Gov. Tom Corbett’s proposed 2013-14 budget and legislative agenda are bold departures from the messages he delivered in the last two years.
The goals he set out Tuesday include taking a giant step to raise significantly more money for road and bridge maintenance, bringing the pension system for state and school district employees in line with what the private sector offers, and breaking Pennsylvania’s monopoly on liquor sales.
The governor’s annual budget address traditionally has gone far beyond a mere spending plan, and many of Mr. Corbett’s initiatives will require legislation separate from the proposed $28.4 billion budget. Naturally, they all have fiscal ramifications.
Mr. Corbett waited a long time to put forward his transportation funding plan, and it endorses one of the most lucrative recommendations of a task force he appointed shortly after taking office in 2011. Removing a cap on the wholesale gasoline tax, under a five-year phaseout, would bring in an estimated $510 million the first year and $5.3 billion over the five-year period. That would provide $300 million to repair deteriorating state-owned highways and bridges, $80 million for local spans and roads and $40 million for public transit. The transit figure would rise to $250 million annually by the fifth year, provided local governments pick up a larger proportion of the costs.
Based on the average wholesale gasoline price, removing the cap on the oil franchise tax could push it from the current 19.2 cents per gallon to 47.7 cents. Although that tax is paid by wholesalers, most if not all of it winds up being passed along to drivers.
The governor would ease the burden somewhat by cutting the rate on the liquid fuels tax, from 12 cents per gallon to 10 cents, over two years. Consumers also would pay the same fees for driver’s licenses and vehicle registration, but the renewals will be less frequent — every six years for licenses and every two years for registrations — so the bills, when they come, will be higher but save the state money on processing.
The transportation plan is not as generous as necessary to cover all of Pennsylvania’s needs, but it also is not free. It fairly places the surcharge on those consumers who use the roads and bridges.
Another huge ticket item in the budget is state pension costs, and the governor has proposed a long-term solution that has proven elusive for years. Current retirees would be unaffected, and employees covered by the state’s pension plans — one for state workers and one for educators — would not lose benefits they’ve already accrued.
Big changes are proposed for the future, however. Starting in 2015, all new hires would be required to participate in a 401(k)-style plan. That same year, the multiplier used to calculate the value of pensions for existing employees would be reduced for contributions made after that date. In addition, changes would be made to prevent high overtime payments earned in an employee’s final working years from significantly increasing benefits.
Mr. Corbett also has promised to put his political muscle behind efforts to sell off the state liquor system’s wholesale and retail operations, which would move Pennsylvania into the modern era and into alignment with all other states but Utah. It’s too soon to count on additional dollars from that transition in next year’s budget, though.
Although the governor’s past budgets contained significant cuts to education, the latest proposal keeps funding for colleges and universities level and adds $90 million to the basic subsidy for public schools. Given the cuts already absorbed by local districts, which resulted in higher property taxes in many communities, Mr. Corbett could have funneled more of the state’s projected carryover of more than half a billion dollars into education.
Another misstep is the governor’s decision to pass on the expansion of Medicaid that is possible under the federal Affordable Care Act, something that has been embraced by other governors who opposed Obamacare, as Mr. Corbett did.
Overall, though, there is much to like in this budget, a huge difference from his two earlier spending plans.
Achieving his goals will not be easy, but it’s encouraging to see him stepping out of the shadows and advancing an ambitious agenda. His budget address answered the question of what Gov. Corbett hopes to accomplish in the second half of his four-year term.