Reflections on the state budget: Late but Fair

It was 101 days late, but the state finally has a budget. In the end, the budget we passed is balanced, makes important investments and reasonable cuts without unduly burdening Pennsylvania taxpayers. However, there is no excuse for the delay, and reforms are needed to ensure that future budgets are passed on time.

As we considered the FY2009-10 budget, the Commonwealth faced an unprecedented $3.5 billion deficit due to the recession and falling revenues. Our choice was to cut billions in spending from our $28 billion budget, raise taxes to cover the shortfall or do some of each. We opted to do some of each.

First, the budget invests in education. Notwithstanding the deficit, we maintained our commitment to public education by investing $5.5 billion in basic education—a $300 million increase in funds over last year. Our local school districts--Abington and Upper Dublin--will see their state allocation increase as a result of this budget. I fought against proposed cuts to Pre-K Counts, Head Start and full-day kindergarten and instead the budget funds them at last year’s levels. We know that early childhood education is the foundation for academic success, which is why this investment is so critical.

The budget expands opportunities for higher education by building on a law that I wrote four years ago to allow college students to take up to 30 credits when they transfer from a community college to a state college in Pennsylvania. This budget contains language I wrote that increases the transferrable credits from 30 to 60 and mandates the participation of Temple, Penn State and Pitt, who in the past were not required to accept those transfer credits. We’ve seen a 12 percent increase in transfer students since the law was passed in 2005 and this will only further expand opportunities for Pennsylvania students.

Second, this budget avoided deep cuts that were initially proposed. For example, the initial budget, which I opposed, proposed a 51 percent cut to public libraries. The final budget invests $60 million in libraries--a modest cut over last year’s budget. In addition, some wanted to eliminate a program that provides cervical cancer screenings for low-income uninsured women in our Commonwealth. I've fought hard for this program in each of the last three budgets. This time, I was successful in my effort to secure $718,000 for these women—only a slight cut from last year.

Third, we made sure the budget funded important social services. We have an obligation to look out for the most vulnerable in our society. This budget restores funding for autism services for children and creates a new program for 500 autistic adults. We protected funding that was to be eliminated for critical hospital functions like the Trauma Center at Abington Memorial Hospital. We managed to expand medical assistance to cover 960 more Pennsylvanians with severe physical disabilities and 132 with traumatic brain injuries. We also fought to maintain funding for county mental health services and drug and alcohol treatment programs.  

Fourth, to make these investments during the recession, we eliminated waste and the revenues we generated are fair, limited and recurring. The total spending in this budget is $500 million less than last year. We did this by cutting waste and eliminating programs that were not effective.

I opposed a hike in the Personal Income Tax that could have hurt families at a time when so many are struggling. In its place, some budget negotiators agreed to a tax on arts and cultural institutions--including non-profits. I fought hard against that tax, and with the help of so many of my constituents and online followers, we made our case and killed the arts tax. The revenues we generate under this budget include a 25-cent increase in the cigarette tax, a new tax on cigarillos, a temporary freeze in the phase-out of the Capital Stock and Franchise Tax and a gross receipts tax on certain Medicaid managed care organizations.

Fifth, we protected the environment but more work is needed. To raise revenue, the early budget proposals required leasing sufficient acreage of state lands where there is Marcellus Shale natural gas beneath the ground to generate $240 million. I adamantly opposed that as I thought it would decimate too much of our natural resources. In the end, the budget leases only enough land to generate $60 million—75 percent less acreage than what was originally proposed—and contains environmental protections to safeguard our state lands. In the future, I think we ought to tax gas companies that extract natural gas from beneath the ground here like most other states do. It will generate revenue and it is the responsible thing to do to help protect our natural resources.

Sixth, we invested your tax dollars responsibly and transparently. I spoke out against the age-old practice of doling out hundreds of millions of dollars in discretionary grants, known as “WAMs”—often times with no transparency—and the final budget instead uses that money, for libraries, education and social services.

Seventh, we tried to use the tax code to keep Pennsylvania business competitive. This budget cuts $74 million in business taxes to attract business and jobs. We expanded the research and development tax credit, helped start-ups by increasing the net operating loss provision, and changed how taxes are calculated for business sales. This budget also preserves successful tax credit programs like the Film Tax Credit and the EITC that helps lower-income families send their children to private schools.

This budget is not without pain and we will have to do more with less. Regardless of the outcome, there is no excuse for the budget being passed 101 days late and it further demonstrates the need for more reform in Harrisburg. In the coming weeks, I intend to offer proposals on how to reform the budget process to ensure that in the future it works better for the people of Pennsylvania. As always, I welcome your feedback.