HARRISBURG, Pa. (AP) — A big year for tax collections, some new sources of cash and delayed pension and health care bills would help pour hundreds of millions of dollars of new money into education and social services under Gov. Tom Corbett’s biggest spending plan for Pennsylvania state government unveiled Tuesday.
Corbett, a Republican who is facing a tough re-election battle, wants to create a big new grant program for public schools, boost money for a range of social services and start offering scholarships to Pennsylvania students in the fiscal year starting July 1. For Corbett, who balanced his first two budgets with cuts to public schools and social services, it’s a turnaround in direction, but it will require some crafty, and perhaps risky, moves to accomplish.
Overall, Corbett will propose a $29.4 billion budget that increases spending by almost 3.7 percent over the current year. The total increase would be more than $1 billion, although a portion would go on the books of the current budget.
The state government for the first time is projected to break $30 billion in revenue for its main bank account that finances public schools and universities, social services, health care, pensions, debt and prisons. That increase is more than 4 percent over the $29.1 billion expected this year, the biggest such increase in revenue since the economy began recovering from the recession in 2009.
Corbett is not proposing to increase income or sales taxes, the two biggest pillars of the state budget.
It would be the biggest one-year spending increase under Corbett, who took office in 2011 facing a collision of a slumping post-recession economy, soaring pension obligations and the end of the federal government’s bailout of state governments.
To spread new money to education and social services without raising taxes, Corbett must deal with more than $1 billion in costs for public employee pensions and health care for the poor.
He will count on more than $300 million in new money from newly legal gambling in bars, a stepped-up government seizure of unclaimed investment and bank accounts and royalties from the extraction of natural gas from beneath publicly owned lands.
Meanwhile, he will look to postpone nearly $600 million in Medicaid and pension payments until later years and divert $225 million in securities from a health care investment fund to cover more of the state’s pension costs. Delaying the pension payments by reducing the allowable increase will also save school districts $130 million next year, administration officials say.
Complicating things are a drop in federal Medicaid funds of more than $340 million a year and new administrative costs under the 2010 federal health care law, the Corbett administration said. It is counting on $125 million in savings through changes he wants to make to the Medicaid program.