Jim Gerlach, R-Chester County, a candidate for governor, on the 100th day of the standoff last week called it a "national embarrassment."

Tens of thousands of state employees faced delayed pay checks in July. At least eight day care centers closed specifically because of the budget impasse, according to the Department of Public Welfare. For small social service agencies like the Domestic Violence Service of Fayette County, it was "a balancing act every day" without state funding, said director Jacquie Albert.

Rendell on Friday signed a $27.8 billion state budget. A tax bill passed with it increases the capital stock and franchise tax on business and raises the state's cigarette tax 25 cents per pack. A new gross receipts tax will be levied on Medicaid managed care organizations.

Rendell, Republicans and Democrats hailed the fact there had been no major tax increase, such as income or sales taxes.

Critics had said any tax hike in a recession would be unsound policy.

"Businesses across Pennsylvania are closing or downsizing. ...Taxes are not the answer for these folks," said House Minority Leader Sam Smith, R-Punxsutawney.

The budget relies on $2.6 billion in federal stimulus funds. It spends $1.1 billion less than Rendell proposed and at least $400 million less than last year's budget.

It's not finished. Legislative leaders and Rendell this week will attempt to reach agreement on legislation to legalize table games at casinos, which will produce $200 million. Funding for Pitt, Penn State, Temple and Lincoln universities is being withheld until table games are approved, said House Majority Leader Todd Eachus, D-Hazleton.

Asked about the 101-day delay, Rendell said, "The process is screwed up, and the system is broken."

All the while, most lawmakers racked up per diems at $158 per day for food and lodging. The tab exceeded $532,000 for July and August, records show.

There's no penalty for legislators or the governor if they don't meet the June 30th deadline when a budget is required by law.

The budget has been late seven years straight since Rendell took office in 2003.

In early September, Rendell identified "Ideology, partisanship and laziness," as reasons for the late budget this year.

An ideological bent was reflected by both Rendell and Senate and House Republicans in a war over whether state taxes would close a $3.2 billion deficit.

Rendell in February proposed a $28.9 billion state budget that included a tax on natural gas extraction and the cigarette tax increase. In May, the GOP-controlled Senate approved S.B. 850, a $27.1 billion budget with no tax hikes. Rendell went on a bus tour and marshalled his administration's public relations apparatus to blister the Senate Republican plan.

As the state's deficit grew, Rendell proposed what critics said he was aiming for all along -- a 16 percent boost in the state income tax.

He insisted despite the recession, a $400 million increase was needed for public education.

The Senate Republican leaders wouldn't even negotiate as long as the income tax was part of the mix.

The much-maligned S.B. 850 was approved by the House on Aug. 3 and two days later Rendell vetoed $12 billion worth of spending for school districts, counties and social services to gain what he termed "leverage" over the Legislature as state money ran out. He signed $11 billion worth of spending so state employees could be paid and so emergency services could continue.

When it was clear the income tax was dead, Rendell began floating the removal of sales tax exemptions as a solution.

Rendell with House and Senate Democrat and Senate Republican leaders on Sept. 18 announced a deal that included a tax on small games of chance and lifting the sales tax exemption on music and arts performances. The House Democratic Caucus rebelled and rejected the plan. A new plan close to the original, minus the arts and small games tax, emerged last week and became the final budget.

Some legislators said the 2010 budget is in line with what the public wanted -- no broad-based tax increase. But Matthew Brouillette, president of the Commonwealth Foundation, said the budget "taxes too much, spends too much, and puts Pennsylvania on an unsustainable path to the future."

Brad Bumsted can be reached at bbumsted@tribweb.com or 717-787-1405.