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January 6, 2012 | By | Posted in Governor

Corbett hopes spending freezes will help solve fiscal problems

State faces nearly $500 million shortfall for current budget

By Stacy Brown | PA Independent

HARRISBURG — Like the recent arctic blast, Gov. Tom Corbettis putting the freeze on $160 million in state spending, his administration’s first step in addressing Pennsylvania’s financial problems.

The freezes go into effect immediately, Corbett said. With a freeze as opposed to an outright cut in funding, Corbett can reinstate those funds to the departments and programs if finances allow.

"Until revenue collections improve, we must take precautions to ensure that the commonwealth budget remains in balance," Corbett said in a statement.

At the half way point of the state's fiscal year, tax revenue stands at $11.6 billion, which is $486.8 million or 4 percent below estimates, according to the state Department of Revenue. The fiscal year runs from July 1 to June 30.

While lawmakers do not anticipate any tax increases, administration officials cautioned Pennsylvanians not to expect a miraculous turnaround.

"The data we are looking at suggests there won't be any dramatic recovery soon," said Revenue Department spokeswoman Elizabeth Brassell. "It is about managing the realities that we are in."

Corbett added, "We did not make the decision to freeze these funds lightly." His funding freezes include:

  • Ten percent for 46 programs, including economic development and teacher professional development;
  • Five percent for 57 programs, including the state Human Services Development Fund, which include assistance and services for those who are homeless and mentally ill;
  • Five percent for the state universities of Penn State, University of Pittsburgh, Temple and Lincoln and the 14 universities in the Pennsylvania State System of Higher Education, or PASSHE;
  • Three percent for 70 programs, including the state library system and youth development centers;
  • One percent for public safety agencies, such as State Police and the state Department of Corrections;
  • Less than 1 percent for the state Department of Public Welfare.

In addition to these spending freezes, cabinet members had their salaries frozen this week for a fourth consecutive year.

The 5 percent freeze affecting PASSHE universities will be tough to overcome, said Steve Hicks, president of the Association of Pennsylvania State College and University Faculties, which represents 6,000 faculty members and coaches at Pennsylvania’s 14 state-owned universities.

"The total loss to our universities will be over $112 million,” Hicks said. “Students on our campuses have already seen the impact of June’s severe budget cut. Their tuition was raised 7.5 percent; they are experiencing larger class sizes and they are worrying about taking out additional loans to pay for college.”

The average graduate of a state university finishes school with more than $23,000 in student loan debt, Hicks said.

As part of his mid-year budget freezes, Corbett also cut 5 percent, more than $21 million, from the Pennsylvania Higher Education Assistance Agency, which provides grants and loans to students.

State Rep. Joe Markosek, D-Allegheny, the ranking Democrat on the House Appropriations Committee, said in a statement that there is a "good possibility" that the current revenue gap will close this spring. Revenue collections are, in raw dollars, running 1.5 percent ahead of last year

Numerous telephone and email messages left for various state representatives and senators were not returned this week. The new legislative session begins Jan. 17.

State Sen. Richard Alloway, R-Franklin, told the Waynesboro Herald-Mail that state spending cuts in 2011 prevented tax increases, a trend he wants continued this year.

“We cannot make progress in 2012 without taking steps to strengthen our economy,” Alloway said.

Spending cuts trickle down to states, counties, cities, townships and boroughs, said David Patti, president and CEO of the Pennsylvania Business Council, a trade association here.

"The federal government did it to the state and the state is now doing it to the locals," he said, referring to recent cuts in federal spending.

Patti said local governments now must find a way to live with fewer services, including police protection.

"There are municipalities who years ago opted not to have their own police force and to depend on the state police," Patti said. "If their service isn't what it used to be, then welcome to what everyone else has been going through."

For a list of all spending freezes, click here.

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