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Rendell Proposes Another $77 Million Cut In Environmental Spending, Loss Of 240+ Positions

Gov. Rendell this week proposed his 2009-10 budget and as promised there was "universal pain," including an additional $55 million cut in environmental spending and the loss of 240 positions from the departments of Environmental Protection and Conservation and Natural Resources.

The budget also makes available $22 million less than last year from the Recycling Fund to support local recycling programs, host municipal inspectors, public education programs and small pollution prevention programs.

(PA Environment Digest has links to more detailed summaries of the budget proposal at the end of this story. Photo courtesy Harrisburg Patriot-News.)

The proposed cuts are on top of $207.4 million diverted to balance the current 2008-09 budget-- $174 million in Marcellus Shale lease funds diverted from DCNR, $15 million diverted from the Recycling Fundand $18.4 million in operational budget cuts from DEP and DCNR.

If these budget recommendations are adopted in the final budget, a total of $861 million in environmental funding has been diverted to balance the budget or fund programs that could not find funding on their own over the last seven years. (See separate article)

The Governor did propose a new natural gas severance tax on natural gas production on Marcellus Shale, but dedicated the entire amount to go to the General Fund, not for environmental programs. The tax is expected to generate $107 million in 2009-10 increasing to $631.9 million in 2013-14.

Gov. Rendell also called on the General Assembly to adopt what he called a Green Building Code to reduce energy use, cut greenhouse gas emissions and water use and urged the General Assembly to pass legislation to phase in electric rates when price caps expire in 2010.

The proposed budget does keep the $10 million Resource Enhancement and Protection (REAP) farm conservation tax credit program, as well as Gov. Rendell's $75 million film development tax credit.

Overall,Gov. Rendell proposed a $26.6 billion General Fund budget that includes $1 billion in budget cuts affecting 80 percent of the line items in the budget and reducing line items, other than education, public welfare, corrections and probation and parole, by 8.8 percent.

101 line items were eliminated entirely from the budget by Gov. Rendell, but DEP and DCNR were second only to the Department of Public Welfare in the total dollar amount of programs zeroed out-- $20.1 million versus $46.7 million. (List of programs eliminated)

There are no general tax increases, but, as expected, taxes were proposed on smokeless tobacco, cigars, an increase in the cigarette tax and legalizing video poker in addition to the tax on production from Marcellus Shalenatural gas wells. The Governor is also proposing to give counties the ability to impose up to a one percent sales tax half of which would be shared with cities and continue the phase out of the Capital Stock and Franchise Tax on businesses.
The Governor is also counting on $2.4 billion in federal bailout funds to balance the 2009-10 budget.
Gov. Rendell touted the steps he has taken since coming to office to reduce the cost of state government, including eliminating 4,767 positions since 2003 and another $1.75 billion in operating costs.
The proposal also calls for the development of a new cabinet level Department of Emergency Management and Homeland Security.
Gov. Rendell’s 2009-10 proposed budget continues infrastructure investments with $537 million for Rebuild PA projects that includes:$200 million for bridge repairs;$294.5 million for water, sewer, flood control and dam projects;$42.5 million for rail and aviation improvement projects; and another $1.9 billion in base Motor License Funds will be directed to bridge and highway repairs.

Here are some specifics on several key agency budgets--

-- $13.9 million reduction to $68.1 million In General Fund
-- Overall Budget Cut $25.7 million, Total - $226.7 million 2009-10
-- Eliminate 92 positions of 710
-- Cuts:$466,000 conservation districts ($1 million total)
-- 2002-03 Budget - $274.3 million

Conservation and Natural Resources
-- $6.9 million reduction to $113.4 million in General Fund
-- Overall Budget Cut $59.6 million, Total - $344.4 million 2009-10
-- Eliminate 68 positions of 1,408
-- Cuts:$8.2 million Heritage and Park Grants (zeroed out),$3.2 million reduction in Keystone Recreation, Parks and Conservation Fund,$2.3 million infrastructure mapping
-- Increases: $7.1 million State Forest Operations to offset dramatic reduction in timber sale revenue
-- 2002-03 Budget - $322.9 million
Environmental Protection
-- $18.2 million reduction to $212.8 million in General Fund
-- Overall Budget Cut $31.9 million, Total - $680 million 2009-10
-- Eliminate 172 positions of 3,127
-- Cuts: $504 ,000 conservation districts ($1 million total),$22 million Recycling Fund,$245,000 Chesapeake Bay Agricultural Source Abatement,$5.1 million in Acid Mine Drainage Abatement Fund (10 percent set aside)
-- 2002-03 Budget - $728.2 million

Proposed Marcellus Shale Tax

Members of the Pennsylvania Alliance for Restoration and Conservation this week called on Gov. Rendell and the General Assembly to invest a portion of the proposed $107 million severance fee on drilling for natural gas in Pennsylvania to environmental protection and improvement through the Environmental Stewardship Fund.(See separate story)

Commenting on the proposed tax, House Minority Leader Sam Smith (R-Jefferson) said,"The Marcellus gas play is a great opportunity for Pennsylvania. It's going to create jobs and wealth within Pennsylvania, and we should be viewing it as an emerging industry where we could be providing incentives. Clearly a tax is counterproductive and I think it would be the wrong direction for this state to go."

The Marcellus Shale Committee, an industry group involved in the development of natural gas resources in Pennsylvania, released the following statement in response to the proposed severance tax--
"Pennsylvania is blessed with rich natural resources, including a potentially large natural gas field in the Marcellus Shale. Although the MSC strongly opposes a broad-based severance tax, especially while the development of the Marcellus Shale is in its infancy, the industry remains willing to work through the Commonwealth's current financial challenges with the Governor and the legislature.
"The committee believes some of these challenges would be better addressed through an expansion of developing natural gas resources on state-owned land that would yield substantial immediate bonus payments and long-term royalty income for decades. This option would not only help create new jobs, it would also provide an immediate economic benefit that does not hinder growth and development, especially in these difficult macroeconomic times.
"While West Virginia may have a similar severance tax, West Virginia does not have the same regulatory challenges that exist in Pennsylvania. We strongly believe the Governor and the legislature want Pennsylvania to be a leader in the development of this important energy source. As such, it is essential to point to development models in Texas and Arkansas, two of the largest shale gas producing states. Both states have far more favorable tax approaches, and Pennsylvania is competing against these states for investment in equipment, technology and other aspects of natural gas development. The Marcellus Shale could provide an economic boost for the Commonwealth for many generations, but not if it is prohibited from developing through a hastily imposed severance tax."

Links: Text Of Governor's Budget Address

Governor's Press Release

Governor's Detailed Budget Document

House Democrat Summary of Proposed Budget

House Democrat Line Item Spreadsheet of 2009-10 Budget

List of Programs Eliminated



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