Corbett's state budget plan cuts $866 million

Governor holds line on taxes; proposes huge decreases for education

HARRISBURG -- Gov. Tom Corbett's announcement of his $27.3 billion spending plan sparked heated reactions from Democratic lawmakers, who vowed to fight to restore millions in state education funding, while Republicans said it was a "blueprint" for the direction they'd like to go.

"Obviously there is no appetite or support for tax increases, so we have to take this finite amount of money now and we have to prioritize it," said Senate President Pro Tempore Joe Scarnati, R-Jefferson. "I think the governor has done an excellent job of reflecting what are the priorities of the people of Pennsylvania."

In his budget address, Mr. Corbett called his spending plan for the upcoming fiscal year "a reality-based budget."

"The electorate, its trust scraped to the bone by lies and half-truths, isn't going to stand for another broken promise," he said. "I said we'd cut. I'm not asking you to read my lips. I'm asking you to read my budget."

That proposal, which does not raise taxes, instead would slash $866 million in current spending.

The governor's proposed cuts would bring spending back to 2008-09 levels, prior to the recent budget plans that included several billion in federal stimulus funding.

Public schools, state-owned universities, state-related universities and the Department of Community and Economic Development took the biggest hits.

The budget reduces basic education funding from $5.8 billion to $5.3 billion. It provides for school choice vouchers, while asking districts to negotiate with unions to freeze teachers' salaries and to eliminate salary bumps for those who earn master's degrees.

Those education changes drew the harshest criticism from Democratic lawmakers.

Sen. Jay Costa, D-Forest Hills, described the basic education cut as being larger than the apparent $500 million reduction, due to the loss of, among other programs, $259 million in block grants for early education and full-day kindergarten.

"The governor talked about jobs. At the end of the day, those jobs need people who are able to perform and are skilled," said Mr. Costa, who said the cuts represented "misplaced priorities."

Others said fiscal constraint at the state level will simply push the tax burden to local officials.

"This is not a no-tax budget," said Rep. Joe Markosek, D-Monroeville. "It's a no-state-tax budget, but it will not be a no tax budget at the end of the day for most Pennsylvanians. School taxes will have to go up."

To mitigate that concern, Corbett administration officials said they will push to require public approval by referenda before school districts can hike property taxes above the rate of inflation. Pennsylvania's Act 1 of 2006 already requires that, but the law contains 10 exceptions that allow districts to skirt the requirement too often, according to budget documents.

But House Minority Leader Frank Dermody, D-Oakmont, said that will lead to failed referenda and underfunded schools.

"We have to make sure our school districts run as efficiently as possible, but I've got great concerns about placing those types of issues on the ballot," Mr. Dermody said.

State Department of Community and Economic Development funding, meanwhile, would be slashed from $337.9 million to $223.6 million under the Corbett plan. Lawmakers are expected to put up a fight to have funding restored to that department, which has in part been a pass-through for what has become known as "walking-around-money" -- grants for legislators' pet projects.

Mr. Dermody defended some of those programs, arguing that "without some of those economic-development programs, Westinghouse is in North Carolina."

Gene Barr, vice president of government affairs for the Pennsylvania Chamber of Business and Industry, said many of the DCED programs had become duplicative over the years, and could be streamlined.

Mr. Barr said the governor's decision to reinstate the phase-out of the Capital Stock and Franchise Tax and other structural changes can be more beneficial to businesses than DCED grant programs.

The levy, charged on a business's assets, had its elimination delayed in recent budgets, and now would be set to end in 2014.

Meanwhile, support for the four state-related universities and 14 schools in the State System of Higher Education was halved in the budget proposal.

Within minutes of the speech, Penn State officials characterized the governor's proposed cuts as devastating.

"A funding gap this large is going to fundamentally change the way we operate, from the number of students we can educate, to the tuition we must charge, to the programs we offer and the services we can provide, to the number of employees and the research we undertake," said university president Graham Spanier.

House Majority Leader Mike Turzai, R-Bradford Woods, commended the governor's cuts overall, but said funding for state-related institutions is one place where lawmakers will be taking a closer look.

While introducing his budget to the Legislature Tuesday, Mr. Corbett said: "To the people of Pennsylvania, the taxpayers who sent us here, I want to say something you haven't heard often enough from this building: We get the picture. It's your money."

He asked public school employees to accept wage freezes and said he would be looking for salary rollbacks and freezes for state employees, as well as increasing their contributions to healthcare benefits.

The budget calls for eliminating 1,550 state jobs -- including 400 positions to be cut by privatizing forensic psychiatry jobs at state hospitals and another 100 through consolidating two treatment units at the New Castle Youth Development Center.

Some new positions will be added. Mr. Corbett wants to hire 230 more state troopers, anticipating significant retirements in coming years.

And another 55 workers will be needed for probation and parole programs, as case agents and investigators.

But the Department of Environmental Protection, one of the most closely watched agencies due to its natural gas drilling oversight, will lose 69 employees. DEP currently has 2,839 employees, so the reduction would amount to 2.4 percent of the department's workforce. Administration officials said those in drilling oversight roles will not be affected.

DEP's funding would decrease from $147 million to $140 million, even as energy companies ramp up drilling efforts that use harsh chemicals to release natural gas.

The Corbett budget counts on $65 million from the oil and gas lease fund. It is unclear how much of that would come from royalties -- fees for gas produced from wells already operating on state land -- as opposed to new leasing.

Current permit fees and fines on gas drillers will not rise. That permit process is being reviewed to see how to reduce the current application backlog.

In his speech, Mr. Corbett reiterated his opposition to taxing the gas that comes from the Marcellus Shale, saying the state should try to make itself the center of the drilling boom for Marcellus Shale.

"The Marcellus is a resource, a source of potential wealth, the foundation of a new economy," he said. "Not just something new to tax."

The budget does propose to increase several agency budgets, including boosting welfare funding by $607.7 million and health funding by $61.5 million. Military and Veterans Affairs, meanwhile, gets a $19.6 million boost, while state police get a $10 million increase and the Department of Revenue gets $8 million more.

The Corrections budget also would rise, by about $13 million. Sen. Tim Solobay, D-Canonsburg, said he was frustrated to see that the proposal "decreased education funding while increasing money for prisons."

Mr. Corbett did not mention transportation in his budget speech despite a consensus among professionals that a funding crisis is affecting the state's highways, bridges and transit systems.

His budget calls for $6.3 billion in transportation spending for 2011-12, a 3 percent decrease compared with the current year. The figure includes federal grant money.

The decrease is driven by the end of the federal stimulus program and reduced contributions from the Pennsylvania Turnpike because of the state's failure to win federal approval for tolls on Interstate 80.

Pennsylvania Department of Transportation spokesman Rich Kirkpatrick said the budget emphasizes "effective management of limited resources."

It provides for an 11 percent increase to PennDOT county offices for road maintenance, including such activities as paving, snow removal, guide rail repairs, pothole patching and litter removal and a 4 percent increase in liquid fuel fund reimbursements to municipalities for the same sorts of activities, Mr. Kirkpatrick said.

It continues the state's accelerated bridge repair program with $200 million. According to the Federal Highway Administration, Pennsylvania had 5,900 structurally deficient bridges as of December, most in the nation.

The budget does not call for major changes in funding for Port Authority, spokesman Jim Ritchie said.

"It doesn't appear to change anything for us. It doesn't resolve the funding shortfall from Act 44 (I-80 tolls) but it doesn't cut any deeper," he said.

That would appear to ensure that service cuts beyond the 15 percent reduction scheduled for March 27 will not be needed through at least June 2012, he said.

The Corbett budget maintains $60 million in film production tax credits, the same level as in the current budget. Film industry officials had said that as many as four productions would have considered leaving the state if the tax credit program had ended.

Some programs would get no funding at all, if Mr. Corbett has his way. Those include the Science is Elementary Program introduced by former Gov. Ed Rendell, teachers' professional development for the arts, flood control projects, regional cancer institutes, poison control centers and programs for people with diabetes, lupus and epilepsy.

In a letter accompanying the summary Mr. Corbett said he aimed to protect public safety, maintain human services and reduce the size of government.

The budget, he wrote, "was crafted with honesty and restraint. Many historic programs that were not critical, [not] essential or did not have a statewide impact have been proposed for elimination. What remains is a more limited but vigorous government."

In his speech, Mr. Corbett said that "the day of reckoning has come" for dealing with the state's debt and spending problems.

Administration officials cautioned that the state's economic recovery is still under way. While current revenue receipts have come in $243 million ahead of estimates, they expect that surplus to be only $78 million by the June 30 end of the fiscal year.

Staff writer Jon Schmitz contributed. Laura Olson: 717-787-4254 or lolson@post-gazette.com . Harrisburg Bureau Chief Tracie Mauriello: 717-787-2141 or tmauriello@post-gazette.com

First published on March 9, 2011 at 12:00 am

Correction/Clarification: (Published March 10, 2011) Community colleges would receive $212.2 million in the general fund budget Gov. Tom Corbett proposed Tuesday. That is about $2 million less than the state appropriation for the current fiscal year. In addition, the community colleges will not receive $21.5 million in federal economic stimulus money that was included in the 2010-11 state budget. A chart in Wednesday's editions included incorrect figures.