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February 7, 2012

Governor unveils $27.1 billion hold-the-line budget

HARRISBURG — Gov. Tom Corbett today 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 prepared remarks, 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,” Corbett added in the remarks he planned to deliver to a joint session of the Legislature. “These tough decisions will lay the groundwork for the prosperity of tomorrow.”

Perhaps the most glaring cuts are a proposed reduction of more than $250 million, or about 20 percent, for the State System of Higher Education, Penn State, Pitt and Temple, a year after cutting the schools by almost 20 percent.

Public schools would see a small reduction, a year after absorbing cuts of about $860 million, or more than 10 percent to help balance a multibillion-dollar deficit.

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 in the Department of Public Welfare’s $10.5 billion budget.

Among them is a plan to save $319 million by eliminating cash payments for about 60,000 participants in the General Assistance program and imposing new eligibility rules, including minimum work requirements, for about 30,000 General Assistance recipients who receive Medicaid benefits.

For businesses, Corbett would cut an asset tax that businesses pay, reducing expected collections by about $250 million.

Corbett, a Republican, and the Republican-controlled Legislature this year enacted a $27.1 billion budget, a spending reduction of about 3 percent. However, mid-year tax collections were running behind, prompting the governor to request a freeze of more than $200 million.

Corbett’s budget chief, Charles Zogby, said the current budget is expected to end in June with a $719 million shortfall. While revenues is expected to increase in 2012-13 by 3.8 percent, or slightly more than $1 billion, much of it will be consumed by fixed increases in pension and debt costs. “It’s a very difficult budget year. It’s really a math exercise.”

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