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UPDATE: Corbett Signs Budget, Vetoes $72M in…

$28.4 Billion State Budget Plan Unveiled

Pennsylvania Gov. Tom Corbett’s budget would increase taxes for gas, lower payments for pensions and cut business taxes.

By Eric Boehm | PA Independent

HARRISBURG – Gov. Tom Corbett on Tuesday began pitching his budget to the members of the General Assembly and the people of Pennsylvania.  He will call it a balanced budget that does not raise taxes, but neither of those statements is entirely accurate.

The budget proposes to spend $28.4 billion, a 2.4 percent increase from the current year.

According to Budget Secretary Charles Zogby, who briefed the media on the budget  basics  Tuesday morning, Corbett’s proposal will increase levies on gas stations and drivers in the state by beginning a five-year process of incrementally uncapping the Oil Franchise Tax as part of a plan to spend $5.4 billion over five years on highways, bridges and mass transit.

To partially offset that increase, the governor is proposing a reduction in the flat gasoline tax from 12 cents per gallon to 10 cents per gallon.

The budget also tackles a $500-million increase in pension contributions, but does so by reducing the amount the state will contribute to the pension costs and increasing the debt of the state’s two public pension funds.

Those funds already face more than $40 billion in debt.

By artificially cutting the state’s contribution to the pension systems, the budget proposal hopes to achieve $175 million in savings at the state level and $140 million in savings for school districts.

Those savings also are predicated on reforms to current and future employees’ pensions — all future employees will enter a new 401(k)-style retirement plan and current workers will have their future benefits reduced by about 20 percent.

Corbett is proposing adding $90 million to basic education, part of an overall $350 million increase on the education line item that includes some of the costs of the pension increase.

The budget will also propose an $11.4 million increase for early education.

A previously-announced plan to privatize the state liquor stores will fund a $1 billion block grant program during the next four years for school districts.

Corbett also will call for an incremental reduction in the state’s corporate net income tax, beginning in 2015 and continuing for 10 years.  By 2025, the proposal would lower Pennsylvania’s corporate income tax rate from 9.99 percent to 6.99 percent.

Zogby said that tax, applied in Pennsylvania at a higher rate than any other state in the nation, was a key barrier to economic growth.

Corbett also will ask managerial-level state employees to work 40 hour weeks instead of the current 37.5 hours.  They will be paid for the increase, Zogby said.

Lastly, the budget will not include a final decision from Corbett on whether to expand Medicaid eligibility in accordance with the federal health care reform law, though Zogby said the governor “is not intending to expand” eligibility.

Contact Boehm at Eric@PAIndependent.com and follow @PAIndependent on Twitter for more.

p bresn February 06, 2013 at 02:20 AM
corbett is a loser particularly in alloctring 400 million for the prison system he has been a loser from day one.........goodbye.,,,and good riddance i hope... pa has become a difficult state to live in and not desirable...thanks to the politicians who are in office to benefit themeselves.....disgusting...they are self serving.
concerned citizen February 06, 2013 at 12:18 PM
Make the parents of kids pay for education and schools! If you dont have kids why should you be for ed to pay for schools? Privatize them all and save money that way! Eliminate recreation funding too let that be privatized as well. Who wants to pay for something that is not used often? Privatizing liquor stores is ok cause the state will make more money by all the small businesses paying taxes and license fees. Thank you for lowering gas by 2 cents! Thats a joke because we got to pump our own gas and pay higher prices no matter what! And as for jobs if you would stop immigration and close borders to foreigners maybe americans can actually have a chance! All the foreigners are getting the small buisnesses and taking over everything and we get to work for them with minimum wage and no medical and no chance of promotion! This country needs an extreme makeover!
JA Logan February 06, 2013 at 12:49 PM
Yeah, and he turns down free fed money for the medicaid expansion. What an idiot, we have to get rid of him next election.

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