Corbett Unveils $27.1 Billion Hold-the-Line Budget

Gov. Tom Corbett on Tuesday proposed a hold-the-line budget of $27.1 billion, with no tax increases, deep cuts to higher education assistance and a range of cost-saving measures in services for the poor, elderly and disabled.

Corbett's proposal for the 2012-13 fiscal year that begins July 1 comes as his administration grapples with lackluster tax collections and higher costs for debt, health care and pensions. Cuts would be widespread across state agencies.

In his address to lawmakers, Corbett called his budget “lean and demanding.”

“It is a budget that proposes more in the way of reforms by continuing to change the culture of government from one of entitlement to one of enterprise,” he added. “These tough decisions will lay the groundwork for the prosperity of tomorrow.”

Dozens of demonstrators wearing black shirts that read “Gov. Corbett, Whose side are you on? Stand with the 99 percent” roamed through the Capitol during Corbett's speech.

Perhaps the most glaring cuts are a proposed reduction of about $230 million, or 25 percent, for the State System of Higher Education, Penn State University, University of Pittsburgh and Temple University, a year after cutting the schools by almost 20 percent. Community colleges would see a 4 percent cut and grants through the Pennsylvania Higher Education Assistance Agency would see a 6 percent cut.

Public schools, which had to absorb about $860 million in spending cuts this year, would see their basic subsidies rise about $45 million to $5.4 billion, but would lose $100 million in grants that helped fund full-day kindergarten and other programs. In his proposal, Corbett would fold the public school aid with subsidies for transportation and other costs into a proposed new block grant that would give school boards more control over how the money is spent.

He also would institute hundreds of millions of dollars in cost-saving measures to offset a rising tab for services for the poor, elderly and disabled and keep the Department of Public Welfare budget roughly level at $10.5 billion.

Among them is a plan to save $319 million by eliminating cash payments for about 60,000 participants in the General Assistance program for people who do not qualify for federally funded welfare. It also would impose new eligibility rules, including minimum work requirements, for about 30,000 recipients who receive Medicaid benefits, administration officials said.

Corbett said his aim was to “right-size” the state welfare system. He said his proposal would “give incentives to those who are able to transition from the welfare line to the employment line while it gives real relief to our poor.”

For businesses, Corbett would continue the phase-out of an asset tax that businesses pay, reducing expected collections by about $250 million next year.

The Republican governor and GOP-controlled Legislature this year enacted a $27.1 billion budget that reduced spending by about 3 percent. However, tax collections are lagging and Corbett's budget chief, Charles Zogby, said the current budget is expected to end in June with a $719 million shortfall.

While revenue is expected to increase in 2012-13 by more than $1 billion, much of it will be consumed by fixed increases in pension and debt costs.

Corbett's budget did not address the growing problem of the state's deteriorating highways and bridges, but he promised to work on a solution in the months ahead.