House approval expected Monday

Saturday, December 20, 2003

By Bill Toland and Tom Barnes, Post-Gazette Harrisburg Bureau

HARRISBURG - The state Senate approved a $1.3 billion tax increase shortly after dawn today- including a 10 percent income-tax hike - but was unable to fashion a deal that would have brought slot machines to the state's racetracks, big cities and resorts.

	Rendell: I will veto Pittsburgh oversight board Gov. Ed Rendell said this morning he will soon make good on a promise to veto legislation passed by the state House and Senate that would create a state oversight board to ease Pittsburgh's financial crisis but would deny the city access to a state law aimed at helping financially distressed towns. Rendell said that he had earlier told a bipartisan group of legislators from the Pittsburgh area about changes that would have been needed to gain his signature on the plan. "They didn't make the changes, so I will veto it," Rendell said. He has said all along that he couldn't sign a bill that bans Pittsburgh from seeking new sources of revenue while demanding that the budget be balanced merely by cutting expenditures or merging operations with Allegheny County. Rendell spoke today at 8 a.m., about seven hours after the state Senate voted 41-8 to approve the legislation, sponsored by Sens. Jane Orie, R-McCandless, Jack Wagner, D-Beechview and Sean Logan, D-Monroeville. The state House approved the measure cracking down on Pittsburgh municipal spending in a 116-79 vote Thursday. The Senate's margin of approval for the bill is more than the two-thirds needed for an override of a veto, but the House's margin is less. -- Tom Barnes Find more about the Senate budget vote and the legislative response to Pittsburgh's fiscal crisis in tomorrow's print editions of your Pittsburgh Post-Gazette.

The Senate deal must next be approved by the House of Representatives and Gov. Ed Rendell.

After starting its session yesterday evening and talking all night, the Senate finally approved a tax-and-spending package by 7:45 a.m. today, minutes after daybreak. The tax portion of the plan was approved by a 30-19 vote, while the spending side passed 42-7.

"This [package] was negotiated over a long period of time," said Senate President Pro Tem Robert Jubelirer, R-Altoona. "It was important to get the job done. I think we have effected a reasonable compromise, a budget that is fiscally responsible."

Over a full fiscal year, the plan will raise more than $1.3 billion in new revenues, due largely to what will be the first increase to the personal income tax rate in a decade. Under an agreement among Rendell and Senate and House negotiators, the tax rate will be hiked from 2.8 percent to 3.07 percent, starting Jan. 1.

The rate increase will raise $729 million per year for state coffers, starting next fiscal year. For the remainder of this fiscal year, from January through June, the state gets $302 million.

That revenue will be combined with an additional $500 million from a new tax on cell phone companies, a tax on interstate land-line phone call, a higher tax on a pack of cigarettes, fee increases for birth and death certificates and other things, plus delaying the phaseout of a tax on businesses' physical assets.

"This has been a long, arduous, but in the end, enjoyable process," said Sen. Vincent Fumo, D-Philadelphia. "We are the last state in America to get a budget, but we did get it done, finally."

Steven Miskin, aide to House Majority Leader Sam Smith, R-Punxsutawney, said the Senate-passed budget isn't perfect and some House members object to parts of it, but he's fairly confident the House will approve it, probably Monday.

Rendell is also going along with the new income tax rate, even though it's considerably lower than the 3.75 percent rate he originally sought.

"This is a terrific day," Rendell said after the all-nighter. "We've wiped out a structural budget deficit that has plagued us for two years, and restored onerous cuts in spending. Children will see an increase in education spending for proven programs that we know work.

"The next budget will be much, much easier," he promised.

Much of Friday's and today's back-stage negotiating was centered not on the package itself, which was fundamentally settled during the week, but on a last-ditch effort to cobble together a slots agreement.

Rendell said he still thinks it's possible to resurrect a slots bill in late January and hopes that will be successful in bringing about property tax relief.

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