Yesterday, Governor Tom Corbett unveiled his budget proposal which will inevitably be tinkered and toyed with until the General Assembly passes their final version in the end of June, but it made clear the hopes and dreams of Governor Corbett in the coming fiscal year.
Last year, Corbett proposed major cuts to education and paid for it with his approval rating. He hasn’t made the same mistake this year. Corbett proposed a 1.7 percent increase to basic education funding and promised $1.6 billion to higher education. However, these funding increases are not yet a foregone conclusion. The spending increase is tied to several other reform projects that Corbett has his eye on. Education funding will be tied to the privatization of state liquor stores, a greatly debated issue in the past few years. Without this reform, budget officials say that major cuts are inevitable. Public schools would be forced to choose between increasing their taxes, cutting their programs or an unfortunate combination of the two.
Funding for transportation will also be increased in a similar deal. Over the next five years, $5.3 billion is to be invested in transit with $510 million immediately going to highway and bridge projects if the legislature votes to reform the state pension system. The proposed reform would do nothing to reduce the benefits that current employees have already paid, but the future of their plan would switch to a 401(k) program in which they allocate 6.25 percent of their salary to their retirement benefits. New state employees would enter the pension system with this program in place.
New employees to the state may be sparse though; Corbett’s budget includes the elimination of 900 positions, including 400 layoffs. Most of these staff reductions will come from the Department of General Services, the Health Department and Public Welfare. In Human Services news, Corbett has proposed $6.1 million to transition patients at state facilities to community placements.
Despite the spending increases, this budget proposal is also business friendly. It eliminates the Capital Stock and Franchise Tax, reduces the Corporate Net Income Tax and repeals the Corporate Loan Tax. Small businesses certainly weren’t left out of business benefits either. They are now eligible to a $5,000 tax deduction for start-up businesses and access to a new team within the Department of Community and Economic Development that will provide advice on how to best utilize state and local incentives to increase the success rate of new businesses. The Pennsylvania Business Development Authority will consolidate eight loan programs into one large pool of $1.1 billion loan funds.
The Republicans control both the state house and senate, but it is unlikely that Corbett will get everything that he asked for in this proposal. However, it will certainly shape the debate in the coming months before the 2012-2013 fiscal year expires.
Stay tuned for Governor Corbett’s presentation of his proposed budget for fiscal year 2012-2013 on Tuesday, February 7th before a joint session of the PA House and Senate. This is only the first step in the annual fiscal process, as legislators will be in budget meetings discussing the proposal in the days and weeks following Corbett’s proposal.
You may be asking, “Well, who cares? It’s only the first step in the process.” Guess what? It does matter and you should care! If you are concerned about cuts in funding for a particular program or agency, you need to speak up. Take for example the students from four state-related universities who rallied at the Capitol building to advocate for state education funding. They are concerned about financial aid and affordable tuition for college, and they made sure their voices were heard.
What are your biggest concerns as the state budget is debated and determined? Share with us your thoughts. But more importantly, share your thoughts with your local representatives and senators. Let them hear your concerns so that they can be your voice in the debate. Change won’t be accomplished unless you participate.
Watch the address at: http://www.governor.state.pa.us/portal/server.pt/community/governor_pa_gov/20650
Budget discussions are underway, both at the state and federal levels. In Pennsylvania, among other suggestions, Governor Rendell is proposing a lift on some sales-tax exemptions coupled with a plan for a lower sales tax (4%, rather than the current 6% rate). The Lehigh Valley’s leaders chimed in their thoughts on the Governor’s budget proposal in today’s Morning Call.
Nationally, Obama’s proposal includes a plan for a National Infrastructure Bank, that would support both national and regional projects. The New Republic reported on this plan, though with slight disappointment that the proposal only focuses on transportation proposals.
Other noteworthy aspects of the national budget: increased funding for the Clean Water and Drinking Water Revolving Funds and more funding for high-speed rail projects. As Pennsylvania moves forward on plans for an integrated state rail plan, the hope remains that the Commonwealth will have several projects eligible for this funding.
Thoughts on these budgets?
The latest development around the Pennsylvania state budget is a stark bridge bill that was signed by Governor Rendell today, allowing for state workers to be paid. The bill is a bare-bones version of Senate Bill 850, the harsh budget proposed by the Senate Republicans. The next step for the legislation is the same one that Keystone residents have been waiting for since July 1st: an approved state budget. The Conference Committee is in the process of trying to iron out the differences between the Senate, House, and Governor’s budgets, and frustrated Harrisburg insiders report that the two sides seem to be speaking different languages in the attempt to reach a compromise.
It has been a long road, and it seems that the light at the end of the tunnel cannot come soon enough. However, any suggestions of a resolve bring the very real possibility of deep program cuts. With the Republicans rallying against any tax increase, the likelihood of unfunded mandates is looming. If a cuts-heavy state budget is passed, the counties and municipalities will bear the burden of funding local programs.
As written about in a previous post, the Department of Community and Economic Development (DCED) stands to lose funding for crucial incentive programs, which aid the state in better planning practices and smarter development choices. In 2005, the Economic Development Cabinet adopted The Keystone Principles & Criteria for Growth, Investment & Resource Conservation, a sort of bullet-point vision for growth within Pennsylvania. The DCED’s funding programs have aspired to adhere to this vision, which boasts such smart growth goals as brownfield revitalization, transit-oriented development, and infrastructure improvement. Some noteworthy examples of successful DCED programs include the Community and Economic Development Loan Program, which funds up to 50% of the cost of projects that will improve distressed communities, and the Neighborhood Assistance/Neighborhood Partnership Program (NAP/NPP), which builds coalitions among local businesses and neighborhood organizations by providing corporate tax credits. The promotion of good growth practices is the essence behind these DCED programs, and cuts in funding will only exacerbate the problems within needy communities.
I encourage you to check out the entire line-up of DCED programs on their website to better understand what is at stake in these budget negotiations. Additionally, make sure to add Crossroads to your RSS reader to stay up to date on the Pennsylvania budget.