Scott Kraus
Allentonw Morning Call
Standing beside a sleek German sports car Tuesday in Palmer Township, Gov. Tom Corbett warned state lawmakers not to hit the accelerator on state spending based on a couple of months of decent revenues.
As he gears up for a budget battle, Corbett made two stops in the Lehigh Valley, visiting a Porsche distribution and training center that opened in 2009 in a Palmer Township office park, and addressing a packed banquet room full of the region’s business and government leaders at the Hotel Bethlehem.
His message at both venues was the same: State revenues remain tight and he doesn’t see the economy recovering quickly enough to justify increased spending, especially with a state employee pension crisis looming that will suck up $4.3 billion in revenues by 2016 if not addressed.
“The Senate has a version [of the budget] that is a little higher than my version because they have seen February, March and April receipts a little better than predicted, but the same thing happened last year,” Corbett said. “I am very cautious about that. They want to add money back into education. Who are we now going to take it from?”
Corbett has proposed a $27.14 billion budget that would reduce some business taxes and cut social welfare and higher education spending. The state Senate passed a bipartisan plan adding $500 million that restores most of the $253 million Corbett’s budget cuts to higher education and adds back tens of millions in basic education and social services funding.
Fresh off a trade mission to Germany and France, Corbett said Pennsylvania is competing for business on a global stage, and raising taxes to boost revenue would hurt job growth and is simply off the table, he said.
“The more we tax businesses the more difficult it is for them to decide to come to Pennsylvania,” Corbett said, noting that Porsche’s decision to come to Pennsylvania was based partly on the state’s lower property and corporate taxes than New Jersey.
Using a “pizza pie” analogy, Corbett said the recession has reduced the size of the state’s economy from and 8-inch to a 6-inch pie, making less revenue available for the growing needs of its citizens, devoting larger and larger slices of the state budget to education and social welfare programs.
Democrats responded with a statement from party chairman James Burn, saying Corbett’s budget has the wrong priorities, and pointing out cutting education spending will result in increased property taxes.
“Homeowners will pay higher taxes because of Tom Corbett’s budget and families will pay more for college because of Tom Corbett’s budget,” Burn said. “Schools will be forced to lay off teachers and valuable programs that serve children and seniors will be drastically scaled back or ended.”
Corbett said he doesn’t enjoy reducing spending on social welfare programs, and defended his education budget, saying the state isn’t reducing its commitment to basic education, it just isn’t replacing millions of dollars in federal stimulus spending school districts knew was temporary.
He said the state has added 82,000 private sector jobs since February 2011, while shedding 19,000 public sector jobs.
With political uncertainty in Europe and the Middle East, Corbett said he’s loathe to depend on a strong and sustained economic recovery to cover new spending based on just a couple of months of improved revenue.
“How many of you think the economy is getting ready to really take off?” Corbett asked the crowd at the Bethlehem event sponsored by the Lehigh Valley Economic Development Corp.
He got few hands.
“And I agree. I look at the economy and I am very conservative…I’m cautiously optimistic, but I am not sure of the growth rate,” Corbett said. “I think we have to be very careful, particularly as we in Pennsylvania are getting ready to come up with a budget in the next four to six weeks.”