Analysis: Pennsylvania Budget Plan Is Lean And On Time

Charles Thompson
Harrisburg Patriot-News

Pennsylvania soon will have a state budget that cuts spending more deeply than most folks have seen in a generation.

Gov. Tom Corbett is expected to sign a $27.15 billion budget today that includes no tax increases or new taxes. The new fiscal year begins Friday.

The 2011-12 budget cuts spending by 4.1 percent. It dramatically reduces aid for schools, colleges, economic development and welfare programs. It contains about $300 million in tax cuts and credits for business interests.

It is the first budget to spend less than the prior year since 2002 and for only the third time in four decades, according to House Republicans.

Is the austere budget a one-year blip prompted by lagging tax revenue and looming deficits? Or is such lean spending a sign of the new normal with Republicans controlling the governor’s office and the Legislature?

State lawmakers offered perspectives on whether the plan reflects one year’s needs or is a sign of things to come.

“This is a small step in the right direction,” said Rep. Daryl Metcalfe, R-Butler, a leader of the fiscal conservatives. “But we have far more to do to actually protect taxpayers of this state from the excesses of the past.”

Other Republicans cited the hundreds of millions of dollars in obligations hanging over the state as a reason to go slowly with any spending growth. Those obligations include pension costs, money owed to the federal government for jobless benefits and a past transfer of $800 million from a medical malpractice fund that is subject to a court challenge.

“Until we get some of that at least reasonably under control, I think there’s going to have to be an air of caution and restraint,” said Rep. Scott Perry, R-Dillsburg. “We don’t want to end up like some of these other states that just have to completely eliminate everything to pay the bills. That’s not good for anybody, either.”

Others, however, expressed hope that spending in some areas could move back toward prior levels in the years to come.

“I assume if we get reasonable growth then some of these lines, particularly education, will grow again,” said Sen. Jake Corman, the Centre County Republican who is a leading advocate for funding for Penn State and other universities.

“I wouldn’t think restoration to what they were getting previously is automatic by any stretch,” said Corman, whose district includes Perry County. “It just all depends on what the revenues allow us to do.”

Still, Republicans were cognizant of the pain the budget cuts will bring.

“This isn’t a budget to be proud of, other than getting it done on time and no new taxes,” said Rep. Rick Geist, R-Altoona.

Budget Secretary Charles Zogby said Corbett isn’t driven by spending ideology as much as he wants to make sure spending matches revenues. State government got out of that habit during Gov. Ed Rendell’s administration, Zogby said.

“It’s about fiscal discipline. Gov. Corbett doesn’t take any pleasure out of the fact that he’s had to do all this cutting,” Zogby said. “But this is a problem that he was left with. … This is a legacy from the prior administration that he’s been handed.”

Critics of the budget had a different view.

They considered it unnecessarily harsh, given the availability of $700 million in unanticipated revenue and the prospect of more in 2011-12. The GOP budget used only $200 million of that to restore some of Corbett’s cuts.

State tax collections are bouncing back nationally toward pre-recession levels, said Lucy Dadayan, a senior policy analyst at the Nelson A. Rockefeller Institute of Government’s Fiscal Studies Program.

In the first quarter of 2011, state tax revenues nationwide grew for the fifth straight quarter, though they are slightly trailing the peak year of 2008, she said.

Sen. Vince Hughes, D-Philadelphia, said Democrats are concerned that the Republican governor and his legislative allies might be more focused on reducing spending than meeting basic needs.

“It’s not been proven to us that this is a direction that is focused on meeting the real needs of real Pennsylvania citizens. They had an opportunity to express that in this budget and they chose not to,” Hughes said.

Critics talked about the loss of adultBasic, a state-subsidized health insurance program for the working poor, and cutbacks in the Homeowner Emergency Mortgage Assistance program that helped families avoid foreclosure.

They also voiced concern about deep cuts in education that are causing schools to lay off thousands of teachers, eliminate programs and close schools. And they might result in fewer course offerings and larger class sizes at public universities.

“It certainly is going to leave a mark in that there are going to be people fall through the cracks,” said Tony Ross, president of the United Way of Pennsylvania. “The money may go away, but the people’s needs will not.”

Rep. Glen Grell, R-Hampden Twp., had a different way of looking at it, and he believes his view will be shared by the majority of Pennsylvanians.

“For a welcome change, the Pennsylvania taxpayer is a priority this year,” he said. “The years of overspending are being reversed in this budget.”

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