Worry that revenue projections too optimistic, pension issues not addressed
By Mike McGann, Editor, The Times
Gov. Tom Corbett unveiled his 2014-15 budget plan Tuesday in a speech to a joint session of the state legislature — and it appears that some provisions, such as cutting state pension fund contributions and increasing spending without a clear way to pay for it could make it a tough sell for some local legislators.
While the $29.4 billion budget proposal again calls for privatization of state liquor stores, and a boost in state funding to schools, including expansions in special education and pre-K, Corbett proposes increasing spending by more than $900 million. Additional revenue is anticipated — but the sources seem in the governor’s plan to be tied to expected growth in jobs and employment, some additional gambling revenue, and cutting $170 million in payments to state and school pension plans, rather than specific new sources of funds. No tax increase is called for.
One notable proposal, the creation of Healthy Pennsylvania, would create a private health insurance option, rather than an expansion of Medicaid, as offered under the federal Affordable Care Act for low-income commonwealth residents that Corbett described as “one-size fits all.”
“I would give this budget a mixed review,” said State Rep. Dan Truitt (R-156), who represents the greater West Chester area, Tuesday. “The governor has proposed increased spending in some popular areas. Given the deficit we are facing, I was hoping to just see level funding in some areas and we got that for higher education, which is very important to my district.”
State Senate Majority Leader Dominic Pileggi (R-9), who represents portions of Chester and Delaware counties, cautioned that it is very early in the budget process — and while voicing support for the address, said that it would be the beginning of the discussion about spending and revenue priorities, as is the normal budgeting process.
“I think the governor takes an optimistic view,” Pileggi said, noting that analysis from the Independent Fiscal Office, as well as the economic forecasts from the governor’s office and from staff in both the state Senate and House of Representatives would bring those fiscal projections into tighter focus before the final budget comes into shape.
“I think as we come closer to June, those numbers will get tested,” he said.
State Sen. Andy Dinniman (D-19) expressed some appreciation that the governor is finally seeking to boost school funding, after three years of flat numbers, but is left wondering whether it’s more about politics — with the governor facing a tough reelection campaign this fall — than supporting public schools.
“It is fortunate that Gov. Corbett has finally come around to accept that education is a wise investment and to propose investing more in pre-kindergarten, more in basic education, and more in special education,” Dinniman said. “The unfortunate thing is it took the governor three years and an upcoming election to come to that conclusion.”
Dinniman takes issue with Corbett’s claims that state education funding only dropped off because of the end of federal stimulus dollars.
“The governor is attempting to paint a rosy picture of his legacy of slashing funding to all levels of public education,” Dinniman said. “The fact is our students need a champion in their corner every year, not once every four years.”
State Rep. Duane Milne (R-167) said that additional school funding is a needed investment in the state’s future.
“Gov. Corbett committed himself and the state Legislature to funding public education at record levels,” MIlne said. “Some 40% of the entire general fund budget will be devoted to primary and secondary education. The budget, as proposed, calls for targeted funding specifically for early education, special education, and post-secondary learning. Effectively educating the children of Pennsylvania is the surest way to push for an even brighter future for our beloved Commonwealth.”
Steve Barrar (R-160) who represents portions of Chester and Delaware Counties, expressed concerns about the boost in spending without a seemingly clear plan to find the additional funds.
“Where does the money come from?” he asked. “The governor is proposing to spend $927 million more, but hasn’t really told us how to pay for it.”
Noting that the existing deficit — about $1.4 billion — is already an issue, Barrar said that adding additional spending without identifying new revenue sources was problematic.
Truitt agreed with Barrar’s comments on revenue worries, noting that after a first-glance review of the spending plan, he was concerned about a proposed boost in overall spending — going beyond the current rate of inflation, and cutting state and local school district contributions to the state worker and school district employee pension funds.
While the pension contribution adjustment (the numbers would still increase over the previous year, but just at a lower rate) would save the state $170 in this fiscal year — and the state’s 500 school districts about $130 million, Truitt said he was worried that continued underfunding of the pension plans would just make a bad situation worse over the long term. Corbett also called for pension reforms to deal with the long-term pension liability issue, but the details were not spelled out.
“I see two fundamental problems,” Truitt said. “First, the governor is proposing to increase spending by more than the rate of inflation. Second, the governor is proposing to kick the pension can down the road again by reducing the collars this year and raising them in future years. This is the very definition of kicking the can down the road and the reason we are in the mess we are in. We simply can’t do this again unless it will be accompanied by substantial reforms that can’t be derailed before the pension system is fully funded again.”
Truitt noted that he wanted to go more deeply through the budget before definitively passing judgment, and said he expected the budget to change as talks continue between the governor’s office and legislative leaders.
Barrar expressed support for the additional $20 million in special education funding, as well as additional funds for adults with mental disabilities — Corbett cited a four-month waiting list for services in this area that he’d like to eliminate.