THE ASSOCIATED PRESS
8:15 PM EST, February 5, 2012
With the state government projecting its fourth straight deficit next year, the budget plan that Gov. Tom Corbett will roll out Tuesday is expected to bring somber news to many who rely on state aid.
Hospitals, counties, schools, nonprofit service providers and business advocates will watch closely to see how their pet causes fare in what is expected to be an approximately $27 billion budget that must spend more on debt and pensions while tightening practically everywhere else.
For now, top Corbett administration officials are staying quiet about what will be in the budget for the 2012-13 fiscal year that begins July 1.
There are plenty of pressures.
Corbett, a Republican, is already trying to keep a lid on rising costs for prisons and for health care for the poor, disabled and elderly, while managing lackluster tax collections. Advocates for the poor say the state’s safety net is springing bigger holes. And school boards are fearful of losing more aid and raising property taxes.
Business advocates, key supporters of Corbett’s, are pressing for tax cuts that they say will boost the state’s economy by improving the state’s attractiveness to companies looking to expand, relocate or hire.
Primarily, they want the continuation of a reduction of a tax on assets — a $278 million tax cut if it stays on schedule. After that, they’d like to see an increase in the amount of losses that can be written off against profits and an adjustment in corporate net income taxes to reflect just sales, rather than payroll or asset value. Both changes would reduce taxes.
“I think he and his staff know this is the litany,” said David W. Patti, the president and CEO of the Harrisburg-based business advocacy group, the Pennsylvania Business Council. “But we’re also trying to be realistic about where we’re at in the economy.”
Corbett, who campaigned on a pledge not to increase taxes, pushed through a 3 percent spending reduction for this fiscal year to address a multibillion-dollar deficit, primarily by cutting aid for public schools and universities. He followed with a mid-year spending freeze of less than 1 percent that left the budget at $26.9 billion this year — about the amount that was spent in the 2007-08 fiscal year.
Also being closely watched is whether Corbett will reshape the way the state sends aid to universities and whether he will issue a plan to inject new money into a transportation network widely criticized as in disrepair.
Business advocates and labor unions both support new money for transportation, both as a way to improve commerce and to stimulate hiring. In addition, unions are floating suggestions that they say would help to avoid more cuts in education and human services.
Among their cost-saving suggestions are thinning the ranks of managers in the state’s work force, consolidating prescription drug purchases by nine different agencies, enacting a law that allows whistleblowers to sue Medicaid providers for fraud and tightening the screws on payments to charter and cyber school operators.
Then there are tax changes they recommend: Imposing a levy on the booming Marcellus Shale natural gas drilling activity, tightening a provision that allows businesses to avoid Pennsylvania’s corporate income tax by moving profits to outside jurisdictions, and ending a reward for businesses that send the sales taxes they collect to the state on time.
Tony Ross, president and CEO of the United Way of Pennsylvania, said he is hoping to see more money for mortgage assistance, early childhood education, child care, worker training, food banks, emergency shelters and flexible money that counties can put toward a range of social and human services.
A just-released United Way survey underscores complaints from advocates for the poor about a battered state safety net: Shelters are turning away people, food banks are giving less out to more people, child care operators are absorbing higher co-pays that the state is requiring for subsidized parents, and waiting times for other services are growing.
The counties, meanwhile, which provide billions of dollars in social and human services on behalf of the state, are bracing for cutbacks after a decade of stretching dollars for everything from caring for neglected children to helping seniors get at-home assistance.
“We’ve spent down reserves, we’ve looked to trim where we can,” said Doug Hill, the executive director of the County Commissioners Association of Pennsylvania. “We’re at the edge. We genuinely are talking about service cuts now.”