Gov. Tom Corbett delivered his fourth budget address midday Tuesday, calling for more than $900 million in additional state spending over the current fiscal year.
A good chunk of Corbett’s proposed roughly 3 percent increase in state spending would go to education. About $300 million more would go toward a new block grant for schools, special education and early learning programs, and higher education scholarships.
The proposal also calls for continuing the phase out of the Capital Stock and Franchise Tax on business holdings, erasing the levy by 2016.
Two months ago, the governor’s budget secretary, Charles Zogby, estimated a budget deficit for the next fiscal year that would be as high as $1.4 billion. On Tuesday, he said the funding gap would go away under the proposed spending plan.
“That was a planning deficit,” Zogby said. “We’re able to close that gap through various strategies.”
He pointed to economic estimates that economic growth picks up this year.
“That’s certainly going to be a piece that helps us bring the budget into balance in the new year,” Zogby said.
To find revenue, Corbett is turning to a number of unresolved issues – like changing pension benefits for future state and school employees. His budget would reduce scheduled payments to the public pension funds.
Zogby said to ensure the move wouldn’t be “kicking the can down the road” (the can = payments toward the commonwealth’s pension obligation), state lawmakers are being charged with enacting changes to public pension systems.
“Help your state. Help your school district. Help your taxpayers,” Corbett said in his address to the Legislature. “Enact public pension reform before the end of this session.”
Rep. Mark Mustio (R-Allegheny), who described the governor’s proposal as strong on education, said the majority of problems with education funding can be directly tied to the state’s pension debt.
“We’re seeing significant increases ever year, and three or four years from now it’s going to be a four-or-five billion dollar bill, whereas right now it’s a billion and a half,” Mustio said. “So where is that money going to come from without some sort of serious reform or else we’re going to be seeing cuts or significant tax increases on our citizens, and I doubt if we want to see either of those.”
Rep. Dan Frankel (D-Allegheny) said while he is pleased with the increase in education funding, he is not pleased with how it’s being funded.
“The way he does it is by doing a one-time revenue savings from different sources of funds that are not sustainable,” Frankel said. “For instance, he’s taking on $13 billion of additional pension debt for us, and we’re already struggling, in order to save $400 million in the short term.”
Corbett’s budget also relies on savings from his administration’s alternative to Medicaid expansion – a plan not yet federally approved.
Other moves to find revenue under his proposal include shifting investments from the state’s Tobacco Settlement Fund, expanding “non-impact” natural gas drilling on state parks and forest lands, and including keno among the games offered in the Pennsylvania Lottery.
Corbett made a brief entreaty to lawmakers to change the state’s system for selling wine and liquor – an item central to last year’s budget address that failed to get through the state Senate.
“We have unfinished business to address,” Corbett said. “We have to reform our system of antiquated liquor stores.”
Zogby called the governor’s fourth budget proposal a “pivot point,” representing a change in economic fortune and available funds. The governor also framed his fourth budget proposal as a turnaround after years of spending cuts he said were necessitated an economic downturn and unsound budgeting in the years that preceded his term.
“All of this was our starting point,” Corbett said. “We have a lot to show for three years of hard choices and honest effort.”