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Election
New job, old crises for Rendell

In some ways, state's problems mirror Philadelphia's in 1992

Sunday, January 19, 2003

By James O'Toole, Post-Gazette Politics Editor

Standing on the East Front of the Capitol Tuesday, Ed Rendell will take the oath of office as governor 11 years after he was first sworn in as mayor of Philadelphia.

 
 
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As he does, the state's political and fiscal circumstances almost demand that the inaugural address he will deliver shortly after noon will carry echoes of the speech he gave more than a decade ago in Philadelphia's Academy of Music. That likely overlap doesn't suggest a lack of creativity on Rendell's part. Rather, it reflects a sense of deja vu in the challenges that will become his as his hand leaves the Bible.

"It's eerie when you think of the similarities," said Neil Oxman, the media strategist who has helped guide all of Rendell's campaigns. "The deficit; coming into it with the effects of a recession -- this [state] budget deficit is bigger in gross dollars, but the percentages are similar."

On one level, those similarities are clear. In Harrisburg, as in Philadelphia, Rendell, after a sweeping election victory, confronts fiscal challenges with a promise of immediate pain, of shaking up the status quo, as a means to expanded spending and economic development down the road.

"Make no mistake," Rendell told the Academy of Music crowd, in words that could have been a template for his recent pronouncements about the state budget, "Our situation is worse than we thought it could ever be."

But, he promised later in that speech, "Change must surely come. But the good news is that if it does come, this city can not only survive, it can come alive."

The Democrat conjured those echoes throughout his campaign. He promised to boost education spending by some $1.5 billion, but that plan relied on finding nearly $1 billion in unspecified cuts in other categories of state spending. To questions about the vagueness of his funding prescription he repeatedly pointed to his Philadelphia feat of managing to cut 11 percent of the municipal budget.

But if there are similarities in the management of the state and its largest municipal government, there are also significant differences -- in kind as well in scale. Compared with his oft-told Philadelphia story, Rendell's new challenges are compounded by a different government structure, by the absence of a public sense of crisis about the state's fiscal problems, and, perhaps most of all, by the fact that he will be the first governor in a half a century who will have to deal with a Legislature completely controlled by the opposite party.

Rendell's ability to cope with Philadelphia's ills was also abetted by crucial aid from the state. It is at best unclear, and more likely doubtful, that the deficit-plagued federal government will do much to ease the financial pressures in Harrisburg over the next four years. Perhaps the largest question mark over Rendell's chances of success involves the national economy. While the economic picture was dark when he took office, he ended up presiding over Philadelphia during the nation's greatest post-war boom. No one can predict with confidence how the national economic tides will influence Pennsylvania's economy over the next four years.

Everything's on the table

A key component of Rendell's success in taming Philadelphia's budget was his ability to win concessions from the city's unionized employees. Although no one was laid off in the process, those givebacks were the seed of the bitter opposition Rendell faced from public employee union leaders in last year's election.

Rendell and his designated budget chief, Michael Masch, noted this month that everything -- including the size of the state work force -- will be on the table as they try to reconcile the state's finances. But employee costs aren't likely to provide as much low-hanging fruit for budget cutters at the state level.

As described in "Prayer for the City," Buzz Bissinger's chronicle of Rendell's first term in Philadelphia, he took office after Mayors Wilson Goode and Frank Rizzo, figures who helped cement their political positions by granting a series of relatively generous contracts to the city's workers.

While state workers enjoy some benefits that are generous compared with many workers in private industry, Rendell acknowledged during the campaign that he did not see the same levels of bloat in Pennsylvania, a state with one of the lowest ratios of state employees to population in the nation.

State Sen. Vince Fumo, D-Philadelphia, pointed out that employee costs represented a much smaller share of the state spending than of a typical municipal budget.

"In Philadelphia, most of the costs are driven by payroll; in the state, it's the opposite. Most of it is driven by formulas and money you pass along to other people. If you did away with every employee in state government, you wouldn't save 20 percent of the budget."

As mayor, Rendell also had the perverse advantage of a broadly shared consensus on just how bad things were. Bissinger writes of the sense of liberation from "business as usual' provided by the very depth of its problems.

"But as Rendell and [chief aide David] Cohen and ... budget analyst Mike Masch got over the initial terror of the Number [the size of the city's projected deficit], something strange happened. They were seized by a sense of opportunity that was both breathtaking and unprecedented, perhaps a little bit crazy."

Longtime adviser Oxman said this week, "I don't think the people of Pennsylvania feel the same sense of crisis the people of the Delaware Valley did in 1992."

He noted that in Philadelphia as Rendell took office, in answer to the standard polling question on whether the city was on the right or the wrong track, the response was a bleak 75 percent in favor of wrong track. He speculated that if the same question were asked across the state today, the responses might yield only a slight plurality in the negative.

Fumo echoed that assessment but argued that Rendell had the skills and now the position to raise the public sense of urgency.

"In Pennsylvania right now, people don't fully appreciate where we are, how bad things are, even though we've been saying it constantly," Fumo said. "But the chief executive has the bully pulpit. When we in the Legislature say something, it's on the back pages somewhere; when the governor says something ... it's big headlines."

Not such dire straits

Rendell's been carrying that message for months, warning of a potential deficit for the next fiscal year approaching $2 billion even without the new education spending he will seek. The very name of his blue-ribbon fiscal panel. "The Budget Crisis Task Force," seems calculated to instill the sense of urgency needed to spur major change in the way the state does business.

Some of the Republicans who control both chambers in the Legislature are already shrugging off the dire forecasts.

"Pennsylvania's fiscal situation is not as our chronic complainers portray it," Rep. David Argall, R-Schuykill, the chairman of the House Appropriations Committee, wrote recently. "Their criticism comes from the desire to create a fiscal crisis so they can raise Pennsylvanians' taxes. ... Gov.-elect Ed Rendell's spokesman is attempting to instill fear into the hearts of Pennsylvanians by claiming a fiscal or budget 'crisis' exists. That is simply not true."

Fumo dismissed that analysis with a familiar barnyard epithet, while acknowledging that new taxes could end up being needed to support the initiatives Rendell is seeking. "The people of Pennsylvania basically voted that they wanted property taxes lowered and more money for education, and [Rendell] was being honest in not promising not to raise taxes. ... He has a mandate and quite a mandate."

Rendell's former opponent, Attorney General Mike Fisher, continues to be skeptical of Rendell's chances to push through an increase in state education funding and a commensurate cut in local property taxes.

"I don't see it," Fisher said. "He's going to have to cut spending to balance the [existing] budget and I just don't see where the money is. I think it's going to be hard to get the General Assembly to vote for any tax increases."

Stephen MacNett, the general counsel for the Senate Republicans, agreed that there was little appetite among Republicans for increasing any of the state's major taxes -- the sales tax, the personal income tax or the corporate net income tax -- but he didn't rule out the possibility of some significant compromise on education aid. "He may not be able to move as aggressively as he talked about, but he ought to be able to increase the funding level to some extent ... it may be that there is some combination of minor taxes, fees, and cost savings that will give him some flexibility."

Oxman acknowledged that it figures to be much more challenging to negotiate with a solid GOP Legislature than a city Council with 13 Democrats among its 17 members, but he said, "He's persuasive; he likes dealing with people one-on-one, and he's pretty good at getting three-quarters of a loaf."

Since the election, Rendell has repeatedly emphasized his intention to work across party lines. In a noteworthy comment while discussing one Cabinet appointment, Rendell pointed out he was now head of the state Democratic Party and determined to be a resource for candidates across the state.

But, he added, "I also want to make it clear that the next two years are going to require unusual actions by Republicans and Democrats. ... I will not campaign against Republicans who help in those difficult choices."

At least for the time being, that spirit of detente is shared by some Republicans. Speaking last week, Fisher praised several of Rendell's Cabinet appointments.

"The atmospherics, at least as far as the Senate is concerned, are very good," MacNett said. "There is not an anger about the election outcome. There is disappointment, but there is not anger. [Rendell] won two hard races decisively; they were not mean-spirited races, and as a result there is a lot of optimism, a lot of good will, and a view that we ought to give this new administration a chance to move forward."


James O'Toole can be reached at jotoole@post-gazette.com or 412-263-1562.

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