Pennsylvania Gov. Tom Corbett Tuesday released a $27.3 billion spending plan that is $866 million smaller than the current-year budget and includes no new taxes or tax increases.
The Republican governor aims to close a $4.1 billion projected deficit for fiscal 2012 with $2.6 billion of spending cuts after instituting a budget freeze in January to save $364 million. Corbett also revised spending plans producing $353 million in savings and anticipates an increase in estimated revenues for fiscal 2012, which begins July 1.
Officials project the state will collect $27.94 billion of revenue next year, a boost of $1.1 billion, or 4.3%, from budgeted estimates for the current year, according to budget documents.
In looking at capital spending, Corbett proposes $2.18 billion for infrastructure needs, with $685 million of bond proceeds supporting that plan. Transportation revenues will help finance the remaining capital projects.
During his budget address before a joint session of the General Assembly, Corbett said that his plan incorporates fiscal discipline, limited government, free enterprise, and reform. Like other states, Pennsylvania must craft a fiscal 2012 spending plan without federal stimulus funds.
By merging programs, eliminating 103 appropriations, cutting funding in another 150 appropriations, and terminating 1,500 state positions, Corbett seeks to reduce state spending. In his view, he said, Pennsylvania must reinvent itself to generate business and job growth and change the way the state spends taxpayer money.
“But to do this we have to change the culture of this place,” Corbett said. “It means we stop the one-time fixes and gimmicks that have barely held the machine of government together. It’s time to peel off the duct tape and get to work on what’s broken underneath.”
The governor did not propose a tax on the extraction of natural gas in the state’s Marcellus Shale region. Pennsylvania is the only state that does not impose such a levy on drilling for natural gas. Instead, Corbett said that asking less of drilling companies up-front will generate growth in the industry, thereby creating even more jobs and boosting individual and corporate tax collections. His administration anticipates the state will gain $10 billion in economic activity this year from the drilling industry.
“Let’s make Pennsylvania the hub of this boom,” Corbett said. “Just as the oil companies decided to headquarter in one of a dozen states with oil … let’s make Pennsylvania the Texas of the natural gas boom.”
Conversely, Democrats seek to implement an extraction tax in order to generate funds to help cities and towns address the potential environmental effects of drilling. In his response to Corbett’s budget plan, Sen. Lawrence Farnese, D-Philadelphia, said that the natural-gas drilling industry need to pay its fair share.
“Marcellus Shale drillers should pay a modest tax to reimburse local communities and environmental programs for the adverse impacts,” he said. “Instead, they’re asked to provide nothing. The quality and quantity of gas in Pennsylvania will allow drillers to see large returns on their investment.”
Republicans control both the House and the Senate.
Corbett announced a new Marcellus Shale Advisory Commission that will examine how the state can build the natural-gas drilling industry in the state while protecting Pennsylvania’s natural resources. The panel will release its findings this summer.
In addition, the governor will form a privatization task force that will analyze which government functions could be performed by the private sector.
To help achieve savings at the local level, Corbett propose a one-year freeze on all school-district personnel for $400 million of savings. He is also seeking voter approval for property-tax increases that exceed the rate of inflation.