Governor Tom Corbett unveiled his proposed 2013-2014 budget on Tuesday and it looks like there’ll be a few battles over the next few months until it is altered and approved by the legislature.
Before we wade into the proposed budget, here is a bright note on the current finances of the Commonwealth. The state expects to end the current fiscal year with more revenue than expected. Currently the state is expecting an ending fund balance of $544 million at the end of the current fiscal year on June 30. When was the last time Pennsylvania closed the year with that kind of cash in the bank?
Among the big-ticket items on the proposed $28.4 billion budget (more than 2 percent over the last budget) is the overhaul of Pennsylvania’s public pension spending. It would require all new employees to move into a 401k-style retirement plan. The proposal would also make significant changes in the way future benefits are calculated for current employees. It is not expected to affect the benefits of retired workers and would not affect benefits already earned by current employees or elected officials.
The changes would save the state $175 million in its share of contributions toward the Public School Employees’ Retirement System and the Pennsylvania State Employees Retirement System. According to the budget office, it would also result in about $138 million in savings to local school districts.
While the battle lines are being drawn, it’s important to note that if the legislature does not approve the pension changes, school districts could face cutting programs or raising taxes. In addition, the $175 million Corbett hoped to save would have to be found elsewhere. It won’t be smooth sailing since the legislators themselves would face the changes to their own pensions.
The 2013-14 proposed budget does bring back the $100 million Accountability Block Grant, earmarked to fund preschools and full-day kindergarten, among other public school programs. In addition, the budget allocates about $100 billion (up 2 percent from last year) for the per pupil basic education subsidy to school districts – extra money that could be used for classroom needs or the school district’s payments to the pension.
Next year, the governor proposes a $200 million grant to public schools that would be handed out each year over a four-year period. That money could be spent on early learning programs, school safety and other designated areas.
He proposes to get that money by selling off the state stores this year and allowing supermarkets, convenience stores and big-box stores to sell beer and wine.
Also on the governor’s agenda is a plan to remove the cap on the oil franchise tax; the fee levied on the wholesale price of gas (now capped at $1.25 per gallon). Although the plan would be phased in over the next five years, it could have an effect on the price the price drivers pay at the pump sooner. If passed, will voters view Corbett as falling back on his no-tax increase pledge?
According to a Quinnipiac University poll issued last week, 42 percent of registered voters disapprove of the way Corbett is doing his job; 36 percent approve of his performance. Will those numbers change and which way will they go?
Let the discussions begin.