Pennsylvania’s New Budget: Living within Our Means

The Pennsylvania General Assembly and Gov. Tom Corbett were able for the second year in a row to pass an on-time and balanced budget for the Commonwealth.  You can learn more about the main points of the $27.656 billion budget below. 

Spending:  The 2012-13 fiscal year budget includes a modest spending increase of $395 million above last year’s budget.  This represents a 1.4 percent increase, which is well below the rate of inflation.  It should be noted that spending in the 2012-13 budget is actually less than the 2008-09 spending plan, which was the year before federal stimulus funds began flowing to the state.  Most importantly, this budget matches spending with available revenue to provide our state with a truly balanced budget.

Taxes:  Our new budget does not contain any new or increased taxes; however, it does contain several important tax reforms to help employers, nonprofit organizations and family farmers.  The legislation will increase incentives for employers to hire unemployed workers.  My proposal to exempt family farms reorganizing for corporate liability reasons from the realty transfer tax was included in the final budget package.  Volunteer Firefighters’ Relief Associations will benefit because they are now permanently exempt from the state’s sales and use tax. 

Jobs:  Reducing unemployment and helping Pennsylvanians get back to work remains a focus of the Pennsylvania House of Representatives.  The final budget package included many initiatives to help the private sector create and retain jobs, including the new Keystone Works law, which allows employers to provide an unemployed individual with up to 24 hours of unpaid training per week for up to eight weeks.  Businesses would be permitted to offer a permanent paid position to participants and would receive incentives for hiring a worker involved in the program. 

Education:  Adequate funding for and reform of education at all levels was a priority in this budget.  The Legislature won the fight to level fund Pennsylvania’s state-owned and state-related colleges and universities, which would have seen a 20 percent to 30 percent cut in Corbett’s original proposal.  We are continuing to work with these institutions to hold down tuition increases. The affordability of higher education is an important issue for us all.

Every public school district in Pennsylvania will receive at least as much funding as last year in this budget, and many will see an increase in funding.

Because education is about more than the dollars and cents the state sends to public schools, we were able to include important education reforms in the final budget package.  This includes a plan to establish a comprehensive rating system for teachers and other school employees, based on student achievement and other factors.  

Finally, we were able to secure an increase in funding for and expansion of the Educational Improvement Tax Credit (EITC).  This is a proven program that provides choices to Pennsylvania students to help them achieve academic success by partnering scholarship organizations with businesses that receive a tax deduction for donations.

The final budget package increases available tax credits for these donating businesses from $75 million to $100 million, increases the maximum household income limit for students and provides additional money for opportunity scholarships for children residing in the lowest-achieving 15 percent of school districts.

Human Services:  Protecting Pennsylvania’s vulnerable citizens was an important aspect of budget negotiations this year.  Corbett’s initial budget request would have cut human services funding by 20 percent; however, we were able to provide an additional $84 million to restore half of the planned cuts. In addition, this budget provides an extra $17.8 million to reduce the waiting list for services for individuals with intellectual disabilities.  Finally, this budget includes a tax credit program proposed by Rep. Scott Boyd for businesses making contributions to nonprofit organizations that provide community-based Mental Health/Intellectual Disability services.

If you have any questions about the budget or any state-related matter, please contact me.