Monday, June 11, 2007

The good, the bad and the ugly

I was watching one of my favorite movies the other night. It's one of those Clint Eastwood spaghetti Westerns from the 1960s directed by Sergio Leone.

Eastwood, Eli Wallach and Lee Van Cleef play unsavory characters seeking buried treasure during the Civil War. Throughout the movie, they form various alliances or double-cross each other in pursuit of the gold. Near the end of the film, the gunslingers face each other in a climactic three-way gunfight at a cemetery. Each character starts firing at the other. You don't know who's left standing until the smoke clears.

As I was watching the movie, I began thinking about the upcoming battle over the Pennsylvania budget. I'll let you decide who fits the good, the bad and the ugly description among Gov. Ed Rendell and the Democrats and Republicans in the Legislature.

The Pennsylvania Constitution requires an approved budget no later than June 30 each year, but since Gov. Rendell took office in 2003, the state hasn't passed a budget on time.

Rendell and the Legislature are on a collision course over state spending and it could get nasty. The governor and lawmakers have their own priorities and have shown little willingness so far in compromise.

Rendell wants to spend $27.3 billion for the fiscal year starting July 1. Since taking office, Rendell has increased state spending by $6 billion. He's raised the state income tax and borrowed money to support his spending habit. To balance his proposed $27.3 billion general fund budget, Rendell wants Pennsylvania residents to cough up $2 billion in new or additional taxes.

Therein lies the rub. House Democrats are willing to spend the $27 billion, but don't think they need to hike taxes.

Where would the additional money come from? First, there is a $500 million budget surplus anticipated for the current fiscal year. It appears Pennsylvania collected a half-billion dollars more in taxes than revenue officials predicted. Harrisburg politicians don't want to give that money back to taxpayers. House Democrats want the surplus to go toward the $27.3 billion budget. There's also a $500 million "rainy day fund" that lawmakers control. House Democrats would like to tap into that surplus as well.

Republicans are saying the state should spend the same as it did this year, about $26 billion, with a 2 percent adjustment for inflation. Senate Republican leaders are saying they will never approve a tax hike and they have the votes to frustrate Rendell's spending orgy. The GOP enjoys a 29-21 majority in the Senate.

The House is a different story. Democrats hold a slim 1-vote majority and generally rubber-stamp everything Rendell wants. But party leaders could have a revolt on their hands if they force freshmen Democrats to vote for a tax hike as their first major vote in the Legislature.

How would you like to be a first-term representative facing voters in 2008 after raising taxes, especially when the majority of your constituents keep telling you that eliminating property taxes is their No. 1 priority. The surest way for Democrats to lose the House next year is to back Rendell's tax increases.

Rendell appears to have the weakest hand in the upcoming budget battle. But the governor knows how to play hardball. He can rely on unionized state workers (and mass transit workers) to put pressure on the Legislature). He can also veto any budget that comes from the Legislature. If Rendell vetoes a budget that doesn't include all of his spending priorities (and tax increases), will House Democrats have the guts to override the governor's veto?

Rendell contributed tens of thousands of dollars to help get House Democrats elected in 2006 and he personally campaigned for many legislators. They owe him big time. On the other hand, a vote to increase taxes is tantamount to political suicide. How many Democratic legislators are willing to risk the wrath of angry voters in 2008 to please the governor?

Republicans are unlikely to back down from their "no new taxes" stand, either. The reason Republicans lost control of the House after 12 years was the perception that they were too willing to back Rendell's agenda.

The top two Republican leaders in the Senate were kicked out of office and Speaker of the House John Perzel was ousted from within his own party primarily for their willingness to move Rendell's tax increase, slot parlors and tax-shifting schemes through the Legislature.

Voters sent a clear message to GOP lawmakers last year: You will be punished for collaborating with the enemy. That message will carry into the 2008 elections.

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