Final Push for State Budget Starts Next Week

Next week begins the final push in Harrisburg for a state budget. I put out a memo today to editors and reporters providing an overview of where things are at with the budget. Here's the overview:

Next week begins the final push in Harrisburg for a state budget. The Senate passed its budget bill on May 9, and it is now before the House of Representatives. Legislative leaders say things could wrap up as soon as mid-June.

The Senate, responding to Pennsylvanians’ deep concerns about service cuts, passed a budget bill (SB 1466) that is a significant improvement over Gov. Tom Corbett’s budget. Still, lawmakers are leaving money on the table, failing to act on the governor’s proposal to cap the discount that retailers receive for submitting sales tax payments on time. Efforts to close corporate tax loopholes, a cause recently adopted by House leadership, have been sidelined, while a $275 million cut to the state’s capital stock and franchise tax remains on track even though the commonwealth can ill afford it.

Deep cuts to schools over the past year are taking a toll on the economy, and we are likely to see more of the same in the coming year. In recent weeks, numerous school districts have announced teacher layoffs, including as many as 364 in Reading, 285 in Pittsburgh and 52 in Upper Darby (where music, art, physical education and libraries are on the line). Other districts have already cut jobs, including 265 in Allentown and more than 200 in Erie. Cuts to education and other services cost more than 22,000 Pennsylvania jobs last year, slowing the state’s rapid recovery coming out of the recession. (Pennsylvania actually went from among the top 10 states in job creation in 2010 to the middle of the pack in 2011.)

A report by school administrators and business officials indicates that about three-quarters of the 281 school districts surveyed will raise taxes next year, 60 percent will increase class size, and 58 percent are cutting classroom programs. Fewer classroom resources will erode the quality of education and diminish options for our kids, thus reducing our competitiveness over the long term.

All eyes will now be on the House, where Republican leaders have signaled that their caucus is divided over how much to restore in cuts. On top of that, the House has approved major tax breaks in recent weeks, including a cut to the corporate income tax rate and a sales tax exemption for the purchase of private jets. These tax cuts would come at a time when the commonwealth can least afford it, putting us on shaky fiscal footing for the years ahead.

Read the whole thing here.


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