Insights

Governor Corbett signed the 2012/2013 budget on time for the second year in a row. The budget does not include any new taxes or tax increases, and increases spending over the 2011/2012 budget by only 1.7%. As with the budget each year, the total spending stays about the same and is just reallocated. This year the $27.66 billion budget focuses on three main areas: economic growth, education and human services.

Economic Growth and Job Creation - The budget continues to lower taxes on businesses and preserves tax credit programs while increasing budgeted amounts by 11.7%. Specifically the budget:

• Cuts business taxes by $288 million.
• Maintains the phase-out of the capital stock and franchise tax.
• Includes a manufacturing tax credit, which is anticipated to create tens of thousands of jobs. (See Insight by Cathleen Condrac for more details of this tax credit)
• Creates Keystone Works, which dedicates $2.5 million to job placement and training programs.
• Eliminates the inheritance tax on family farms.

Education - The final budget ensures that no public school or university will receive less money than it did last year and only increases spending by 4.1%. The budget also: 

• Invests more than $11 billion in early basic and higher education. 
• Doubles the funding for tax credits for businesses supporting education. (See Insight by Matt Dodge for more details of the changes to the EITC)
• Calls for across-the-board reforms to the current educator evaluation system.

Human Services – Some services benefited while others saw cuts, but overall budgeted spending increased only 0.2%. The budget:

• Creates a new program that combines various funding appropriations for child welfare, mental health and drug and alcohol into one, allowing counties greater discretion in spending and streamlining reporting requirements.
• Increases funding for people with intellectual disabilities.
• Cuts spending on child-care programs for low-income working families.
• Eliminates cash assistance for a portion of welfare recipients.
• Cuts funding for numerous county-provided human services.

To review the budget bill and the line-item appropriations, follow this link:

http://www.portal.state.pa.us/portal/server.pt/community/current_and_proposed_commonwealth_budgets/4566.

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