Corbett swings budget ax at schools, colleges

Proposes slashing $866 million from current spending

HARRISBURG -- Making good on his promise not to raise taxes, Gov. Tom Corbett this morning released a $27.3 billion budget, slashing $866 million out of current spending through cuts in virtually every spending area.

The cuts bring spending back to 2008-09 levels.

Public schools, 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.

DCED 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 been a pass-through for what has become known as "walking-around-money" -- grants for legislators' pet projects.

Support for the four state-related universities, which include the University of Pittsburgh, was halved in the budget proposal. It calls for Pitt to get $80.2 million. This year's budget provides Pitt with $160.5 million in state money plus $7.5 million in federal stimulus funds.

Penn State would see a similar cut, from the current year's $334 million down to $165 million.

Within minutes of Mr. Corbett's budget address to the Legislature, officials with Penn State characterized the governor's proposed cuts as "devastating" and warned they would "spell catastrophic change for students and (the) state."

Penn State President Graham Spanier scheduled a news conference tomorrow to discuss what the university described as "the Commonwealth's apparent push toward privatization of public higher education, which will force a significant tax on all tuition-paying families of in-state students" attending Pennsylvania's public universities.

"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," Mr. Spanier said.

At Pitt, Chancellor Mark Nordenberg called the proposed cuts "stunningly deep" and warned of a possible substantial increase in the in-state tuition paid by tens of thousands of students.

He said Pitt not only faces loss of 50 percent of its general fund appropriation, or $80 million, but also the elimination of $17 million in state aid to support programs in the health sciences, including the medical school, dental school, Western Psychiatric Institute and the Center for Public Health and Practice.

He said Pitt also stands to lose $9 million in biomedical research support from the tobacco settlement fund on top of more than $7.5 million in federal stimulus funding that expires this year.

Noting that Pitt attracts $800 million annually in research that supports 28,000 jobs directly or indirectly, he said the proposed budget was a "puzzling retreat" from the governor's own agenda of job creation.

Mr. Nordenberg said the governor's cuts target a sector "that helped shield this region from the starkest effects of the recession."

The Corbett budget also cuts funding in half for the State System of Higher Education, which includes California, Clarion, Edinboro, Indiana, Slippery Rock and nine other universities. Funding is budgeted at $233 million, down from $465 million.

While introducing his budget today, 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 roll backs and freezes for state employees, as well as increasing their contributions to healthcare benefits.

The budget calls for eliminating 1,500 state jobs. Acting Budget Secretary Charles Zogby said that 500 of the jobs would include positions at New Castle Youth Development Center as well as forensic psychiatry jobs at state hospitals in Torrance and Norristown. In New Castle, the plan is to consolidate two treatment units into one, which could result in roughly 100 job cuts.

The state hospitals, meanwhile, could lose about 400 forensic psychiatrists. Those jobs would be contracted out to private companies. Mr. Zogby said many of those 400 could likely find work with the private companies.

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Meanwhile, Mr. Corbett wants to hire 230 more state troopers, to boost ranks in advance of significant anticipated trooper retirements in coming years.

Environmental protection funding would decrease from $147 million to $140 million, even as more and more energy companies are introducing chemicals into the ground as they drill for natural gas.

His budget is counting on $65 million out of 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.

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

And 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 and the underlying Utica Shale.

Meanwhile, the budget proposes to increase 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 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.

The state's research and development tax credit for businesses would rise by $15 million, for a total of $55 million.

Most line items, though, were decreased in an effort to hold the line on taxes.

"Central to maintaining fiscal discipline is recognizing that our citizens know best how to spend their own money and refraining from imposing any additional tax burdens," according to a budget summary handed out to reporters this morning.

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."

Democrats have cautioned that a budget with so many cuts merely transfers the tax burden to the local level. School districts, they've said, will have to raise property taxes to compensate for state funding losses.

Mr. Corbett wants to mitigate those concerns by requiring local referenda whenever school budgets seek to raise property taxes above the rate of inflation. State law already requires that, but loopholes allow districts to skirt the requirement too often, according to budget documents.

Administration officials also cautioned that the state's economic recovery is still underway. 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.

Acting Budget Secretary Charles Zogby said the spending plan meets essential needs without overburdening taxpayers.

"A lot of people did not think it could be done without new taxes, without new fees," Mr. Zogby said. "The governor has put together a very reasoned manageable budget today."

Bill Schackner contributed. Harrisburg Bureau Chief Tracie Mauriello: 717-787-2141 or tmauriello@post-gazette.com . Laura Olson: 717-787-4254 or lolson@post-gazette.com

First published on March 8, 2011 at 11:31 am