HARRISBURG Spending bill awaits Rendell's OK

He is expected to sign the measure today.
HARRISBURG (AP) -- The state House of Representatives voted 104-89 Monday to approve $1 billion in new taxes to finance new learning programs, close a deficit, and restore items cut from the budget, even though there was no accompanying property-tax relief measure to offset the burden.
The tax increases were included in a package of bills that were passed by the Senate on Saturday. Gov. Ed Rendell said in a news conference after the voting session that he would sign the package today, ending Pennsylvania's distinction as the only state in the nation without a completed spending plan this fiscal year.
The House also approved separate measures that would include the tax revenue in the budget and provide education funding for Pennsylvania's 501 school districts.
Among other things, the bills call for raising the state's personal income tax for the first time since 1991. House Democrats and Republicans had insisted on property tax cuts as a tradeoff, but 11th-hour Senate negotiations over a proposal to provide rebates by legalizing slot machines collapsed early Saturday morning amid disagreements over issues such as whether to allow casinos run by Indian tribes.
But Rendell said he had assurances from legislative leaders that resolving those differences would be a top priority when lawmakers return to the Capitol next month.
"We will, I repeat, we will give people property-tax relief," he said.
Decision
Ultimately, members had to decide whether their desire to end a budget impasse, which has held up more than $4.2 billion in basic education funding for 51/2 months, could override their disappointment over the absence of a gambling bill. A handful of school districts have threatened to close as early as Dec. 31 if no state aid is forthcoming.
About one-third of the 108 Republicans supported the plan, but several GOP opponents said it represented excessive, unnecessary spending.
"The governor and his friends are about to take Pennsylvanians for another ride down the tax-and-spend expressway, a trip that will end in a destructive economic accident," said Rep. Daryl Metcalfe, R-Butler. "The right choice is the choice of government living within its means."
Supporters said Rendell, a Democrat, needed the tax increases in part to fix a $1.8 billion structural deficit he inherited from the Republican administrations of Govs. Tom Ridge and Mark S. Schweiker.
Tax increase
The legislation calls for the state income tax rate to rise from 2.8 percent to 3.07 percent -- an increase of nearly 10 percent -- to raise an additional $729 million a year. A household with a taxable income of $50,000 would owe $135 a year more in income taxes.
The biggest part of education funding that Rendell pushed for, $175 million, would fund grants to help schools introduce full-day kindergarten and reduce class sizes, among other things.
The grants are expected to be included in Rendell's budget for the next fiscal year, which begins July 1.
The package also would release the public school subsidies that Rendell has held up to force Republicans to approve at least some of his education initiatives. The money accounts for an average of 35 percent of school districts' operating budgets.
It would give Rendell a slightly smaller tax increase and slightly less money for education than a $1.1 billion compromise bill that passed the House in October, and less than one-third of the tax increase and new education funding that he originally sought in March.
Some of the other levies in the package were a 35-cent per-pack boost to the $1 cigarette tax. Twenty-five cents of the cigarette tax increase would be earmarked to help physicians pay their share of a state-run insurance fund that covers medical malpractice claims against them.