Governor Corbett unveiled the 2011-2012 state budget on Tuesday, the first of his new administration. Budget Secretary Charles Zogby outlined the Corbett Administration’s “Day of Reckoning” 2011-2012 budget proposal Tuesday morning, in a closed briefing before the press.
The PBPC says that Pennsylvania, like every other state, saw a steep decline in revenue collections in the wake of the recession. While the economy of 2011 is on the mend, with tax revenue running ahead of projections and unemployment continuing to drop each month, collections still have not returned to pre-recession levels.
According to Sec. Zogby, the proposal calls for a 3.1 percent reduction in spending, with 103 line items zeroed out. Notable adjustments include a return to 2008-09 spending levels for basic education funding, and roughly 50% cuts to the State System and State Related higher education lines. Correctional institutions are to receive an 11 percent increase, or $186 million.
Among the actions taken to balance the budget, Sec. Zogby said $154 million in Tobacco revenue and programs will be shifted to the General Fund, along with Moving Violation surcharges. According to the Budget Office, the state will wind up with a preliminary ending balance of $5 million at year-end, based on current revenue predictions. The proposal also reinstates the Capital Stock and Franchise Tax phase-out, maintains a variety of tax credit programs, including the Film Tax credits, and addresses tort reform. Various DCED business incentive programs are proposed to be consolidated into a single tool called the Liberty Loan Fund.
Initial reaction from the state legislature is mixed with some being surprised about the limited cuts in human services and others concerned with the significant cut to education and higher education. With that in mind, according to an article in the Pittsburgh Tribune Review, some GOP lawmakers are questioning Gov. Corbett’s decision to boost welfare spending and slash higher education aid. On the spending side, a proposed $607 million increase in welfare spending — about equal to the steep cuts in higher education spending — bothers some Republicans, said Rep. Curt Schroder, R-Chester County. “I definitely want us to take a hard look at cutting welfare,” said Rep. Mike Reese, R-Westmoreland. “Does that free up some money for higher ed? I would think so.” In addition, the 2011-12 budget proposal from Governor Corbett does not include a Marcellus Shale tax and some GOP lawmakers they at least want to discuss this option with many Democrats already advocating for a gas severance or extraction tax.