A Tale of Two Budgets
Harrisburg — Gov. Tom Corbett unveiled his proposed budget for the coming year today in Harrisburg. It’s filled with goodies for both parties, but most of them are contingent on difficult plans to reform state pensions and sell the state’s liquor stores.
“Now is not the time to be timid in our approach. Now is not the time to cling to old ideas and the status quo. Now is not the time to make small changes and expect big results,” Corbett said.
“Now is the time to be truly innovative. Now is the time to embrace new ideas. And now is the time to be bold. Pennsylvanians deserve this from us now.”
His budget proposal, including the spreadsheets of line items, are available online here.
The budget increases funding for a number of popular programs, from mental health and disabilities programs to transportation to services for sexual abuse victims. And if the liquor plan were enacted as proposed, it would add $1 billion to education.
For conservatives, the plan cuts a variety of taxes, including the elimination of the Capital Stock and Franchise Tax and a 30% percent reduction in the Corporate Net Income Tax (from 9.9% presently to 6.9% in 2025). Interestingly, the Governor mentioned neither of those moves during his speech.
But those benefits come with a big political risk. The proposal calls for an immediate reduction in pension benefits accrued from today forward, a net increase in the tax on gasoline (at the wholesaler level), privatizing the Pa. Lottery, and the sale of state liquor laws. The math for the budget as a whole relies on each of these elements and without one or all of them it could be back to the drawing board.
It’s his first budget proposal in an economy that’s slowly improving, and his first in the 2014 election cycle. He took a decidedly softer tone about spending than in previous years.
Reactions to the Governor’s speech were predictably partisan.
During the speech, the sharpest partisan split came during Corbett’s announcement that he would not pursue an expansion of the state’s Medicaid program under the Affordable Care Act.
“At this time, without serious reforms, it would be financially unsustainable for the taxpayers, and I cannot recommend a dramatic Medicaid expansion,” he said to Republican cheers and Democratic grumbles. He said the immediate benefits of funding would be outweighed by the long term costs of an expanded program.
“One half million working families need help here, and that’s what this program would do here,” declared Senate Democratic Minority Leader Jay Costa in a post-speech press conference.
“The conservative Republican Governor of Ohio is actively campaigning for the expansion in his state,” echoed Sen. Dan Frankel (D-Allegheny), referring to Gov. John Kasich who supports the expansion.