Mike's Memo

State Budget Passed

On Friday, July 4, more than a week after the set deadline, the General Assembly and the Governor were able to reach an agreement and approve a state spending plan for 2008 – 2009.  The bill, Senate Bill 1389, passed the Senate by a vote of 49 – 1, with Senator John Eichelberger casting the only negative vote.  Unlike last year, I was able to support this year’s state budget because it is within the current rate of inflation (approximately 4 percent), and given previous spending under the Rendell Administration, I believe this year’s budget is more responsible.  However, at the same time, this budget also highlights the need for my “Taxpayer Protection Act” (Senate Bill 707), which would have limited state spending to a maximum of 3.29 percent. Even with all of the spending cuts enacted by Senate Bill 1389, more cuts would have been needed to meet the TPA limits.  This is further evidence of the need for a law, or a constitutional amendment, to better control state spending.  

Budget Highlights

The following are highlights of the 2008 – 2009 state budget:

• A $28.26 billion spending plan (3.98 percent increase over last year);
• No new taxes or fees;
• Rainy Day Fund preserved (current balance is $744 million);
• Continued phase-out of the Capital Stock – Franchise Tax, saving job generators $270 million in state taxes; and
• Minimum increase of 3 percent in basic education subsidies 

Additional updates will be included in future editions of Mike’s Memo.

State Borrowing

Additional borrowing was approved in conjunction with the passage of the state budget.  Given the amount and breadth of state borrowing, I was only able to support two measures, both designed to fund critical infrastructure needs (especially water and sewer):  Senate Bill 2, which provides for $800 million paid for from existing revenues (the Gaming Economic Development and Tourism Fund), and Senate Bill 1341, which would borrow $400 million after voter approval.  I was not able to support additional borrowing as provided for by House Bill 2231 ($800 million) and House Bill 2522 ($1.2 billion).  I believe that additional work is needed on how the Commonwealth identifies, prioritizes, and funds improvements to infrastructure.  I was the only no vote on HB 2231 and HB 2522.  

Special Session on Energy

The Special Session on energy produced the “Alternative Energy Investment Act,” Special Session House Bill 1, which was passed 47 – 3.  This $650 million initiative is designed to promote the development and use of alternative and renewable energy and promote both energy efficiency and reduce energy consumption.  I was unable to support this plan – mainly due to the increased borrowing ($500 million).   

State Vehicle Accountability Bill Sent to House

I am pleased that my Senate Bill 1499, which would add accountability for the use of state vehicles by state employees, was unanimously approved by the full Senate.  Like other reform measures of mine, and of other Senators, Senate Bill 1499 was referred to the House State Government Committee.  I am hopeful the Committee and the full House will consider these measures, which are designed to bring more transparency and accountability to Pennsylvania state government.