Three more important pieces of Corbett’s new budget proposal

By Eric Boehm | PA Independent

Education funding and calls for public-pension reform were the cornerstone pieces of Gov. Tom Corbett’s fourth budget address earlier this week.

But those aren’t the only important pieces of the budget proposal, which forms of the basis for the 2014-15 state budget the General Assembly will spend the next five months hashing out in greater detail.

Here’s three big parts of the $29.4 billion spending plan Corbett pitched on Tuesday.

Healthy Pennsylvania

What Corbett said: “Healthy Pennsylvania will put high-quality, private-sector health insurance within reach of all our citizens, whatever their means. This is the solution we have chosen for ourselves. The alternative is to let Washington, with its usual one-size-fits-all mindset, make our choices.

“Their approach would send a half-million currently uninsured Pennsylvanians into Medicaid, with no other option. Our approach would provide those same citizens with the kind of affordable, private health coverage that working people all over this state receive through their employers.”

What it’s all about: Healthy Pennsylvania is Corbett’s response to the optional Medicaid expansion included in the federal Affordable Care Act. Though Democrats, and even some Republicans, in the General Assembly have called for Corbett to accept Medicaid expansion and the extra federal cash that comes with it, the governor so far has refused.

The plan itself is multifaceted, including provisions to provide health insurance for all Pennsylvania children and to attract more doctors to the state by reforming the state’s medical liability laws. It also will expand funding for community health centers in rural parts of the state and give a budget boost to programs that help the elderly and disabled.

The administration says the entire package could save Pennsylvania $125 million this year and more in subsequent years by overhauling the state’s Medicaid program. But most of the changes cannot happen without a waiver from the federal government, so the entire plan’s future is somewhat vague right now.

Applause: “Giving more people the opportunity to be insured is a positive thing, but only if they have a place to use it when they need care. … We’re really encouraged to see that work is being done to preserve the safety net and increase the number of providers available.” — Dr. Bruce A. MacLeod, president of the Pennsylvania Medical Society.

Boos: “Rather than accepting full Medicaid expansion, which would extend coverage to hundreds of thousands of Pennsylvanians and offer a guaranteed savings of $400 million to the commonwealth, the (governor) has instead opted to pin his hopes on a federal waiver for his Healthy PA plan, which has no timeline for being considered and no certainty of being approved.” — State Sen. Matt Smith, D-Allegheny

Business taxes

What Corbett said: “When it came to business taxes, all I needed to know was that they were costing people jobs.

“So over the past three years, we have reduced the tax burden on Pennsylvanians by a billion dollars and our workers are better off for it. And we’re pressing on with more tax relief this year, by continuing the phase out of the capital stock and franchise tax.”

What it’s all about: The capital stock and franchise tax — a tax paid by businesses on physical assets and goods they cannot sell — will continue its long, slow march to oblivion. The phase-out of that tax began in 2000. It was supposed to be eliminated from the books by 2009, but the process has been paused a few times along the way, including this year. If the phase out continues in the 2014-15 budget, the tax will be off the books by the beginning of 2016.

The current rate is 0.89 percent, which Corbett wants to cut to 0.67 percent next year.

Business groups say the tax is an added burden on top of Pennsylvania’s highest-in-the-nation corporate income tax of 9.9 percent. Labor unions, progressive groups and many Democrats annually call for the tax to be continued because they see the phase-out as corporate welfare. If the tax was still applied at the same rate as in 2000, Pennsylvania would have collected more than $2.3 billion in revenue during the past 13 years.

Corbett has proposed, and the Legislature has approved, about $1.2 billion in business tax cuts and breaks in the past three years. But with the governor looking to increase spending this year, the capital stock and franchise tax figures to be the only major tax cut on the table.

Applause: “We are well aware that some lawmakers will push to freeze or increase the Capital Stock and Franchise Tax, or impose a severance tax on top of the existing impact fee; it happens every year. But as employers will tell you, new taxes and adding to the cost of doing business will only hamper economic growth and job creation.” — Gene Barr, president, Pennsylvania Chamber of Business and Industry

Boos: “For the past four years, Gov. Corbett has bet on business tax cuts to fuel economic growth, and this budget provides more of the same. But that bet has been made and lost.” — Sharon Ward, director, Pennsylvania Budget and Policy Center

“He has sacrificed hundreds of millions of dollars that could have put Pennsylvania in a much stronger fiscal position.” — State Treasurer Rob McCord, who is running as a Democrat in the 2014 race for governor

Jobs and Unemployment

BRING THEM IN: Corbett’s throwing millions of dollars at programs designed to lure jobs to Pennsylvania. Opponents says he should help workers in other ways, like raising the minimum wage.

What Corbett said: “This budget invests more than $450 million for job training for Pennsylvanians — to make our workforce even better, and to sharpen our state’s competitive edge. We should also invest more in the effort to draw new companies here, and to win back the ones that have left.”

What it’s all about: Unemployment fell below 7 percent in December for the first time since early 2009, but not necessarily because more people are finding jobs. Either way, Corbett intends to keep throwing money at the problem in hopes of moving things in the right direction.

The budget includes a $5-million increase for Pennsylvania First, a job training program, aimed at training as many as 10,000 employees for future jobs. Another $4.8 million in combined state and federal funds will train young people with disabilities for the workforce.

But Corbett also wants to spend money wooing employers to the state. He’s proposed more than $2 million on a three separate programs designed to lure employers and overseas investment into Pennsylvania. There’s also a $1.25 million item intended to boost tourism and to convince movie-makers to make their movies in the Keystone State.

Finally, a $10 million expenditure will serve as “seed money” to the new JOB Partnership Fund, a public-private partnership meant to match employers with employees.

Applause: “Now that Pennsylvania is on a more secure fiscal footing, the (governor) believes the time has come to invest in education. That will lead to graduates who are better prepared to enter the workforce. That and an investment in job training will help small-businesses find workers ready to fill new jobs. That combined with a business climate ripe for growth is a recipe for success!” — Kevin Shivers, director of the Pennsylvania chapter of the National Federation of Independent Businesses

Boos: “Crucially, the governor made no mention of the important changes we need to get Pennsylvania back on track and create an economy that will work for everyone. He proposed no increase to Pennsylvania’s minimum wage. He proposed no plan to close tax loopholes and ensure that corporations are paying their fair share.” — State Sen. Daylin Leach, D-Montgomery.

Eric Boehm is a reporter for PA Independent and can be reached at Eric@PAIndependent.com. Follow @PAIndependent on Twitter for more.

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