Looking Beyond the Kinder, Gentler Budget

With state budget hearings in the rearview mirror, I wanted to offer a few thoughts about the Governor Tom Corbett's 2014-15 budget proposal.

First of all, this, the Governor's fourth budget, is very different from his first. Tough talk about reining in spending has been replaced with a host of new initiatives that resonate with the public, particularly women.

Several of the Governor’s priorities stem from genuine interest. He has been sympathetic to the plight of children with autism and other intellectual disabilities, and has proposed new funding to reduce waiting lists for a second year. His support for rape-crisis and domestic-violence programs can be traced to his experience with victims of sexual assault as attorney general.

The Governor’s budget also reflects a reversal on education funding, a response to the resounding voices of Pennsylvanians who disapprove of his cuts to public education. A poll released last June showed that an unprecedented share of Pennsylvanians, 77 percent, were worried about the cuts and that a majority would support measures, including paying more, to restore them. The latest Franklin and Marshall poll finds that after the economy and education funding tops voter concerns.

The budget includes no increase for basic education funding, the main source of state dollars for Pennsylvania’s 500 school districts, which is still $250 million less than when Corbett took office.

The biggest education initiative is a new block grant called “Ready to Learn.” While many of the details are still forthcoming, we do know this — lower-performing school districts will face significant restrictions in how those funds can be spent.

“Ready to Learn” block grant funding can be used for early learning, teacher training, and science, technology, engineering, and math education — all worthwhile programs. But the new funds will not be available for art, music, counselors, school nurses, sports, or to restore smaller classes.

In short, the dollars cannot be used flexibly to restore cuts prompted by the loss in state funding. That would require the Governor to acknowledge the cuts to begin with — something he has not done. Instead, he continues to point to the loss of federal stimulus funds in 2011, despite the fact that half of the education funding reductions that year came in state-funded programs.

The new block grant would be allocated based on a formula that includes student counts, poverty, and English-language proficiency. This is a step in the right direction. Pennsylvania is one of a handful of states without an education funding formula that considers student needs and community resources.

Still, the spending plan makes no commitment to use real costs to determine how much school districts need to educate students to meet state-imposed standards. Without such a commitment, the disparity between high- and low-poverty districts will continue to grow.

As befits an election-year budget, the Governor’s plan presents a hopeful view of the state’s overall fiscal health, more than is warranted by the facts. The commonwealth is not enjoying the robust revenue surpluses many states now have, and revenue projections for next year and beyond are optimistic, masking fiscal troubles ahead.

The budget relies on several one-time funding sources and gimmicks that the Governor condemned in his first address. It will reduce, again, the state’s contribution to public employee retirement, increasing the state’s pension debt.

Without sustainable funding, the new worthy initiatives proposed in the budget may be short-lived.

This budget does have some similarities to Corbett’s first.

For the past three years, the Governor has relied on business tax cuts to fuel economic growth. This budget provides more of the same, further reducing the capital stock and franchise tax. That tax has already been cut by 90 percent and is paid by only a small percentage of large companies.

Cutting business taxes has not brought jobs to Pennsylvania. The commonwealth’s job-growth ranking has fallen from seventh in 2010 to 48th in 2013. Corporate tax collections have begun to decline, leaving the cost of services to fall more heavily on other taxpayers, and undermining the state’s long-term financial health.

The budget saves money, once again, by cutting health care for low-income Pennsylvanians. It foregoes the opportunity to expand Medicaid under the federal health-care law, proposing instead a new Healthy PA program that will reduce health-care benefits for low-income working families and people with high health needs.

So the tough talk is gone, and we have been offered a kinder and gentler budget. But the devil is always in the details, and we still have a lot to learn as the budget season continues in the months ahead.

If we are going to see sunnier days ahead, Pennsylvania must restore education funding with flexibility for school districts to address their local needs, expand health coverage without strings attached, and adopt a tax policy that asks large corporations to pay their share. That is the key to getting our economy back on track.


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