PENNSYLVANIA Rendell, GOP won't budge on education funding

Both sides are OK with raising taxes, but they differ on the amount.
HARRISBURG (AP) -- With an impasse over education funding now nine months old, Gov. Ed Rendell and Senate Republicans remain about $100 million apart, and both sides insist they're not budging.
The divide represents less than one-half of a percentage point of the state's annual $21 billion budget. Even more striking, the opposing sides are divided by about one-tenth of a percentage point on how high to raise the income tax to pay for new education spending and deficit reduction -- or about $50 a year for someone who makes $40,000 a year.
So why have Rendell and the GOP been unable to reach a deal? Observers say there is more in play than philosophy.
Each party needs to benefit politically from any agreement, and both sides want to stake out territory that will establish a precedent for the rest of Rendell's term, said Terry Madonna, a political science professor who directs an opinion survey put out by Franklin & amp; Marshall College.
"When you take the philosophy, the politics, and the power relationships," Madonna said, "you get all of the ingredients for a major impasse."
What they want
All sides say they want to get a deal done before the end of the year, but any agreement will have to allow all sides to leave the table and claim victory -- and how that's going to happen is not clear, Senate aides say.
Rendell wants $200 million -- he has bargained down from $560 million -- to pay for learning initiatives, such as smaller class sizes or full-day kindergarten, that he believes will boost student performance.
Senate Republicans, who control that chamber and have blocked a compromise bill that Rendell struck with the GOP-controlled House, are loathe to raise taxes to pay for new spending during a period of job losses. Republicans say they are willing to put up $100 million for the new education initiatives.
There are other things being kicked around in negotiations -- for instance, restoring social services cuts -- but the education funding issue has been by far the most divisive.
Republicans are willing to raise the income tax from 2.8 percent to 2.98 percent, said Erik Arneson, a senior Senate GOP aide.
Rendell wants to raise the income tax to at least 3.1 percent, down from his initial request of 3.75 percent in March.
Effect on schools
The difference for schools could be in the number of districts that get enough money to make an impact, said Tim Allwein, a spokesman for the Pennsylvania School Boards Association.
"The difference may be starting a program this year or waiting to start it until next year," Allwein said. "The difference could be having a full-time teacher or a part-time teacher, having a program run three days a week or five days a week."
The difference could also affect how much money a district decides to raise to buttress state grants in order to afford a new program, he said.
Has the standoff been worth it?
Loans
According to an estimate by the school boards association, districts have taken out about $250 million in loans because Rendell has held up the state's $4.1 billion public school subsidy -- it pays for an average 35 percent of each district's budget -- as leverage in negotiations.
The state subsidy should eventually repay the loans, but taxpayers still have to foot the loan interest payments and, without state funding, districts have spent reserves that otherwise could have been used to earn interest.
The Legislature, dominated by the stalemate, has punted a slew of priority bills into next year's session, including a bill to stimulate economic growth by helping businesses get low-interest loans.
And little of the new education money that Rendell is seeking can be used this year anyway, now that talks have dragged through half the school year.