Senate Budget has Deal to Limit State-funded College Tuition Hikes. Administration Opposed Spending Hike.

By Peter L. DeCoursey
Bureau Chief
Capitolwire

May 8, 2012

Senate GOP budget proposal would spend $500 million more than Gov. Tom Corbett’s plan, but they say it is only a 1.8 percent increase, and would fit under a TABOR law that limits budget hikes. Budget Secretary Zogby says that spending hike is ‘clearly not sustainable beyond the 2012-13 fiscal year and, indeed, would move the state farther away from the goal of achieving long-term structural balance.

Senate Appropriations Committee chairmen Jake Corman, R-Centre, and Vince Hughes, D-Philadelphia, reached a deal on a Senate proposed budget Monday.

The committee then voted today unanimously to approve the Senate budget proposal,, which is poised for a vote Wednesday. Corman later released a printout of the line-by-line budget.

It hikes Gov. Tom Corbett’s $27.15 billion proposed budget to $27.65 billion. It also restores $245 million in funds for higher education, putting back 97 percent of the $253 million cut by Gov. Tom Corbett. It also includes a commitment from the presidents of the 18 state-funded universities to hold tuition raises to the level of inflation or below, Corman said.

The Senate budget deal also cuts $165 million in unspecified programs from the Corbett budget. Also, $100 million of its ‘additional’ spending are current programs the governor sought to move off-budget. It also restores $50 million for education block grants for early childhood education and a similar sum for distressed schools. Hughes acknowledged the role played in getting that sum by Senate Majority Leader Dominic Pileggi, R-Delaware, who represents the financially-ailing Chester-Upland School District, and other senators representing Harrisburg and other distressed school districts.

DEBATE OVER FISCAL SUSTAINABILITY.

State Budget Secretary Charles Zogby responded that the state couldn’t afford the Senate plan. He added that the state mandated cost increases over the next two years were more than $1 billion above projected revenue growth.

Zogby wrote: “By adding over half a billion dollars in new spending for an array of programs, the Senate budget proposal is clearly not sustainable beyond the 2012-13 fiscal year and, indeed, would move the state farther away from the goal of achieving long-term structural balance.

“We cannot simply budget for today without regard to the substantial increases in mandated costs (pension, public welfare, corrections, and debt service) the state will see in each of the next two fiscal years, costs that are likely to outstrip projected revenue growth by over $1 billion.

“These mandated cost increases coupled with the fact that we are expected to end the current fiscal year roughly $300 million under estimate, counsel prudence and caution towards any new spending.”

Corman and Senate Majority Leader Dominic Pileggi, R-Delaware, defended the Senate plan as sustainable increased spending.

Responding to Zogby, Corman said: “I fail to see how a less-than-2-percent spending increase takes us from fiscal responsibility to unsustainability, as they claim.”

Corman agrees that Zogby’s projections show state spending rising by $1.5 billion in each of two fiscal years after the forthcoming budget is passed, 2013-14 and 2014-15.

“But I don’t think anyone is going to vote to raise spending by that much two years in a row, and deal with those cost-drivers that way,” Corman said. “We have a balanced budget requirement, so I am working on the assumption that with the governor’s leadership,we are going to pass reform proposals to deal with pensions and these other those cost-drivers, not hike the budget $1.5 billion a year to deal with them.”

The Senate plan also offers a thumbs-down to $131 million in transfers and $60 million in revenues proposed by Corbett’s budget, another sore point for the administration. Officials said Corbett wants the revenues to deal with the looming cost hikes cited by Zogby.

SENATE DEMOCRATS SAY GOOD FIRST STEP, HOUSE SEEMS TO SHARE SPENDING PRIORITIES.

“It is a good step forward. It restores $500 million in cuts and we are encouraged by how our Senate Republican colleagues have worked with us to move towards our Senate Democratic budget priorities we laid out in February. There is more work to do, but this is a very positive step,” said Senate Minority Leader Jay Costa, D-Allegheny, before it was clear his members would vote for it unanimously in committee.

House GOP spokesman Steve Miskin said: “We are working with the Senate crafting a budget. If there’s any sustainable revenues, we believe those monies should go to education first, Basic K-12, then Higher Education. And then some of the county human services, mental health/mental retardation/ intellectual disabilities.”

Hughes did offer amendments to restore more county welfare funding, cash welfare subsidies and other programs. All lost on largely party-line votes. Corman said they were worthy programs, but beyond what the state could afford.

Corman and Hughes said that group of programs and others would compete for any additional revenues that surface in the next month or so. Hughes’ staff projects another $100 million in revenues will be available.

GOVERNOR’S BLOCK-GRANTING PROPOSALS NOT IN SENATE GOP BUDGET.

The Senate plan also does not propose block-granting most education funds and county welfare funds, despite Gov. Corbett’s plans to enact both ideas in this year’s budget, Corman said.

“We break those lines out, as we did in the past, into separate lines, like last year’s,” said Corman. “We fund those line times at basically the same level as last year. So that discussion will go on.

“We are not saying no to block granting the entire education formula and major subsidies, but it’s not in that proposal.”

Hughes and Senate Minority Leader Jay Costa, D-Allegheny, went further, opposing Corbett’s block-grant program.

Of the Corbett proposal to block-grant that funding, Corman said: “There’s a lot of people opposed to it, we have to sit back and get a feel from school districts as to what they want to do with it.”

But the Senate GOP budget does propose to fund education accountability block grants, which Corbett has proposed to delete two years in a row, at $50 million.

That program was $250 million annually before Corbett took office. Last year lawmakers insisted on adding $100 million for that program to be spent this year, but funded it with a last-minute boost to the previous year’s budget.

Sources said the House GOP will now have about $80 million to restore either the remaining $50 million for the education block grant or $80 million for the county human services funding.

 

That choice is there because the Senate GOP plan also restores half of the $168 million Corbett proposed slicing from county-run welfare programs for mental health and mental retardation. As with overall education funding, the Senate did not specify that funding go in a block grant, as Corbett proposed.

“We didn’t get into whether it was block-granted or not,” Corman said. “We just reduced the 20-percent cut to a 10-percent cut.”

PROPOSAL FOLLOWS TABOR LIMITS, CORMAN SAYS.

The bill also limits growth to less than the 1.8-percent spending increase that would be allowed if the state had passed the Taxpayer Bill of Rights or TABOR bill. The Senate GOP budget comes in $80 million under the level that would be allowed if a TABOR proposal had passed here, Corman said.

“We believe the budget should never increase higher than TABOR would allow, so we can be sure we have sustainable growth in the budget,” Corman said.

That calculation is based on assuming this year’s spend to be $27.15 billion. If the $100 million education block grant spent this year is counted, the proposed increase is 1.5 percent.

That leaves the $80 million, or 0.3 percent for House restoration priorities, sources said.

“We think this is a responsible, sustainable level of state spending,” Corman said.

REVENUE DISPUTES WITH CORBETT.

About $40 million in revenues beyond those proposed by Corbett are in the Senate plan, mostly from recalculating welfare and school district employee Social Security costs based on more recent data, Corman said.

So of the $800 million in revenues above those predicted by Corbett by the Independent Fiscal Office, the Senate plan will use about $500 million of the surplus for spending restorations. The $165 million in unspecified spending cuts will offset most of the $191 million in Senate-rejected revenues, Corman said.

Where Gov. Corbett proposed to take $59 million from the CURE fund for medical research in the state Tobacco lawsuit settlement fund, the Senate proposed to leave that funding intact. They also left most of the funding Corbett proposed to take from the Horse Racing Fund supported by slots revenues. Corbett proposed to cut $75 million, but the Senate cut only $3 million to subsidize the Farm Show Products Fund.

The $41 million that Corbett sought to claim by reducing the vendor discount for sales tax collection was also rejected by the Senate budget.

The Senate also sliced in half the $38 million reduction Corbett proposed in the Key ’93 Fund, reducing it to a $19 million cut.

HIGHER EDUCATION SPENDING FIGHT.

Of the $253 million in higher education reductions proposed by the governor, only $8 million of the $19 million in reductions to PHEAA grants are proposed in the Senate GOP budget.

“The governor proposed a $19 million cut for PHEAA grants,” Corman said. “We cut $8 million. Other than for community colleges, the state system universities and the state-related universities” of Pitt, Penn State, Temple and Lincoln, “are back at last year’s levels.”

Speaking to township officials Monday morning in Hershey, the governor defended his higher education spending cuts, especially his proposed 30 percent cuts for Penn State, Pitt and Temple universities, the Pittsburgh Post-Gazette reported.

“It’s not that I’m against Pitt or Penn State or Temple, but I don’t have the money,” Mr. Corbett told the packed ballroom, the newspaper reported.

Corman said the money was there, and he and Hughes extolled the agreement by the 18 presidents of state-funded universities to limit tuition hikes to cost-of-living or lower if they got the same sum next year as they got this year.

Hughes and Costa said they wanted to restore more programs as fully as they had the colleges and believe the state can do do.

The Senate GOP restored $14 million cut by Corbett from early childhood education. The governor’s cuts amounted to 2 percent.

But they cut $10 million from Child Care Services on top of Corbett’s cut to that program OF $5 million. Hughes and Costa said they wanted to restore that $15 million.

In K-12 basic education funding, state funding for Social Security payments declined slightly, Corman said: “Our latest payroll information shows a little less is needed than the governor estimated in February.”

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