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Rendell questions city bailout by recess

| Wednesday, June 25, 2003, 12:00 p.m.

HARRISBURG -- Gov. Ed Rendell said Tuesday that the city might not get financial bailout legislation before lawmakers recess for the summer.

Rendell, a political ally of Pittsburgh Mayor Tom Murphy, said he still hopes the Legislature will authorize new revenue sources for the strapped city. He added, though, that a packed legislative agenda with little time remaining might nudge out a bailout plan.

"The problem is it's late ... and there's much to do, as the Legislature consistently reminds us," Rendell said.

He cited such statewide priorities as prescription benefits for low-income elderly; a lessened reliance on property taxes; legalization of slot machines at racetracks; enactment of early-childhood education programs; and his $2 billion economic-stimulus plan.

Lawmakers are expected to recess for the summer in early July -- leaving only about a half-dozen voting days before July 4.

After Rendell made his comments at a news conference yesterday, his press office attempted to back away from his statement.

"The governor still believes this (can happen) before summer recess," said Rendell's press secretary Kate Philips, adding that Rendell's statement was "only a hypothetical."

Murphy's spokesman Craig Kwiecinski said Pittsburgh "faces very difficult choices if we are unable to move forward with a relief package."

The city has a projected budget deficit this year of $60 million. City officials have said Pittsburgh could run out of money by November. Murphy has said hundred of layoffs could occur unless the Legislature helps.

The bailout issue, though, is not dead. Moving forward depends on whether the Pittsburgh business community backs a plan, Rendell said. If Murphy reaches agreement with business leaders, Rendell would ask lawmakers to approve legislation.

State Rep. Frank Dermody, an Oakmont Democrat and chairman of the Allegheny County delegation, said he has heard that the city and businesses "are getting close on an agreement. ... I expect to look at concrete proposals in a day or two."

Proposals to help dig Pittsburgh out of its financial hole include an increase in the $10-a-year occupation tax; a fee on employees of tax-exempt nonprofit institutions, such as universities; and the elimination of city tax exemptions for manufacturers, banks, utilities and financial institutions, coupled with a lower business-privilege tax.

State Rep. Dan Frankel, the Squirrel Hill Democrat leading the push for a financial package for Pittsburgh, said he hopes "we can do it -- it's to everybody's advantage."

State Rep. Michael Diven, a South Side Democrat, said he is not surprised by Rendell's remarks. He attributed the dimmed hope for a bailout before July partly a result of the lack of "any clear picture" on state spending and key items on Rendell's agenda.

Despite the circumstances in Harrisburg, now isn't "time to throw up the white flag," said state Rep. Don Walko, a North Side Democrat.

Republicans and some Democrats in the General Assembly have said they want to see further spending cuts by the city before a tax package would be enacted.

"Delaying it until the fall would give the City Council ample opportunity to further cut the city's budget, rather than put it all on our backs," said state Rep. Tom Stevenson, a Mt. Lebanon Republican.

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