This week, on a special edition of Radio PA Roundtable, Brad Christman & Matt Paul break down key portions of Governor Tom Corbett’s budget address, including plans for education, pension reform and road & bridge funding.
Radio PA Roundtable is a 30-minute program featuring in-depth reporting on the top news stories of the week.
Click the audio player below to hear the full broadcast:
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The impact this major winter storm forming over New England has on you will depend on where you live in Pennsylvania. Some areas of the Poconos could see a foot and a half of new snow, with up to 8 inches projected across the northern tier and a possible half-foot in the Philadelphia region. It could be more of a wintry mix for south-central and southwestern PA, with 1-to-3 inches in the Harrisburg area and minor accumulations, if any, in and around Pittsburgh.
This storm is the result of the convergence of two systems over New England, where forecasters say 2-to-3 feet of snow is possible in some areas. That will mean the chance for major utility outages as heavy snow brings down tree limbs and power lines. Utility trucks were already gathering in staging areas near Harrisburg this morning, preparing to be dispatched to areas of need later today.
High winds are also expected in New England, with potential hurricane-strength gusts.
While the state’s largest teacher’s union says the Governor’s budget fails students again, another group sees signs of encouragement. Pennsylvania Partnerships for Children says the budget begins to restore some cuts to core programs.
CEO Joan Benso says they were pleased to see increases for Pre-K Counts and Head Start Supplemental Assistance. She says it’s a turn in direction, indicating the Governor wants to make some important investments in children.
Benso is also encouraged by additional funding to do outreach for the Children’s Health Insurance Program. She says the state has seen its child population in Medicaid decline.
The budget also calls for 90 million more for basic education, but Wythe Keever, a spokesman for the Pennsylvania State Education Association, says that doesn’t begin to fill the hole created since Governor Corbett took office.
Keever is not impressed with the administration’s argument that it inherited an education budget backfilled with one-time federal stimulus money. He says budgeting is about choices and the Governor chose not to replace the stimulus funding.
Keever adds that the governor’s pension reform proposal asks teachers and other public employees to shoulder the burden, when they didn’t create the problem with the pension system. He says new employees would be paying more for a lesser benefit.
The Association is not a fan of the governor’s proposal to privatize state liquor sales and create a four-year education grant program with the proceeds. Keever says the governor is proposing to spend money he doesn’t have yet. He says privatization is far from a done deal; it’s been proposed many times over the last two decades in the General Assembly.
A privatization effort failed to get enough support for a vote in the last session and some lawmakers favor modernization instead.
Public opinion is changing when it comes to same-sex marriage in Pennsylvania. Today’s Franklin & Marshall College Poll finds that 52% of Pennsylvania voters now favor legal marriage for gay and lesbian couples, compared to 41% who oppose it.
Terry Madonna
Poll Director Terry Madonna believes this is the first poll to show majority support for the issue in PA. “Some polls gave gotten up to 47, 49, even 50% support – depending on how the question was worded – but not a majority support for gay marriage,” Madonna tells Radio PA, “heavily driven by young voters whose attitudes on gay marriage are very different from seniors who oppose gay marriage.”
Just seven years ago, in May 2006, Madonna’s poll found just 33% support for same-sex marriage in the Keystone State.
Democratic state Senator Daylin Leach (D-Montgomery) has long been pushing marriage equality legislation, and is already circulating a co-sponsorship memo this session, which would legalize same-sex marriage in Pennsylvania. However, while public opinion may be changing, Madonna believes the Republican-controlled General Assembly is still many years away from changing state law.
The F&M Poll provides a number of compelling results aside from the same-sex marriage issue. Here’s a sampling:
– Governor Tom Corbett’s job performance rating has hit a new low, as just 26% indicate that he’s doing a “good” or “excellent” job.
– 64% oppose plans to put Pennsylvania Lottery operations in the hands of a private manager.
– 82% want more money being spent on transportation infrastructure, but only 47% support the main recommendations of the TFAC report.
– 53% support privatizing state-run liquor stores.
Three Democratic state representatives say there’s more willingness to discuss gun safety measures after the Connecticut elementary school shooting.
Citing gun violence statistics, Representative Ron Waters (D-Philadelphia/Delaware) is again calling for a number of new laws designed to improve gun safety. Emphasizing that point, Waters says they want to dispel the idea they’re calling for gun control.
The bills include a military style assault weapons ban, a firearms liability insurance requirement for those licensed to carry and a child safety lock requirement. Other bills in the package would roll back the expansion of the Castle Doctrine, call for mandatory sentences for those carrying firearms without a license and require neighborhood watch groups to register with the Attorney General’s office.
Representative Madeleine Dean (D-Montgomery) believes they can do something to reduce gun violence while honoring constitutional rights.
Representative Dan Frankel (D-Allegheny) believes there has been a mood change in Harrisburg after Sandy Hook. He says he senses a difference among his colleagues with respect to a willingness to have a conversation about the issue.
Pennsylvania will not pursue an expanded Medicaid program until the federal government reforms the system. Governor Tom Corbett made his intentions known during Tuesday’s budget address before the General Assembly. “We cannot afford to expand a broken system,” Corbett announced. “Right now, without expansion, the cost to maintain our current Department of Public Welfare programs will increase by $400-million dollars. The main driver in that cost increase is Medicaid and long-term care.”
The Affordable Care Act expanded Medicaid to cover people up to 138% of the federal poverty line, but a Supreme Court ruling made it an option for the states.
Until reforms are made, Corbett is opting out. “The federal government must authorize real flexibility and innovative reforms that empower us to make the program work for Pennsylvania,” he says. The governor has written the federal government to express his concerns.
But the move has irked Senate Democrats, as Medicaid expansion supporters say it would cover at least a half-million more Pennsylvanians, save on uncompensated care costs and inject billions of federal dollars into the state’s economy.
State Sen. Vincent Hughes
“The governor is walking away not just from the number one health care issue that is confronting us, but the number one job creation issue that exists in front of us,” Senator Vincent Hughes lamented in the wake of Corbett’s budget speech.
The federal government has promised to pay 100% of the cost of the Medicaid expansion for the first three years, but the Corbett administration says the state’s administrative costs would approach $1-billion dollars over that time, and they are not interested in raising taxes or cutting programs to make up the difference.
Last December, Corbett also passed on a state-run health insurance exchange, under the new federal health care law.
Perhaps the most controversial piece of Governor Tom Corbett’s $28.4-billion dollar state budget is the call for public pension reform. The administration has penciled in $175-million dollars worth of savings next year, pending legislative action on the issue. They say reforms would also free up nearly $140-million for the state’s 500 school districts.
Charles Zogby briefed reporters on the budget just prior to the Governor’s speech on Tuesday.
“The reality is that our pension costs are taking most of our available revenue growth,” says Budget Secretary Charles Zogby. The state’s pension obligations are expected to triple – to $4.3-billion – within the next four years. Without reform, Zogby says deep cuts would be unavoidable.
But legislative Democrats call it a false choice. “We’ll work with him on [pensions], but everything he proposed today is not right, and we won’t support,” says House Democratic Leader Frank Dermody (D-Allegheny).
The Corbett plan calls for new hires to be enrolled in a 401(k)-style defined-contribution plan and for adjustments to be made to the yet-to-be earned benefits of current state employees. No changes would be made to retirees’ benefits or the benefits existing workers have already earned.
The plan’s already raising legal concerns. “He’s talking about changing future compensation for current employees, which has already been decided in the courts that is something that’s illegal, back in 1983-84,” says AFSCME Council 13 executive director David Fillman.
The state’s two biggest public sector unions – AFSCME and the Pennsylvania State Education Association (PSEA) – are vowing a legal fight, and that has lawmakers on both sides of the aisle concerned about balancing a budget on savings that would ultimately be in the hands of the courts.
“The question is really, I think, what does a set of reforms look like that can secure 26-votes in the Senate and 102-votes in the House,” says Senate Republican Leader Dominic Pileggi (R-Delaware). Pileggi has been serving in the Senate for more than a decade now, and knows that pension reform can be a profoundly difficult issue.
Governor Tom Corbett has presented his general fund budget proposal for the 2013-2014 fiscal year that begins on July 1st. He calls it a balanced budget with no tax increases. Corbett’s plan calls for the state to spend $678.76 million more than it has in the current budget, an increase of 2.4%. In his budget address, the governor also laid out his plans for pension reform and transportation infrastructure.
Highlights of the budget include the first increase in basic education funding in two years. The 1.7% increase amounts to about $90 million. Additionally, the governor is proposing a block grant program to be funded by the state’s divestiture in the liquor business. That funding, which would total $1 billion over four years, could be earmarked for school safety, K-3 readiness and enhancing access to STEM programs (science, technology, engineering and mathematics), among other programs. The governor says there would be an initial $200 million available for the grants by the 2014-2015 school year.
Governor Corbett’s proposal also eliminates the Capital Stock & Franchise Tax on January 1, 2014, and calls for a reduction of the Corporate Net Income tax to 6.99% over ten years from 2015-2025. That CNI tax is currently 9.99%.
The budget plan also includes $14.7 million for three new State Police cadet classes.
On pension reform, the governor is proposing big changes for the two public pension funds that have been declared in a state of crisis. The State Employees Retirement System (SERS) and the Public School Employees Retirement System (PSERS) are both drastically underfunded and threaten to gobble up massive pieces of future state budgets. Among the changes proposed by Governor Corbett, new employees would be automatically enrolled in a 401(a) retirement plan where they will be required to contribute at least 6.25% of their salary (7.5% for PSERS). The governor says current employees would not see any changes to benefits already accrued and current retirees would see no changes at all in the benefits they are collecting. SERS is currently only 65.3% funded while PSERS is 69.1% funded.
On transportation funding, the governor is proposing removing a cap on the Oil Company Franchise Tax. Currently, distributors pay that tax based on the artificial cap of $1.25 per gallon, wholesale. Gas prices, of course, are well beyond that threshold, and the governor wants to “uncap” that price over a 5-year phase-in. Distributors would pay more in taxes under the plan, but to offset any potential attempts to pass along that increase to consumers, the governor also wants to lower the state tax on gasoline by a penny per gallon in 2013-14 and another cent in 2014-15. The current state gasoline tax is 12 cents per gallon.
Next up, the overall spending plan will be the subject of dozens of legislative budget hearings in the coming weeks. Then legislative leaders will carve out a final budget that will be sent to the floors of the House and Senate, probably in late June.
State revenue collections fell short of estimates last month, according to the Pennsylvania Departmetn of Revenue.
January revenue collections were off slightly as the state collected almost 19 million dollars less than anticipated, a difference of eight-tenths of a percent.
Still, boosted by December’s better than expected performance, the fiscal year to date General Fund collections are 1.1 percent ahead of estimates.
Sales tax receipts fell short by 59 million dollars in January. Inheritance tax, and other general fund revenue such as cigarette, malt beverage, liquor and table games taxes were below estimate for the month.
Personal income, Realty Transfer and Corporation taxes performed above estimate.
With Governor Tom Corbett’s commitment to level-fund higher education in the new fiscal year, state-owned and state-related university officials are pledging to keep any tuition hikes as low as possible. “This agreement, this working together, will allow our schools to better plan their budgets for the coming year and make the best use of their resources,” Corbett said at a capitol news conference. “Their commitment should allow students, and particularly their families, to plan their own budgets accordingly.” Corbett was flanked by the state’s higher education leaders as he made Friday’s announcement.
This agreement – level-funding in exchange for minimal tuition hikes – is similar to a deal that was ultimately struck last year. Corbett says it resulted in the lowest tuition increases in more than a decade. “For example, Temple University did not raise tuition last year; Penn State had their lowest tuition increase in nearly 40-years.”
The state appropriated nearly $1.6-billion to higher education in the current fiscal year, and Corbett is proposing the same amount for FY2013-14.
State Senator Jake Corman (R-Centre) says level-funding is significant in what continue to be difficult budget times. “As Appropriations Chairman I can tell you that this coming fiscal year… our cost-carry-forward items – such as Medicaid, debt service, corrections, things of that nature – will grow at a higher rate than what our revenues will grow next year,” he explains.
This sort of early collaboration between Governor Corbett and the higher education community is a change of pace from previous budget cycles. Two years ago, higher education received a near 20% cut, after even steeper cuts were initially proposed. Last year, a level-funding deal wasn’t struck until long after Corbett proposed another round of stiff cuts.
With that track record in mind, Democrats don’t seem too impressed with Friday’s announcement. “By flat funding higher education, Tom Corbett is keeping in place harsh cuts from past budgets and ignoring cost of living increases,” says Pennsylvania Democratic Party Chairman Jim Burn, “Tom Corbett has the wrong priorities.”
Corbett will discuss all of his priorities on Tuesday when he delivers his annual budget address to a joint session of the General Assembly.