FOR IMMEDIATE RELEASE
July 16, 2007
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Senate Majority Leader Dominic Pileggi
Budget Comments * July 16, 2007

NOTE: Some of these comments were changed slightly upon delivery.

Madame President, we are here today considering the 2007-08 State Budget. Since the Senate first passed a budget on June 20, nearly a month ago, it has been a long road.

Today is July 16, which means that we are more than two weeks past the deadline for a state budget.

But we are now considering the Conference Committee Report on House Bill 1286, a budget that truly moves Pennsylvania in the right direction.

• A budget is an expression of the state's priorities. We balance competing interests and try to ensure that the real needs of Pennsylvanians are met.

• I'd like to talk about what I believe are some of the highlights in this year's budget.

• An additional $167 million is being provided for basic education, along with an additional $29 million for special education, and an additional $34 million for charter school reimbursements.

• The Educational Improvement Tax Credit will be increased by 27 percent, from $59 million in 2006-07 to $75 million this year.

• This program helps thousands of children all over the state afford schools they otherwise could not attend, and it has created many innovative programs in our public schools as well.

• We are creating a new tax credit known as the Resource Enhancement and Protection Tax Credit, or REAP.

• REAP has been described by a senior agricultural consultant with the Chesapeake Bay Foundation as "a bold, first-in-the-nation step toward expanding conservation opportunities and distinguishing Pennsylvania as a leader in innovative approaches to farm-friendly environmental protection."

• Up to $10 million in tax credits are available under the REAP program, which enjoys broad support in our caucus but was led by Sen. Mike Waugh and Sen. Mike Brubaker.

• To ensure continuity of care, this budget does not include what is known as the "pharmacy carve out" in health choices, at a cost of $14.3 million.

• This budget includes $4 million to fight healthcare-associated infections – implementing legislation prime-sponsored by Sen. Erickson and sent to the governor two days ago.

• $5 million in new funding is provided for obstetrics and neonatal services.

• This budget puts a 3% COLA in place for Pennsylvania's MH/MR workers.

• And it allocates nearly $110 million in additional contributions to the State Employee Retirement System to help the state address its pension obligations.

• This budget also includes many items that the governor originally proposed to cut and which we have been able to return to the budget.

• For example, we restored $5 million for hospital-based burn centers. This money is vital to treating burn victims in Pennsylvania.

• This budget restores $5.3 million for biotech research.

• $2.5 million is being restored in the New Choices / New Options program, which helps displaced workers find employment.

• $7.1 million is restored for the Hospital Community Access Program, which reimburses hospitals with a large number of patients using medical assistance.

• We were able to provide this increased funding with no new taxes, despite strong claims from some that such taxes would be necessary.

• The governor originally proposed seven tax increases, but none of them are being considered in the Senate with this budget.

• In fact, this budget also maintains some important tax cuts – despite heavy pressure to postpone those tax cuts.

• The biggest one of these, the Capital Stock and Franchise Tax – often described as a "job-crushing tax" – will be reduced by an additional one mill this year, saving job creators $220 million this year.

• With this budget, we are also bringing the growth of state spending back to a reasonable rate – so that this budget did not set us up for tax increases next year.

• You can calculate the growth in state spending literally dozens of different ways.

• We have laid out for the public many of those calculations.

• The two most common are to compare the final 2006-07 budget with the 2007-08 budget now before us with and without $317.5 million of mass transit funding.

• If you include that spending in the 2007-08 budget, there is a 4.4% increase in state spending.

• Without that spending, which is being moved to a dedicated fund, the growth in General Fund spending is 3.2%.

• No matter how you calculate it, this is the smallest spending increase during the tenure of Gov. Rendell.

• This budget also puts Pennsylvania well below the national average in terms of state budget growth this year.

• Clearly, we are on the right track when it comes to controlling state spending.

• Some advocated that the state should spend as much money as possible this year – every last dollar that came into the state Treasury. Some even said we should dip into the Rainy Day Fund to spend more.

• Because of our determination to take a multi-year view of the state budget, this 2007-08 budget includes an anticipated $300 million surplus to carry over into the next fiscal year.

• And the Rainy Day Fund will increase by about $160 million, to a total of roughly $690 million.

• The Rainy Day Fund exists to cushion the blow of economic downturns. It should never be spent in good economic times, no matter how well intentioned the spending is.

• We also avoided gimmicks in this budget.

• All of our public comments have been very clear on the transfer of $317.5 million for mass transit out of the General Fund and into a dedicated fund.

• By avoiding gimmicks, we made it very easy for the public to know the size and the scope of the state budget.

• This budget does not reflect exactly what the Senate Republican caucus would like to see.

• Rather, this budget is the result of negotiations which also included the governor's office and the three other caucuses.

• I would like to thank Sen. Scarnati, Sen. Armstrong, Sen. Mellow, Sen. LaValle and their staffs for the many long hours and the incredible effort which went into reaching this point.

• Budget agreements are ultimately the result of compromise, and in that context this budget is a remarkably good final product.
   
• Madame President, I urge an affirmative vote to adopt the Conference Committee Report on House Bill 1286