Corbett talks spending priorities with business crowd

By - Last modified: May 9, 2012 at 10:54 AM

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The Corbett administration will not kick the can down the road and turn its back on the problems facing the commonwealth, the governor told a business crowd this morning in East Hanover Township, Dauphin County.

The revenue picture has improved over the past few months, but that doesn't mean spending is going to increase or that proposed cuts in Gov. Tom Corbett's $27.1 billion budget will be reduced.

"Negotiations are never in black and white," Corbett said after his speech at the Holiday Inn Harrisburg off Interstate 81.

The event was organized by the Harrisburg Regional Chamber and Capital Region Economic Development Corp.

The Senate Appropriations Committee on Tuesday advanced a $27.7 billion spending plan that restores steep cuts to areas including K-12 and higher education and county-level social services.

Corbett said he understands the need but maintained there has to be a long-term balance in the budget. Pennsylvania has to deal with mandated increases in areas such as state pensions and the commonwealth's massive unemployment compensation debt to the federal government, which totals more than $4 billion.

"I think we'll have to talk about it," he told reporters, referring to potential restorations in the budget.

The 2012-13 fiscal year begins July 1 and lawmakers will be hard at work until then trying to hash out a plan the governor will support.

Pennsylvania's current pension obligation is about $1.1 billion, Corbett said. That cost jumps to $1.6 billion next year and to $4.2 billion in four years, the governor said.

"I'd love to be wrong," Corbett told the business audience, referring to the revenue picture in Pennsylvania.

General fund tax collections came in at nearly $99 million in April, or 3 percent more than expected, according to the state Department of Revenue. Tax collections are down about $288 million, or 1.2 percent, for the year to date.

Corbett had expected a 2011-12 budget shortfall of $719 million when he gave his budget address.

The state's Independent Fiscal Office has projected the state would collect $419 million more than Corbett expected. About $400 million more in revenue is expected in 2012-13, the IFO said.

"We're going to need that money," Corbett said to the crowded room, many of whom shared his cautious optimism about the economy in a show of hands. "I am looking beyond the two-, four- and six-year cycle. I also am looking at factors outside of Pennsylvania."

Decisions have to be made based on what is best for future generations and not around election cycles, the governor said.

Fixing the pension and tackling the unemployment compensation debt issues are among his top priorities. Fostering a more attractive business climate — whether through additional tort and property tax reform or looking at business taxes like the corporate net income tax — also are in the mix, Corbett said.

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