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March 8, 2011 | By | Posted in General News

Corbett’s ‘no-tax’ budget draws scorn, applause

VIDEO INSIDE: Democrats say state cuts will cost taxpayers at local levels

By Eric Boehm  PA Independent

The deep budget cuts and fiscal realignment proposed in Gov. Tom Corbett’s first budget address Tuesday generated a wide range of reactions as Democrats decried reductions in education and economic development spending and conservatives praised Corbett’s focus on the core functions of state government.

The general fund budget proposed by Corbett on Monday is $27.3 billion, while the total spending figure for the state — including federal funds and non-general fund accounts — is set at $63.6 billion. Both figures represent more than 3 percent reductions from the current fiscal year, in which the general fund budget is $28 billion and the total spending figure is more than $67 billion.

During his gubernatorial campaign, Corbett promised to balance the state’s projected $5 billion deficit without new taxes. Corbett reiterated that promise during a budget address, which includes no new state-level taxes. Some House Democrats said the budget will force taxpayers to pay more taxes at the local level.

State Rep. Joseph Markosek, D-Allegheny, minority chair of the House Appropriations Committee, said Corbett’s budget will require school districts and local governments to raise taxes to replace lost state funds.

“It might be a no state-tax budget, but this will not be a no-tax budget,” said Markosek. He predicted school districts will have to drain reserve accounts or raise taxes.

State Sen. Vincent Hughes, D-Philadelphia, said the budget would be “balanced on the backs of working families and children” after Corbett proposed more than $1 billion in cuts to higher education funding.

Among the cries of protest to the budget, the Pennsylvania branch of Americans for Prosperity (PA-AFP), a fiscally conservative organization working with grassroots groups to promote smaller government, applauded Corbett for making necessary cuts and urged him to go further.

Sam Rohrer, a former state representative and executive director of PA-AFP, said the budget’s proposed spending figure should be even lower. He pointed to the budget’s 4.5 percent assumed rate of growth for the year beginning in June as possibly too optimistic.

“In budgeting, you cannot overestimate your revenues, you should be conservative on the estimate of revenue,” said Rohrer.

State Sen. John Eichelberger, R-Blair, chair of the Senate Local Government Committee, commended Corbett’s focus on fiscal accountability.

“This is the first in a long time that we are recognizing the parameters of what state government should be doing,” said Eichelberger. “It’s not going to be pleasant in the short term, but it will be good medicine for us in Pennsylvania.”

Eichelberger also praised the governor for his focus on mandate reform, which he said would “loosen the shackles” on local governments and help prevent tax increases at the local level.

State Rep. Doug Reichley, R-Lehigh, said there is some support among House Republicans for further reductions in spending below the level set by Corbett’s proposed budget.

Aside from the cuts to education spending, Corbett’s proposed budget generated debate about the role of the state Department of Community and Economic Development (DCED), which runs a wide range of state loan and grant programs directed to local governments and businesses with the intention of creating and promoting job growth and improving the state through government spending.

Corbett proposed a $224 million budget for the department, down from a $338 million budget in the current year. He also wants to cut the department’s 127 separate programs down to 56 by eliminating some and combining others.

In particular, Corbett plans to cut $850 million in controversial “WAMs” – shorthand for “Walking Around Money” — a nickname given to discretionary grant programs used for lawmakers’ pet projects.

Among the changes to the department, Corbett proposed combining three state loan and grant programs into a single new program to be controlled by the executive branch.

State Sen. John Blake, D-Luzerne, said Democrats stand behind Corbett’s proposal to cut WAMs from the budget, but other cuts to the DCED would not be supported.

“The governor mentioned his budget was about jobs, but some of these investments that leverage significance private investment create short term jobs and long term assets for the Commonwealth,” said Blake. He said the cuts in DCED were “to the bone.”

State Rep. Mike Sturla, D-Philadelphia,  cautioned against proposed changes to the state Department of Community and Economic Development.

“That could be another WAM program, but for the executive branch,” said Sturla. “When you combine budget lines, and you’re not sure who is in charge of it, those are budget gimmicks.”

Democrats are the minority party in both chambers of the General Assembly after last year’s election, and negotiating with a Republican majority and governor that seem determined to reduce spending by at least a billion dollars may prove difficult.

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