CAP: Budget Highlights & Lowlights

Member Group : Citizens Alliance of Pennsylvania

Highlights and Lowlights of Governor Corbett’s 2013 Budget Address

February 5, 2013:

The thousand pound gorilla in the room for the Governor’s budget address was his
call to reform the states severely underfunded public pension system. His call to move all new employees to a 401(k) style retirement plan is long overdue.

However, that will just keep the pension hole from getting deeper. The Governor also proposed changing the formula for future benefits accrued by current employees. It should not come as a shock that government unions are already
threatening legal action to prevent any changes to future benefits from happening. In much the same way as what happened in Wisconsin, it would not be a surprise to see paid union protestors show up in Harrisburg to protest the changes.

A welcome revelation in the budget speech was Gov. Corbett’s announcement that
Pennsylvania would not be expanding Medicaid enrolment. The proposed expansion was included in the provisions of the "Affordable Care Act" (aka ObamaCare). Gov. Corbett correctly noted that Pennsylvania taxpayers cannot afford
to expand an already financially unsustainable program.

The next item of note was the Governor’s reiterated his call for liquor store
privatization. As we have previously stated, CAP fully supports the Governor’s attempt to remove the state from the booze business.

While we believe that the proceeds of the privatization process could be better
spent, the Governor has made clear his intention to use the funds for an education block grant program. The new grant program would provide funding for four areas: school safety, a new early learning program, individualized learning programs and science, technology, engineering and math programs.

In addition, to the big ticket items, there were several feel good measures included in the Governor’s proposal. His plan for increased Head Start funding ignores its woeful ineffectiveness.

We will be reviewing the details of where some of the other proposed funding increases come from before passing judgment on them.

The biggest objection that CAP had to the Governor’s budget proposal was his
willingness to engage in class warfare rhetoric while advocating for an increase in the wholesale gasoline tax:

"It is time for oil and gas companies to pay their fair share of the cost of the
infrastructure supporting their industry."

As we noted previously, Pennsylvanians should not be asked to pay higher taxes for infrastructure until other wasteful spending is eliminated. Furthermore, the belief that this sleight of hand in the tax structure will not cost citizens of the Commonwealth more is ridiculous.

On one hand, Gov. Corbett is calling for a reduction in the gasoline tax that is
paid directly by consumers. However, at the same time he is proposing removing
a cap on another tax that is passed "invisibly" along to consumers.

Sadly, the Governor did not indicate how much tax money is wasted by forcing state government to pay above market rates for labor on infrastructure projects via "prevailing wage" laws. Nor did he make addressing this relic of the Jim Crow era budget priority as a way to ensure that taxpayers are getting the most for their money. His unwillingness to address the so called prevailing wage laws in any meaningful way is extremely disappointing. However, it might explain why labor unions have contributed well over $100,000 to his re-election campaign account.

The Governor’s 2013 budget speech did acknowledge some of the harsh realities of
the Pennsylvania’s budgetary constraints. We think that some of the proposals will go a long way in addressing specific persistent matters like liquor store privatization and pension reform. On the issue of taxes, Gov. Corbett proposed a phased reduction in Pennsylvania’s corporate net income tax. This proposal will bring the Commonwealth in line with the national average. Improving Pennsylvania’s tax climate will make the state more attractive than it is now to new businesses. The Commonwealth currently has one of the highest tax rates in the world. Equally beneficial, it will provide businesses that are already here much needed relief.

Making proposals is one thing. The challenge will be whether or not the Governor
is willing to stay out in front on the issues. If he hopes to make these changes, he will have to put public pressure on some his fellow Republicans who are more likely to side with the government unions and other special interests before working for what is best for taxpayers.

If interested, you can find the full text of the Governor’s address here
[The full budget proposal can be found here

Citizens Alliance of Pennsylvania (CAP) is a non-profit organization founded to
raise the standard of living of all Pennsylvanians by restoring limited government, economic freedom, and personal responsibility. By empowering the Commonwealth’s employers and taxpayers to break state government’s "Iron Triangle" of career politicians, bureaucrats, and Big Government lobbyists, this restoration will occur and Pennsylvania will prosper.