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Wagner: Pennsylvania risks 'worst fiscal crisis'

HARRISBURG -- State spending increased at nearly twice the rate of inflation since 2003 when Gov. Ed Rendell took office, and the state's financial situation could worsen dramatically next year, Auditor General Jack Wagner said Wednesday.

The state budget grew about 33 percent, from $21 billion to $28 billion, during Rendell's tenure as the Consumer Price Index rose about 18 percent, Wagner said.

As a result, the Legislature and the next governor "face the worst fiscal crisis in our history" when they craft a 2011-12 budget next year -- one that could have a deficit of as much as $5 billion, said Wagner, a Democrat like Rendell.

"Taxpayers do not want to see the cost of government increase," he said. Yet, he warned: "There really isn't any clear light at the end of the tunnel."

Lynn Berger, 60, of Madison voted twice for Rendell but doesn't understand why his administration wastes millions of dollars on pet projects while the deficit rises.

"If they're spending to build a library for Arlen Specter or to remodel offices, I think that's ridiculous," Berger said.

The state should put more money toward helping the homeless and victims of crime, said Berger, a Democrat who worked as a private-duty nurse until she was disabled last year in a car crash with an uninsured driver who was speeding.

Rendell's spokesman Gary Tuma said the budget grew in part to cover Medical Assistance costs, which the state must pay, and Department of Corrections costs, which increased partly because of mandatory sentences. He contended that "voluntary" increases for state spending on education helped keep down local school property taxes.

"Many of the cost increases in state government in a time of recession are beyond anyone's control," said Tuma, citing unemployment costs that rise because people are out of work.

Retired salesman William Ritter, 71, of Murrysville said having no term limits and the huge size of the Legislature compared to those in other states contributes heavily to rampant spending.

"I think our Legislature is out of control, and that's reflected in our fiscal policies," said Ritter, a Republican who plans to vote for Tom Corbett, the Shaler Republican attorney general who is running to succeed Rendell.

"I look at other areas of the state budget -- PennDOT, the Turnpike Commission -- and I see entrenched cronyism there," Ritter said. "Once people are there, they never leave and the government expands."

Voters in November will elect a governor to take office in January. Wagner of Beechview lost the Democratic nomination in May to Dan Onorato, the Allegheny County executive from Brighton Heights, who is running against Corbett.

Grappling with a looming, historic state deficit has become a campaign issue, as evidenced in a debate Monday night between Corbett and Onorato at the state Chamber of Business and Industry dinner. Both candidates said they would not raise taxes, despite the growing deficit.

Wagner said the Rendell administration hasn't implemented hundreds of millions of dollars in potential savings outlined in audits his office performed, such as one on the Department of Public Welfare. That audit found a 14-percent error rate in about 11,000 randomly selected cases from a pool of 513,000 Medicaid cases. The state and federal government spend $14.4 billion a year on Medicaid. The portion examined in the audit found $3.3 million in errors.

Most of the savings auditors found could be implemented by the administration, although some required legislation, he said.

Wagner acknowledged he's irritated because the governor's office recently asked him to cut the auditor general's budget by 1.9 percent. He said his budget was reduced, through measures to save money, from $46.5 million when he took office in 2005 to $44.3 million this year.

Rendell asked all departments, including Wagner's, to reduce spending. Had the auditor general's budget increased at the same rate as the rest of state government's, his budget would be $56.6 million, Wagner said.

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