Pennsylvania's next budget year will be the fourth in a row saddled with a projected deficit, and lawmakers expect Gov. Tom Corbett to call for another round of spending cuts when he unveils his fiscal year plan on Tuesday.
His budget for the year beginning July 1 is expected to be around $27 billion, about the same as the current fiscal year, with no tax increases. Lawmakers anticipate Corbett will propose spending cuts for education and services for the poor, disabled and elderly to offset sluggish tax collections and the mounting costs of pensions and state borrowing.
The Republican governor ran for office two years ago on a promise not to raise state taxes and his opposition to taxing the natural gas industry that is furiously tapping into Pennsylvania's gas-rich Marcellus Shale. Also Tuesday, votes were possible in both the House and Senate on a Republican-penned bill that would impose a first-ever drilling fee on Pennsylvania's booming natural gas industry, spreading the money across drilling communities and state infrastructure and environmental programs, and force it to obey tougher safety standards.
To address a multi-billion dollar, recession-driven deficit this year, Corbett pushed through a 3 percent spending reduction primarily by slashing aid for public schools and universities by more than $1 billion and keeping a lid on the rising cost of social and human services. At the same time, he reduced taxes on businesses.
But this year's tax collections have fallen behind expectations. At the end of December -- the midpoint of the current fiscal year -- state tax collections were already trailing projections by nearly $500 million, or 4 percent. That prompted Corbett to order a mid-year spending freeze of less than 1 percent that left the budget at $26.9 billion this year, about the same amount spent in the 2007-08 fiscal year.
Advocates for the poor are warning that the state's safety net is fraying, with people receiving less at food banks and being turned away from shelters. School boards confronting rising costs and cuts in state aid this year are cutting programs, considering property-tax increases and putting off maintenance projects and purchases of classroom materials.
Advocates for business, a key Corbett constituency, are pressing him to continue the phasing out of a tax on assets that is scheduled to amount to a $278 million tax cut. They say it would boost the economy by improving the state's attractiveness to companies looking to expand, relocate or hire.
