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U.S. Senate vote improves Pa. budget prospects

August 04, 2010

HARRISBURG, Pa. (AP) -- Pennsylvania's prospects for avoiding deeper state budget cuts and more layoffs improved Wednesday, thanks to a key U.S. Senate vote on $26 billion in recession-related aid to the states.

The bill cleared a hurdle in the Senate that virtually guarantees its later passage in the chamber. The legislation would extend aid included in last year's federal stimulus law to states and schools to maintain programs amid anemic tax collections during the recession.

"This is a positive and long overdue first step to prevent harmful budget cuts and layoffs," Sen. Bob Casey, D-Pa., said in a statement.

The Senate vote was 61-38. Maine's two moderate Republican senators joined Casey, Sen. Arlen Specter, D-Pa., and 57 other Democrats to overcome a GOP filibuster. Final Senate approval, which isn't expected before Thursday, and House passage are still necessary. The House is not scheduled to reconvene in Washington until September.

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Gov. Ed Rendell warned that without the aid, he would have to balance the state budget by cutting subsidies to public schools and county-run human services. He said that likely would mean the layoff of 12,500 workers: 4,000 state employees, 3,000 teachers and other school employees, and more than 5,500 local and county employees, such as caseworkers, police officers and firefighters.

The Pennsylvania budget relies on $850 million in federal stimulus aid, but the state-aid bill before the Senate promises roughly $600 million for Pennsylvania. That leaves Rendell to deal with a shortfall of about $250 million, a subject he said Wednesday he would raise with legislative leaders next week.

The bill also promises about $378 million to Pennsylvania's school districts, which are already laying off teachers or closing buildings.

Most Republicans oppose the extension, saying the price tag would add to the nation's growing debt.

Democrats insist the proposed aid would be balanced by accompanying tax increases and spending cuts. The bill would eliminate an expanded food stamp benefit in March 2014 that was enacted last year, and would limit the ability of some U.S.-based multinational companies to use foreign tax credits to reduce their U.S. taxes.

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