2009-02-12 / Features

PA Governor Kept Budget Secrets Well, Perhaps Too Well


HARRISBURG, Pa. (AP) - The Capitol's usually reliable rumor mill might need oiling.

Gov. Ed Rendell's $29 billion recession-driven budget, released this week, caught some lawmakers, lobbyists and many others by surprise.

With layoffs and struggling businesses sapping the state's tax revenue, the Democratic governor was forced to scrounge for savings and new dollars in unexpected ways.

Some things were known for months: That Rendell would try to cut some programs. That he wanted to impose additional taxes on tobacco. That he wanted to tax natural gas production.

But few had heard that he would try to legalize video poker machines to help students afford college or that he would cut all funding for the 129-year-old Scranton State School for the Deaf and the brand new Commonwealth Medical College.

Another surprise was a 2 percent assessment on premiums paid to health insurance companies that don't already pay a 2 percent premium tax on the money.

The Department of Public Welfare said it is imposing the assessment to replace some federal Medicaid dollars that are scheduled to disappear later this year. The assessment will "level the playing field'' with insurers that already pay a tax, it said.

All told, Rendell made nearly $1 billion in cuts from existing programs and proposed new funding sources well in excess of $1 billion, not including one-time federal budget aid.

In a news conference Wednesday, Rendell defended his decisions.

"I've tried to do a balance here. ... There's a lot of first-day rhetoric and what happens to first-day rhetoric as the process goes on and everybody learns about the enormity of the challenges we face?'' Rendell asked. "There'll be some significant changes, just because there will have to be.''

The proposal for video poker machines at bars and clubs stands to ruffle the feathers of casino owners more than anybody. Some said the idea doesn't bother them. Others said it does.

Mount Airy Casino Resort CEO Joseph D'Amato told WNEP-TV in Scranton that the prospect of such competition is troubling in this economy. Robert Soper, president and CEO of Mohegan Sun at Pocono Downs, said it is unfair if the state allows the machines to operate throughout the state without keeping a close eye on them.

Senate Minority Leader Robert J. Mellow, D-Lackawanna, did not know until Rendell delivered his budget address Wednesday that the governor cut funding for two schools in his district, the medical college and the school for the deaf.

Mellow, usually an ally of Rendell's, blasted the governor's plan afterward.

On Thursday, he vowed to restore the medical college's funding - its first class begins this fall - and said the Department of Education should have shown why the school for the deaf should not be funded and then made alternative plans for the students.

"This was not communicated appropriately at all,'' Mellow said.

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