Breaking Down the Budget Proposal

With Gov. Tom Corbett’s first state budget address behind us, we can now begin to go through the 1,200 page monstrosity and get down to brass tacks. Oh wait, he eliminated funding for the brass tacks, so we’ll just have to get down to whatever kind of tacks we can afford.

Per our friend John Micek at the Allentown Morning Call, Gov. Tom Corbett presented a $27.3 billion budget proposal to lawmakers on Tuesday that trims state spending by $866 million, avoids any general tax increases and closes an estimated $4 billion deficit by slashing scores of programs and eliminating at least 1,500 statejobs.

The Republican governor’s first budget proposal to lawmakers resets the state’s fiscal clock to 2008-2009 levels, reducing state spending by 3.1 percent, to make up for a loss in $2billion in federal stimulus funding that has helped the state balance its books for the last two years.

Corbett’s proposal rolls back state spending on public schools and guts funding for higher education while calling for caps on school taxes, the elimination of some teacher salary perks and a statewide pay freeze for all public school employees from the superintendent to the janitor.

At the same time, the GOP administration gives an unequivocal thumbs-down to a severance tax on Marcellus shale natural gas drillers as it hands tax breaks to businesses that it says are critical to helping Pennsylvania compete for employers with its neighbors and worldwide.

The administration’s spending plan calls for the elimination of 1,500 state jobs — 500 directly through layoffs and 1,000 more that come through leaving vacant positions unfilled.

Corbett’s proposed 2011-12 $27.3 billion budget would set the basic education funding levels back to 2008-2009, which amounts to an 8.8 percent cut over this year’s federal stimulus-infused basic education allocation of $5.7 billion.

The budget also calls for eliminating teachers’ salary bumps when they earn master’s degrees, a move Corbett estimates will save taxpayers an additional $200 million. The combined $600 million in savings in those collective bargaining changes are not factored into the proposed budget, Budget Secretary Charles B. Zogby said.

Elsewhere in the spending plan, the administration hands generous tax breaks to the state’s business community.

Spending at the state’s other Big Two agencies: the departments of public welfare and corrections get a boost in Corbett’s budget plan. With more people enrolled in the joint state-federally run Medicaid program and with a larger number of people receiving direct-cash assistance from the commonwealth, direct state spending at the Department of Public Welfare is set to rise slightly from $10.6 billion this year to $11.2 billion next year.

Fueled by an increase in the state’s inmate population, corrections spending in Corbett’s plan is bumped from $1.87 billion in 2010-2011 to nearly $1.9 billion next year, budget documents indicate. There were 51,281 inmates in custody in June 2010 in a system designed to hold 46,637 prisoners.

The administration also boosts spending for the Pennsylvania State Police, with the department’s share of general fund money increasing from $175 million this year to $185 million next year to help fund two cadet classes at the State Police Academy.

Corbett’s budget proposal calls for the consolidation of programs at the state Department of Community and Economic Development. But it maintains funding for some tax credit programs, including the “Job Creation” credit and the controversial film tax credit at 2010-11 levels. The state’s research-and-development tax credit is set to increase from $40 million this year to $55 million this year.

The administration’s proposal also restarts the phase-out of the Capital Stock and Franchise tax levied against a business’ physical assets. After years of delays, the levy is set to be fully eliminated by 2014, the administration said.

So what does any of this mean to you and your family? Probably more than you think, but we are still sifting through the details and trying to make sense out of everything.

Remember this is nothing more than a proposal, which will later have to be voted on a majority in the House and Senate before the Governor can sign the budget into law. Between now and then, there will be plenty of lobbying and horse trading, so anything is possible.

In the coming weeks and months I will be breaking down specific areas of the budget proposal to see how Corbett’s plan will have a real impact on our lives, and I’m going to warn you- it is not going to be pretty.