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Rendell uses line item veto to force a debate

Friday, March 21, 2003

By Johnna A. Pro, Post-Gazette Staff Writer

HARRISBURG -- Gov. Ed Rendell exercised the rarely used power of the line-item veto yesterday to eliminate the state's $4 billion basic education allocation from the 2003-04 budget, setting the stage for negotiations to begin on his plans for tax reform and economic development.

Gov. Ed Rendell fields questions on the state budget during a news conference yesterday in Harrisburg. (Brad C. Bower, Associated Press)

Rendell's decision also forces the Legislature to take action on his proposal by June 30, or leave the state's 501 school districts without funding for the upcoming school year.

Both he and legislative leaders pledged that won't happen.

"I believed this was the best way to focus the attention and the debate," said Rendell, a Democrat whose bare-bones, no-tax-increase $21 billion budget was approved at record speed by the Republican-controlled Legislature earlier this month. "I think this issue will cut across party lines."

Reaction from Sen. David J. Brightbill, the Republican leader from Lebanon, was measured.

"We look forward to hearing what he has to say on Tuesday and to hearing his ideas and suggestions," Brightbill said. "The key here is going to be how his ideas and suggestions resonate with the public."

The governor had asked the Legislature to delay action on the budget until he could present his additional proposals on Tuesday so they could be considered as part of the whole spending plan.

The proposal will be the governor's blueprint to increase the state's share of school funding to 50 percent, increase state taxes while reducing local property taxes, and issue a $2.2 billion bond for economic development. Legalizing slot machines also will be part of the proposal.

By using the line-item veto, Rendell opened the state's newly enacted fiscal plan to the give-and-take negotiations that are traditionally part of the budget process. That's because legislators are now in a position to make their support for Rendell's proposals contingent on increasing funds to some agencies in separate appropriations bills.

Although Rendell would not rule out that possibility, he said he won't be persuaded easily to restore deep cuts that are now in the budget, which became law except for the vetoed items, although the appropriations law does not go into effect until July 1. Public transportation, colleges, welfare programs, libraries and a myriad of other agencies all saw their funding slashed.

"Will I consider restoring some of the cuts [to get the plan through]? Yeah," Rendell said. "But it's not my intention to trade off for leverage. The legislature will have a high bar to meet for me to restore some of the cuts. I believe that the cuts in this budget, while painful, are necessary."

Instead, Rendell said that he wants the discussion in the coming weeks to center on his proposal for legalizing slot machines to provide funds for property tax reduction while increasing other taxes to fund school districts. Among the ideas being floated is an increase in the personal income tax rate, now 2.8 percent.

The tax increases, though, would be offset by property tax relief for residents with controls in place to prohibit municipalities and school districts from levying additional taxes.

"I'll veto any bill that doesn't include property tax relief," Rendell said.

While Rendell was conciliatory in his remarks and optimistic about working with Republicans to "find the best plan for Pennsylvania's future," House Democratic leader H. William DeWeese was inclined to gloat.

"We were pressing for a veto and this is a veto. It's a variation of the theme, but it's an unequivocal and aggressive veto," said DeWeese, of Waynesburg. "It sends a clear message to the Republicans that business as usual is over. This action on the part of our chief executive forces the GOP chieftains and their underlings back to the negotiation table."

Rendell also vetoed stiffer legislative regulation of the Keystone Opportunity Grant program under the Department of Community and Economic Development, a change that was added by the Legislature.

DeWeese said that Rendell had "no choice" but to veto the education subsidy. Otherwise, he said, property owners would face huge local tax hikes once school districts begin to put their budgets together.

"It's salvation," DeWeese said. "There would have been a guaranteed and extravagant property tax increase in almost every one of the 501 school districts in the state."

At an American Jewish Committee dinner honoring PNC Chief Executive Officer James Rohr last night at the Omni William Penn Hotel, Rendell spoke about his education plans again, specifically mentioned his desire to cut class sizes and to make full-day kindergarten mandatory.

"We're cheating kids," Rendell said. "Pennsylvania is one of only nine states with no pre-kindergarten education. We're robbing kids of a chance.

"I'm not saying my plan will solve everything," Rendell said, "but it's a step toward the 21st century and will be fair to every child."

Regarding the acrimonious fight over his budget and its unanticipated, quick adoption, Rendell said "It's not important if it's a political defeat or victory, what's important is, can we fashion finance to attack the problems facing Pennsylvania?"

As news of Rendell's veto spread across the state, reaction among educators was swift.

"The words sound very nice," said Clairton School District Superintendent Robert David after hearing Rendell's comments on Pennsylvania's "regressive" education funding system.

A failure to restructure taxes is one of two major problems in Pennsylvania schools, David said.

The other is "unfunded mandates that come out of Harrisburg and Washington, D.C. If he's going to fix those two things, that will help every child," David said.

Clairton is one of Pennsylvania's 12 low-performing districts. A shift from property tax-based funding could be especially helpful for districts such as Clairton, where more than 85 percent of students are from low-income families.

The change could help Clairton's taxpayers, too, said David, who just completed his first year as Clairton's superintendent.

"I'm more hopeful now that Rendell has vetoed this budget," said Pittsburgh Superintendent John Thompson, who said he anticipates the governor will present an alternative proposal that will give school districts "more flexibility, autonomy ... a budget that will allow schools to do more things. I think we will come out in better shape with a new budget. I'm optimistic that it will work out for the best."

At Sto-Rox School District, which is facing a possible $700,000 deficit in the 2003-2004 school year, Superintendent Anthony Skender also was relieved by Rendell's action.

"I may get some sleep for the first time in weeks," said Skender, who's been superintendent of the district for a year. "I think there's hope."

With 2.9 square miles of "old industrial property" and 600 low-income housing units off the tax rolls, Sto-Rox is one of the poorest districts not only in Allegheny County but in the entire state, Skender said.

"We're just dead in the water," he said, citing a longtime "flat or declining tax base," an expected 28 percent increase in school district health care costs and a declining tax collection rate. "There has got to be some taxpayer equity," Skender said. "My reaction is one of hope."

Staff writers Jane Elizabeth, Carmen J. Lee and Dan Gigler contributed to this report.

Johnna Pro can be reached at jpro@post-gazette.com or 412-263-1574.

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