HARRISBURG - An ambitious budget proposal released Tuesday by Gov. Tom Corbett would boost Pennsylvania's core state government spending by nearly 3 percent while increasing support for public schools, cutting business taxes and counting on the Legislature to adopt long-term changes to public pensions.
The Republican governor's third annual budget plan takes the risky legal and political strategy of assuming that his proposed pension changes are approved by lawmakers, saving hundreds of millions of dollars a year right away. In addition, Corbett, as expected, called for an increase on wholesale gas taxes to come to the rescue of the state's highways, bridges and mass transit systems.
"Now is not the time to be timid in our approach," Corbett said. "Now is not the time to cling to old ideas and the status quo. Now is not the time to make small changes and expect big results. Now is the time to be truly innovative. Now is the time to embrace new ideas. And now is the time to be bold. Pennsylvanians deserve this from us now."
Corbett, who will seek re-election next year, also stressed his bipartisan successes, and spoke at length about his work to balance multibillion-dollar deficits without raising taxes, improve the economy, boost education and help the disabled.
That prompted Democrats to call Corbett out of touch.
Amid swarms of protesters in the Capitol from the Philadelphia Student Union and One Pittsburgh, Democrats accused Corbett of neglecting public schools after pushing through huge cuts in public school aid two years ago, and lacking leadership on transportation funding.
"People could barely believe he was saying some of the things he said," said Rep. Mike Sturla, D-Lancaster, noting that lawmakers received the governor's half-hour-plus speech largely in silence. "This budget proposal needs serious revisions, I believe, in order for the governor to get any support on either side of the aisle."
Corbett's transportation and pension proposals received a mix of lukewarm to cool receptions from top Republicans, but House Appropriations Committee Chairman Bill Adolph said he was otherwise pleased with a budget proposal that carries no general tax increase and a manageable spending increase.
"That's some pretty good stuff," said Adolph, R-Delaware. "We're in a much better place than we were two years ago."
Overall, the budget for the fiscal year 2013-14 would set spending at more than $28.4 billion while boosting spending in the current fiscal year by about $100 million. Corbett expects revenue to rise by a relatively meager amount, 1.5 percent compared with this year's 4 percent, and he would plow more than $500 million in reserves into his spending plan. He would not increase Pennsylvania's broad-based taxes on sales or income, although he would seek to cut business taxes by hundreds of millions of dollars.
The biggest increases in the approximately $800 million in new spending would come under education, health care for the poor, social services and prisons.
Corbett has warned that he might have to cut aid for crucial programs, such as public schools, unless his plan to change public pensions is adopted. The changes would allow him to spend hundreds of millions of dollars on other programs in his budget plan, but it's a tactic that is already being questioned by top Republicans who control the Legislature, and public employee unions have threatened a lawsuit.
Public schools would see an increase of $90 million, or more than 1 percent, while funding for higher education would remain level and nursing homes would get a 2 percent increase in Medicaid reimbursements. Many other agencies and programs would see a small or no increase, while Corbett's budget plan also expects to shrink the ranks of state employees by 900, including 400 layoffs.
Corbett, who pledged not to raise taxes when he ran for governor, wants to phase-in higher wholesale fuel taxes over five years, while partially offsetting the increase to consumers by peeling two cents off the per-gallon taxes that motorists pay at the pump. His transportation plan would raise $5.4 billion over the first five years, the governor's office said.
On business taxes, Corbett would end the capital stock and franchise tax, increase the amount of net operating losses businesses could carry forward from $3 million to $5 million and begin in 2015 a long-term reduction of the corporate net income tax from the current 9.99 percent to 6.99 percent.