The Senate’s review of the budget will formally begin on February 23 with two weeks of hearings conducted by the Senate Appropriations Committee. The state’s current fiscal year ends on June 30.
“As we work to adopt a state budget, we must do the very same thing that families and businesses do during tough economic times, prioritize our spending and find areas where we can cut costs while still investing in core programs that are vital to the citizens of Pennsylvania,” Senator Corman said. “When state government faces a deficit, there are only two ways to bring about a balanced budget – you either raise taxes or you cut expenditures. I’m encouraged that the Governor did not propose a broad-based tax increase in this budget.”
However, Senator Corman expressed concerns about a $1.26 billion (4.6 percent) increase in spending in the Governor’s proposal.
“While the Governor has reduced and eliminated many line items in the budget, his proposal still includes a significant increase in state spending from last year’s budget,” Senator Corman said. “In these difficult economic times, that level of spending seems excessive and unnecessary. Just like families and businesses, we need to tighten our belts and live within our means. This is not the time to call for new programs and spending – we simply can’t afford to pay for them.”
The budget proposal anticipates additional revenues from:
- A 10 cent-per-pack increase in Pennsylvania’s cigarette tax, to a proposed total of $1.45 per pack.
- A new tax on cigars and smokeless tobacco.
- A new tax on extraction from the state’s Marcellus Shale natural gas reserves.
- A proposal to use $250 million from the Rainy Day Fund in Fiscal Year 2008-09 and $375 million in Fiscal Year 2009-10.
- Revenues generated from video poker machines in establishments holding liquor licenses.
- Anticipation of $2.4 billion in federal relief funding.
“The Governor has proposed smaller, more limited tax increases, and during the coming weeks and months, we will examine each of these closely to determine how they will affect our economy and our future opportunities,” Senator Corman said. “Like other states, we also will rely on more than $2 billion in federal economic stimulus money this year to make up the growing deficit. But it’s important to remember that this is not a permanent funding stream and we can’t build it into our budget. If we become reliant on that money, it will only cause greater pain in coming years.”
The proposed budget also includes the elimination of 101 line items and reductions in 346 other line items. In fact, several grant programs, municipal and community assistance services are proposed for elimination as part of $216.7 million in reductions in the Department of Community and Economic Development budget.
However, the proposed budget does include a $300 million (5.4 percent) increase in Basic Education subsidies for Pennsylvania’s public schools for a proposed total of $5.86 billion. Special Education funding would remain at the current level of $1.02 billion.
Funding for State System of Higher Education universities would also remain at its current level of $498.5 million. Community colleges would see a $5 million (2 percent) increase for a total of $241.2 million. State-related universities are facing a 6 percent reduction in funding and state-aided schools face a 10 percent decrease in funding.
“The General Assembly and the Administration must put taxpayers and our state’s economic future above political rhetoric and partisanship. We must work together to pass a sensible, practical and fiscally responsible budget,” Senator Corman said. “There are challenges ahead, no question, but we can take this as an opportunity to make government work better for the people of Pennsylvania.”
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