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Budget impasse: Will the only 'winners' be the politicians?

| Thursday, May 10, 2012, 11:20 p.m.

HARRISBURG - Odds are that by Thanksgiving eve there will be at least a partial state budget solution allowing Pennsylvania's 501 school districts to begin collecting their state subsidies.

With districts having missed two payments from the state -- many districts borrowing -- and some poorer ones threatening to close their doors by the end of the year, the heat will be on Democrat Gov. Ed Rendell and the Republican-controlled Legislature to come up with a deal over the next two weeks.

It might not happen. Then we'll be looking at the possibility of the budget stalemate spilling into 2004.

The timing alone, the lateness in the year, suggests some deal may be forthcoming. But it might not be the whole ball of wax sought by Rendell.

Rendell was elected governor a little over a year ago. Last March he embarked on an ambitious agenda to boost education spending, cut property taxes, pump billions into the infrastructure and legalize slots at racetracks. Slots at tracks would in large part fuel property tax cuts. A hefty state income tax would help pay for new spending.

Early childhood education programs would be the key to the state's future by improving the work force and the state's future success as an employer, Rendell reasoned.

But the plan went nowhere.

Rendell's agenda is in shambles. Sure he's had help from House Speaker John Perzel, R-Philadelphia, but Senate Republicans leaders have said repeatedly; too much, too expensive, too fast.

The budget impasse is in its fifth month. A large portion of the budget is in place but there's a $4 billion gap for funding the public schools. Rendell had vetoed the entire state basic subsidy for education to retain leverage over the Legislature.

Senate Republicans object to raising a general state tax such as income or sales taxes to pay for new spending. There is no real disagreement over using slot machine revenue to fuel property tax cuts, but getting agreement on a slots bill has proved trickier than the budget. The Senate GOP has even raised the possibility of some smaller tax hikes getting consideration.

Rendell says he's compromised enough already and that he's not "budging" from the $200 million he's seeking in new spending for early childhood programs. Like the Energizer Bunny he keeps coming back with a new tax proposal to play for his plan: Large income tax hike, no• Then a sales tax hike, no• OK then a smaller income tax hike.

Here's what has to happen: Rendell and Senate GOP leaders must be able to save face.

I'm not sure how that gets accomplished.

But it could mean Rendell will get some share of his early childhood education proposal.

The House Republican's block-grant concept is a good one, letting districts choose which early childhood program they wish to fund.

If early childhood education programs are so important, so critical to the future of our state , why isn't Rendell proposing to cut some share of other state programs to pay for them• He can't forgo restoration of some spending cuts as a gesture of good will -- to get the ball rolling?

That could be key.

Rendell would have to punt on raising the state income or sales tax. Republicans can claim that as a victory. The state's revenue picture is slightly rosier bolstering the GOP's arguments against a general tax hike.

Unfortunately, there will likely be a patchwork of smaller tax hikes fueling some of the new spending and restoring cuts from the earlier barebones budget.

I'm not saying that's a good idea. That's just how it may work out.

Lawmakers want to take home property tax cuts. If they can make that part of the mix via a slots bill, then many legislators won't mind voting for a quiltwork of minor tax increases such as taxing alcohol served with meals in restaurants or hitting smokers again, and taxing cell phones.

They also can't be left hanging out to dry without basic state funding for their school districts.

But the Senate Republicans remain an obstacle on taxes. The slots bill is no sure-fire thing in the Senate GOP caucus either, where the majority of senators opposes gambling expansion.

An agreement can be had if they take a few small bites of this now. Rendell and the Senate GOP leadership trio of Robert Jubelirer, R-Altoona, David "Chip" Brightbill, R-Lebanon, and Jeffrey Piccola, R-Dauphin County, can all walk away as "winners."

Whether taxpayers emerge as winners remains to be seen.

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