By PA Independent Staff
HARRISBURG — Pennsylvania taxpayers got a look at what their state’s fiscal future could look like this week.
The director of the state's new Independent Fiscal Office said Monday that employment prospects in the state were looking up, despite the state's expected year-end $500 million budget shortfall.
In Gov. Tom Corbett’s annual budget address Tuesday, taxpayers heard proposals for no new tax increases and cuts in higher education funding. However, Corbett failed to give any guidance on how to tackle the state’s transportation needs.
The state’s Redevelopment Assistance Capital Projects program that funds private development projects could be reformed, at a lesser cost to taxpayers. However, the measure spearheading the cost savings does not prevent the types of projects that have drawn scorn.
Buried under this fiscal activity was the conviction of former state House Speaker Bill DeWeese, D-Greene, on five corruption charges by a Dauphin County jury Monday.
Corbett also was expected to sign a Marcellus shale bill that, after a more than three-year legislative battle, ended with the Pennsylvania General Assembly passing a comprehensive shale policy.
Corbett’s budget proposal does not increase taxes
Corbett said the magic words.
“We will not raise taxes,” he said during his annual budget address before the state House and Senate on Tuesday. But nothing comes for free.
Corbett proposed a $27 billion budget plan — about $20 million less than last year’s budget. His reduced proposal manages to increase money for public safety and businesses and pay for more than $1.4 billion in required spending, which includes pensions and debt service. But this spending forced cuts in welfare funding and other programs.
"We will not spend more than we have," Corbett said in his address. "We reduced spending to fit the realities of our time. … Every dollar taken in taxes is one less dollar in the hands of a job holder or a job creator."
No guidance on transportation
Lawmakers on both sides of the political aisle say funding for transportation infrastructure projects is expected to be the most bipartisan spending issue in Pennsylvania.
But Corbett gave lawmakers little guidance in his budget address Tuesday, saying the transportation funding program was "too large" to be part of the budget discussion.
Pennsylvania has nearly 6,000 bridges in need of repair — which is more than any other state in the nation, according to the Federal Highway Administration — and more than 7,000 miles of roads in poor condition, according to the state Department of Transportation.
Democrats criticized Corbett for failing to lay out a transportation plan.
“There is no way better to be able to put people back to work than to give us clear direction on how we are going to address mass transit funding and how we are going to address roads and bridges,” Senate Minority Leader Jay Costa, D-Allegheny, said.
Higher ed tuition likely to rise with, without PA aid
Before Corbett even announced plans to reduce funding to the State System of Higher Education, or PASSHE, during his budget address Tuesday, recent trends dictate that tuition would rise.
Tuition has risen annually during the past decade, while enrollment has increased steadily. In addition, salaries for faculty and staff members have increased modestly during the same time.
During the past 10 years, PASSHE’s state funding has increased five times and decreased five times, peaking in 2007-08 at $484 million. In 2011-12, the state provided $412.7 million in funding, compared with $452.7 in 2001-02, according to PASSHE.
At PASSHE schools, tuition for a two-semester year has grown from $4,016 in 2001-2002 to $6,240 in 2011-12, a 55.4 percent increase. Year to year, the average tuition increase has been about 5.5 percent.
"Cuts like Corbett announced have no bearing on tuition," said Antony Davies, associate professor of economics at the Palumbo Donahue School of Business at Duquesne University in Pittsburgh.
"The state has no business subsidizing education, because college is a great financial deal anyway … and colleges will respond to the economy," Davies said. "The laws of the economy work that way with every industry."
PA Fiscal Office expects $500M shortfall in June
Pennsylvania is expected to end the year with a $500 million budget shortfall, but employment prospects are looking up, according to the head of state’s new Independent Fiscal Office.
“We don’t think there is going to be a ‘spring surprise’ that is going to make up” the shortfall, said Matthew Knittle, the former financial analyst for the U.S. Department of the Treasury who is the first director of the new office, during an exclusive interview with PA Independent.
A similar “surprise” occurred during the final three months of the past fiscal year, leaving Pennsylvania with more than $500 million in unexpected revenue.
The state Department of Revenue released January’s tax report earlier this week, which indicated the state’s expected revenue has fallen more than $495 million behind for the fiscal year, which ends June 30. January’s collections were more than $10 million behind expectations.
PA shale fee bill may violate Corbett’s ‘no-tax’ pledge
A more than three-year legislative battle ended with the General Assembly passing a comprehensive Marcellus shale policy this week and sending the compromise bill to Corbett.
Corbett is expected to sign it, but when he does, he will be violating a pledge taken during the 2010 gubernatorial campaign to not raise taxes — and he’s not alone.
The state House voted 101-90 for the bill Wednesday afternoon, following a 31-19 vote in the Senate on Tuesday. The bill had been voted out of a conference committee Monday, and no amendments were allowed before the chambers voted.
The most controversial part of the bill is the fee, or tax, structure. It will begin with a per-well fee of between $40,000 and $60,000 in the first year after a well is drilled, which will decline to between $5,000 and $10,000 per well by the 15th and final year of the assessment.
The fee will vary with the cost of natural gas each year and will be set by the state Public Utility Commission, which regulates utility companies in the state.
House Majority Leader Mike Turzai, R-Allegheny, defended the final product as an impact fee, despite the ability of the fee to increase with the price of natural gas.
“The sliding scale approach … is a common sense mechanism. It is still an impact fee, nonetheless,” Turzai.
PA taxpayer-funded biz development program target of reform
Pennsylvania taxpayers could pay less for private development projects, but the bill spearheading the cost savings does not prevent the types of projects that have drawn scorn.
Turzai introduced the cut, cap and reform proposal for the state’s Redevelopment Assistance Capital Projects, or RACP, program. The bill would reduce the debt ceiling for the program from $4.05 billion to $1.5 billion over 20 years and implement rules to make future RACP projects more transparent.
“It’s time that state government pays down its debt and reins in this much maligned grant program,” Turzai said. “This legislation offers responsible reforms while ensuring these grants stimulate regional economic growth in an open, transparent process.”
In the past, RACP — usually pronounced “R-Cap” — has financed hundreds of projects, including sports stadiums, shopping malls, convention centers, hotels, the new TastyKake factory in Philadelphia and the now-infamous Arlen Specter Library at Philadelphia University.
Pennsylvania is spending $277 million each year to fund the $4 billion of RACP obligations.
DeWeese convicted on five counts, vows to continue holding office
DeWeese, the former House speaker, was found guilty on five corruption charges by a Dauphin County jury Monday morning.
The verdict ends, for now, a five-year investigation by the state's Attorney General’s Office into the use of taxpayer funds and resources for political purposes.
DeWeese was charged with six counts of theft, conspiracy and conflict of interest for allowing and directing the use of legislative staff members for campaign work. The jury found him not guilty on one charge of theft, and guilty on three theft charges, one conflict-of-interest charge and one criminal conspiracy charge.
“Certainly, we’re pleased with the jury’s verdict, and we agree with it,” said Ken Brown, senior deputy attorney general.
Convicted felons are prohibited from serving in the state General Assembly, but the conviction is not official until sentencing, which is scheduled for April.
“I am still a member of the state Legislature, and my petitions are out in my precincts,” DeWeese said. “I will certainly continue to run for re-nomination and for re-election.”
