The Tribune Democrat, Johnstown, PA

February 5, 2013

Corbett makes his spending pitch

Budget faces ‘challenging few months’

John Finnerty
CNHI Harrisburg Bureau

HARRISBURG — Gov. Tom Corbett’s budget address included a bold array of strategies intended to confront a transportation funding crisis, provide additional money for education and get the state out of the liquor business.

All three of those moves have aspects that may give some lawmakers pause though.

The transportation funding is tied to a move to lift the cap on a tax on the oil company franchises. Corbett took care in his address to argue that he is suggesting that the state change the tax rate, he is just lifting the cap.

That distinction may be too fine for many.

The move to connect educational funding to liquor privatization is objectionable to some lawmakers.

“It’s going to be a challenging few months,” said Sen. Gene Yaw, R-Lycoming.

Beyond those hot-button issues there is reason for optimism, as lawmakers said the state government’s budget is in a much more healthy position now than it had been at similar points in Corbett’s first two years in office.

The governor’s strategy of connecting education funding to liquor privatization is “disingenuous,” said state Sen. John Wozniak, D-Westmont.

“On the good side, we aren’t in a deficit situation,” Wozniak said.

Under the governor’s liquor privatization plan, $200 million a year gleaned from the sale of licenses to operate retail stores selling wine, liquor and beer would be made available to schools for use on school safety, boosting elementary education funding, developing individualized learning plans, and bolstering science, technology, engineering and math programs.

State Sen. John Gordner, R-Columbia, said the education funding – beyond the amount tied to liquor privatization – demonstrates how the strain of austerity is less intense. Corbett has proposed a $90 million boost in basic education funding and $100 million in accountability block grants that many school districts use to fund full-day kindergarten. The state has announced that it will not reduce the amount of funding for higher education.

“Last year, we started with a $400 million deficit,” Gordner said. “This year, we are starting $160 million to $170 million to the good.”

Most lawmakers suggested that transportation funding may be the most likely to be addressed, simply because the need to act is so great.

Transportation funding affects everyone, “whether you’re on a school bus, driving a feed truck or going to work,” said state Sen. Elder Vogel, R- Lawrence.

Corbett said the average age of a bridge in Pennsylvania is 51 years, while the expected life of a bridge is more like 30 to 40 years.

If steps are not taken to repair some of the 4,774 structurally deficient bridges in the commonwealth, “We’re going to have a bridge collapse and then they’ll hang us all,” Vogel said.

Yaw said that when there are bridge problems or issues with road conditions, constituents might point to the $250 million that is going toward mass transit.

“I can’t say they are wrong,” Yaw said.

Vogel said he does not object to increased funding for mass transit, as long as that funding is equitably divided among the public transit agencies around the state.

Vogel said he would like to see the state use some of the additional $250 million for mass transit to help bus fleets convert to natural gas as a fuel.

Wozniak said the transportation funding plan will be significant because many lawmakers have only been in office a short time and have not had to make votes that might be unpopular with their constituents.  Approving a transportation funding plan that depends on lifting the cap on the oil company franchise tax will almost certainly result in an increase in prices at the pump.

Administration officials told lawmakers that gas companies may be limited by federal regulations from passing all of that increased cost directly on to Pennsylvania motorists, Gordner said.

The Senate transportation committee has scheduled a hearing on Tuesday to begin examining the governor’s transportation plan in detail, Gordner said.

Wozniak, the Democratic chairman of the House transportation committee, said the state needs to take action to invest in it highways, bridges, railroads, ports and mass transit.

That spending would result in “thousands upon thousands of jobs,” Wozniak said.

In the House, Cambria County Democrats expressed doubts about the plan.

Rep. Gary Haluska, D-Patton, said he is angered by Corbett’s privatization initiatives – first targeting the lottery, then the liquor system.

“This guy is unbelievable,” Haluska said. “He is dismantling Pennsylvania piece by piece.”

Haluska said that the transportation plan only generates half of what Corbett’s own transportation funding commission suggested was needed.

Rep. Frank Burns, D-East Taylor Township, said Corbett’s plan to offset the potential increase in prices at the gas pump by decreasing the liquid fuels tax by 2 cents is questionable.

“There is no doubt that something needs to be done to fix our roads and bridges, but removing the cap on one tax while lowering another is not the answer,” Burns said.

“I don’t care what the governor says, removing the tax limit that can be levied on oil and gas companies for the wholesale price of gasoline is a tax increase and will be passed on to consumers at the gas pump.”

Budget highlights

Key points of Gov. Tom Corbett’s budget proposal:

• Corbett’s $28.4 billion general fund budget would increase spending by 2.4 percent over last year.

• The governor’s budget would reduce the size of the state work force by 900, including 400 layoffs. Half of the layoffs would come from closing the New Castle Youth Development center, which is scheduled to close Feb. 15. Since Corbett took office, the number of state employees has decreased by more than 2,000. In January, there were just more than 74,600 state employees.

• The cap on the oil company franchise tax would lifted in three phases over five years. Analysts have estimated that lifting this cap could result in a 20 cents a gallon increase in the cost of gas at the pump.

• To mitigate the price increase at the pump, the governor proposes to decrease the liquid fuels tax by 17 percent, or 2 cents.

• Vehicle registrations would be renewed every two years. Driver’s licenses would be renewed every six years.

• Corbett proposes to spend $1.8 billion over five years on additional transportation spending: $1.2 billion on state roads and bridges, $250 million on public transportation, $200 million on local roads and bridges, $85 million on turnpike expansion, and $80 million on “multi-modal” funding.

• The governor proposes eliminating the capital stock and franchise tax.

• Corbett would like to begin phasing down the corporate net income tax, now at 9.9 percent. The phase down would begin in 2015 and continue through 2025.

• The pension system would be reformed  so that all new hires are enrolled in a 401(k)-style defined contribution plan. Existing employees would have their already earned benefits frozen at the existing levels and their future benefits would be modified so that multipliers are reduced or the employee must contribute more.

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