GOVERNOR DISCUSSES FY 2010-2011 BUDGET
By Jason Gottesman
Governor Edward Rendell held a press conference immediately following his budget address to take questions from the media concerning his budget for the 2010-2011 fiscal year.
Before taking questions himself, the Governor allowed Jamie and Ali McMurtie to answer questions. The two were recognized in the Governor’s address for their help in the Haitian relief effort.
What is your reaction to the contention that 10 of the children have been involved in human trafficking?
Ali said the issue deserves to be looked at, while Jamie explained that if you do not follow the law, you should be punished. The Governor interjected all 54 children taken were involved in the adoptive process and it was much different than just scooping up children. He said such things should be done in an orderly process and the girls spent hours with immigration officials reviewing files of the children to ensure safety. The Governor said “we knew they were real orphans.”
What are your future plans with orphanages
in
Jamie said
that they hope to do it again and Ali said planning is hard because
The Governor then took questions about his proposed budget.
Is the $26.2 billion all of the money allowed for expenditures?
The Governor said the federal contribution is not included.
So, what is the overall spending amount?
The Governor
said the total amount of the budget is $29 billion and that is only a $1.2
billion increase from last year, not the projected $1.4 billion. He also stated
some of the increases are inevitable and they only have $5 billion in
discretionary funds with which to work. He noted mandated costs like the
thousands of people who will be joining Medicaid, the large growth in the
Can you better explain your ideas concerning the sales tax?
People will pay less because the base tax drops by one third, the Governor explained. He noted that averages out to a $17 per year savings for families. He said this will mean no huge tax hike for taxpayers to fund increasing costs and it will benefit the future.
Who does the repeal affect?
The Governor said that information will be released and that it affects professional services.
Why not eliminate the tax when there is a tax disparity instead of creating another tax?
The Governor said his system works out better in the end because it creates a situation where other taxes do not have to be increased and he said this is the only way to get out of future problems. He noted 74% of businesses do not pay their CNI tax and that is why it is necessary to close the “Delaware Loophole.” He said, in exchange for the closing of the loophole, businesses would be able to look to their sales numbers and there would be no cap on taking net operating losses.
If the legislature gave this to you, where would the sales tax money go?
Rendell explained since the base is being lowered, there will actually be more revenue coming in and the excess money will be used to fund the Stimulus Transition Relief Fund, much like the rainy day fund. The Governor said he could have “easily punted” this issue to the Federal government, but he feels he has an “obligation to set this right now.”
How tough of a fight will it be to get the tax?
Governor Rendell said he believes it will be very tough because all of the exemptions have lobbyists and the business interests will work hard to defeat it. He said we can no longer give businesses tax exemptions in this economic climate.
Lt. Governor Scarnati has said it is too early for an extraction tax on Marcellus Shale, what is your reaction to that?
The Governor said the people of the commonwealth disagree with him and the oil companies disagree with him. He said if the oil companies believe there is oil in the shale, then the commonwealth can tax its extraction.
Does being in your last year hinder or help you?
The Governor explained it cuts both ways and it helps because it allows some to be less skeptical of some of his spending initiatives. He said by putting the excess sales tax money in the relief fund, it will ensure he can not touch it during his governorship.
Are you sure the reserve fund will be legal?
Governor Rendell said that he is sure because the rainy day fund was legal.
Are you discouraged by the fact that some members of the General Assembly did not applaud at certain points of your address?
The Governor explained he was not because these are tough times and the issues must be considered seriously and deliberatively. He said he was more surprised at the lack of applause and that partisanship still prevailed when he announced good news.
How do you feel about the phase in on the electric rates?
Governor Rendell stated if the General Assembly goes back and passes a bill that would phase the rates in retroactively then he would support that.
Could you explain, politically, why the Senate Republicans would go for any of this?
The Governor said it will be an uphill battle and he has to work to get them on board. He said he would reluctantly sign a budget that met the terms of the agreement reached in last year’s budget. He noted if this budget does not get passed, there will be a $2.5 billion loss that could help with the deficit in two years. He stated if it were up to him, he would devote the time necessary to help get this plan through and that it is up to everyone, including members of the media, to influence public opinion.
Is the managerial and cabinet level pay increase still intact?
Rendell said, unfortunately, it is for one more year and it is a tragedy that some people are getting a pay increase while others are not.
Are there any more layoffs in the horizon?
Rendell explained so long as the three contingencies outlined in his address do not fail, then there will be no need for further layoffs.
Should not the pension crisis be dealt with first?
Governor Rendell said he had a reform package in 2008 that would have flattened the curve on the pensions, but it was not acted upon. He said this will lead to a $2.38 billion increase instead of $98 million. He said this is another reason why the Stimulus Transition Reserve Fund should be looked at.
Is the tolling of I-80 a safe bet?
The Governor said that it is not a guarantee and if it is lost, it would be a huge body blow to mass transit.
Has the DEP budget been restored?
“Unfortunately,” the Governor said, most of the cuts will be staying.
Do you disagree with those that say we spend more money than we should?
The Governor said these are different times than past budgets and that some may disagree with the mandates, but he has no control over them. He said he wishes the economy is better and there are increased costs from greater life expectancy and he explained he can only control discretionary spending. He noted nobody, not even the candidates, should be allowed to say we can simply cut funding without being able to explain the real life implications of those cuts and defending them. “These cuts are brutal,” he said, adding “talk is cheap.”
If we get to June 30, would you test August or July to see if you can get the sales tax change?
If they can get me a budget with no new taxes, education fully funding, and mandated funding taken care of, I will sign that budget reluctantly, the Governor said. He further stated that this is not the time to put off dealing with problems.
Can’t they just run out the clock?
Sure they can, the Governor said. The Governor said if he was in their position, he would send them a budget before the primaries, but that will not help us deal with the problems.
Doesn’t that weaken your hand for pushing for the big changes?
The Governor said the only thing that delay did was to make cuts later and delay education funding. He said he cannot accept the idea that the four caucuses are irresponsible and will not deal with these problems now. He said this budget is a godsend for the future, but noted it will be an uphill fight.
Are you tired of the snow?
Governor
Rendell explained one of the core responsibilities of the state is funding snow
removal and he did not hesitate to help when
What do you say to those that believe we have increased welfare spending at the detriment of education funding?
Governor Rendell said spending was increased for welfare in some areas, but it was not at the expense of education. He said education affects virtually everything we do and when he was an assistant district attorney, many of the criminals had a lack of education. He said education is the key because it affects every facet of our lives.
###