Puts hold on $387 million

In his first major step to address the state’s anticipated multibillion dollar budget shortfall, Republican Gov. Tom Corbett has “frozen” $387 million in state spending slated for this fiscal year, which ends June 30.

The bulk of the money was slated for education, with slightly more than $25 million targeted for unspecified economic development programs. State officials say the education dollars will be made up with federal education jobs dollars that have not yet been spent. Those federal tax dollars will not be renewed in the future.

The announcement sent a shock wave through the government education community which sees the action as a sign of things to come in education funding, the largest single slice of the state’s $28 billion General Fund budget.

Mr. Corbett and the General Assembly face an anticipated revenue shortfall of between $4 and $5 billion going into the next fiscal year and the governor has pledged not to increase existing taxes and fees to make up the shortfall. That leaves budget cutting as the primary option at the state level.

Education spending advocates claim the hit really amounts to $1 billion since about $650 million in one-time federal stimulus funding has already been used this year to prop up schools.

If the spending freeze is a harbinger of things to come and state education funding is steeply cut, the next decisions fall to the state’s 501 government school districts. The local districts would be forced to cut their own spending or increase local property taxes to make up the potential shortfalls.

Property taxes are an ongoing point of contention throughout the commonwealth. In most counties, 75 to 80 percent of property tax revenues go to local school districts for their operations. The state, through a complex formula, also funds the local school districts also and makes up about 42 percent of K-12 spending statewide.