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June 25, 2009

State budget stalemate likely to delay Pitt budget

Passage of a University budget for fiscal year 2010 appears once again to be delayed by the lack of a budget agreement in Harrisburg.

With less than a week to go in the fiscal year, state lawmakers appear to be nowhere near an agreement on Pennsylvania’s FY10 budget. Despite the fact that a House bill that would give Pitt $160.49 million in state funding and $10.244 million in federal economic stimulus money has been introduced in Harrisburg, the legislature typically doesn’t approve appropriations for non-preferred institutions — charitable or educational institutions (including Pitt and its fellow state-related schools) that are not under the state’s control and that the legislature is not under obligation to fund — before the state’s overall budget is passed.

Pennsylvania’s legislature isn’t known for enacting timely budgets — the last time one was passed prior to the fiscal year-end was in 2002. Since then, with the exception of 2003 when a budget was delayed until December, the deadline has been missed by only a few days. However, this year Pennsylvania is facing a $3.2 billion budget shortfall and there appears to be little agreement in Harrisburg on how to close the gap.

“It’s going to be a protracted process,” said Paul A. Supowitz, vice chancellor for Governmental Relations. “The parties are pretty far apart right now.”

A proposed Senate budget bill was shot down by the House appropriations committee earlier this month in a party-line vote. Another House budget proposal remains in committee.

Last week, Gov. Edward G. Rendell proposed more cuts and a temporary personal income tax hike to help balance the budget. He estimated the hike, which would raise the tax from the current 3.07 percent to 3.57 percent for three years, would raise $1.5 billion per year for the state.

The governor, in a prepared release, argued for the tax hike, saying that even with proposed budget cuts, new taxes on tobacco and on natural gas extraction and withdrawals from the state’s Rainy Day Fund, a gap of some $1 billion remained to be bridged.

Despite the dire financial situation, Supowitz pointed out that due to the promise of federal stimulus funding, the University is in a better position than many others who are depending on state appropriations. “We are differently situated than others in this budget,” he said.

Rendell cut Pitt’s FY09 appropriation by 6 percent and in February budgeted that reduced amount — $160.49 million — for Pitt in his 2010 budget proposal. In its annual budget request last September, Pitt had asked for more than $205 million from the state, an 8.5 percent increase.

“We aren’t likely to have a budget in June,” Vice Chancellor for Budget and Controller Arthur G. Ramicone told the University Senate budget policies committee last week in his report to the committee on the status of the budget cycle.

“It’s always the preference of the chancellor to have the full board approve the budget, but they meet June 26 so it likely will fall again to the joint budget and executive committee meeting [July 16].”

The joint committees are authorized to act on the board’s behalf to approve tuition rates, salary pool increases and the University’s operating budget.

In April, the University announced there would be no undergraduate tuition increases next year at Pitt’s regional campuses, but announced no decision on tuition for the Pittsburgh campus. The chancellor in March announced there would be no salary pool increase in the upcoming fiscal year.

Typically any budget action by the trustees is contingent upon having Pitt’s state appropriation figures in hand, so it remains uncertain whether the joint committees will be able to act on a University budget July 16.

While the University may delay approving an operating budget until the state figures are finalized, tuition rates must be set in time to allow families to budget and to apply for financial aid.

“What we did the time it dragged on into December was we approved the tuition and held off on compensation and the full budget. But of course, we’ve already announced the compensation freeze, so we’ll at least approve the tuition,” Ramicone told BPC.

“We’ll do as always and wait and see,” he said.

—Kimberly K. Barlow


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