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Corbett proposes flat-funded budget with no new taxes

By   /   February 8, 2012  /   10 Comments

$1.4 billion in new mandated spending, no new taxes

By Stacy Brown | PA Independent
HARRISBURG — Gov. Tom Corbett said the magic words.

“We will not raise taxes,” he announced during his annual budget address before the state House and Senate on Tuesday.

But nothing comes for free.
Corbett proposed a $27-billion budget plan — about $20 million less than last year’s budget.
His reduced proposal manages to increase money for public safety and businesses and pay for
more than $1.4 billion in mandated spending, which includes pensions and debt service.
But this spending forced cuts in welfare funding and other programs.
For more on Corbett's Budget Address:

Corbett calls for new school block grant program

No guidance from governor on transportation infrastructure issues

Occupy protesters from across PA boo Corbett's address

"We will not spend more than we have," Corbett said Tuesday, addressing legislators from the state House and Senate in his annual budget address. "We reduced spending to fit the realities of our time. … Every dollar taken in tax is one less dollar in the hands of a job holder or a job creator."

The spending cuts were attributed to actual tax revenue coming in lower than projected, said Budget Secretary Charles Zogby in a pre-address briefing. This year, $420 million was expected but less than $100 million was collected. The revenue for the current fiscal year ending June 30 will be $719 million less than last year.

The administration blames the revenue declines on lower than forecast growth in gross domestic product, wages and consumer spending.

However, Corbett's plan continues the phase out of the capital stock and franchise tax on businesses, set to expire in 2014. This year, revenue from the tax would drop from $727 million to $479 million.

The state income tax would remain at 3.07 percent.

As tax revenue overall is expected to decline, cuts in welfare spending are expected to yield more than $475 million in savings in Corbett's proposal. The cuts include:

  • Ending the state-cash assistance grants averaging $185 a month to an estimated 60,000 individuals for a savings of about $320 million.
  • Combining seven programs — the human services development fund, homeless assistance, county child welfare special grants, mental health services in communities, individuals with intellectual disabilities in communities, behavioral health services and outpatient drug and alcohol treatment — into a human services development block grant for a savings of $168 million.

The proposed block grant program would afford counties the flexibility to use money to meet their needs, Zogby said.

Payments for pension and debt service obligations also weigh heavily in his plan:

  • Debt service is expected to rise to $1.1 billion, or 7.5 percent over last year;
  • Pension costs are expected to increase by more than 50 percent to $916 million.

Corbett proposed an additional $7.9 million for a new class of 112 cadets at the Pennsylvania State Police Academy to begin in June.

The state police projects to have about 500 vacancies by June 2013, said State Police Commissioner Frank Noonan.