Pennsylvania's Corbett OKs Budget Just Under the Wire

Pennsylvania Gov. Tom Corbett got the on-time budget he wanted — by minutes.

Corbett, ending a mad-scramble week with lawmakers, signed the state’s $27.15 billion spending plan for fiscal 2012 around 11:45 p.m. Thursday in the Capitol rotunda. The new fiscal year began Friday.

The Republican governor, who had already secured budget approval from the legislature, held out for one more concession and got it when lawmakers passed a bill calling for a referendum on any school district property-tax increase that exceeds the inflation rate.

Pennsylvania’s budget cuts overall government spending by 4.1%, or $1.2 billion, and marks the first timely budget since 2002.

Corbett said the budget eliminates more than 1,000 positions in state government through consolidation, targeting inefficiencies, and reducing or eliminating discretionary financial grants, commonly known as “walking around money,” or WAMs.

The budget, crafted by a Republican-controlled General Assembly and governor, calls for no tax hikes, though Democrats argued that program cuts could force cities and towns to raise property taxes.

“This is a tax-shift budget,” Rep. William Kortz, D-Dravosburg, said during House debate.

Democrats argued in vain that the state should have allocated some of its excess funds toward educational and welfare programs. The revenue department said late Friday that the state finished the year with a $785 million surplus.

Public schools are in store for about $860 million of cuts and universities face a 20% reduction.

Democrats also said that failure to enact an impact fee on Marcellus Shale natural gas drilling cost the state revenue. Corbett opposed any such measure this year. His own advisory panel on Marcellus Shale drilling is expected to announce its findings in July.

Though Corbett had secured approval of the main budget bill in the House and Senate by midweek, he held out Thursday — threatening not to sign the budget — for the school budget referendum bill, called Act 1.

“This puts taxing and funding decisions where they belong: in the hands of the voters who are footing the bill,” Corbett said. The governor said the budget reflects a commitment to reduce costs by 10% over four years, and marks a change in financial culture.

The legislature and Corbett’s predecessor, Democrat Ed Rendell, bickered at length over budgets during Rendell’s eight-year term.

Pennsylvania is rated Aa1 by Moody’s Investors Service, AA by Standard & Poor’s, and AA-plus by Fitch Ratings.

Elsewhere, Rhode Island Gov. Lincoln Chafee earlier Thursday signed his state’s $7.7 billion budget.

The state’s fiscal year also began Friday.

The budget closes an initial deficit of $300 million through cuts to some programs previously paid for with federal stimulus funds and consolidation of state departments, as well as a small surplus and higher-than-expected revenues from the previous year.

The state’s lawmakers added several items subject to the 7% sales tax: pre-written computer software  that is delivered electronically, insurance proceeds, nonprescription medicine, and sightseeing package tours.

Legislators knocked out $6.7 million in aid for struggling Central Falls that Chafee had sought. The city has been under receivership since May 2010.

All three major rating agencies rate Rhode Island double-A.

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