Governor Corbett Signs Pennsylvania’s Budget and Welfare Reform Legislation

     Pennsylvania’s Republican Governor Tom Corbett kept his campaign promise to eliminate the Commonwealth’s $4.5 billion deficit without raising taxes.

     Pennsylvania is constitutionally required to balance its budget. The deficit had been run up during the last year of Democratic Governor Ed Rendell, together with a Democratic-controlled state House of Representatives. Governor Corbett signed a balanced budget for the 2011-2012 fiscal year that was approved by the new Republican-majority legislature on time. Passing budgets on time has been a rare occurrence over the least several years.

     The new budget is balanced because it cuts wasteful spending. Corbett resisted pressure to impose an additional tax on the Marcellus shale natural gas industry in particular on top of the already-high corporate taxes paid by every industry, pending the recommendation of a study group he formed to consider an unnecessary so-called “impact fee.” It was excessive spending, not a lack of higher taxes, that had caused the deficits in the first place. Avoiding a tax increase will prevent harm to the Keystone State’s economy. 

     Some of the Governor’s critics claimed that there was a budget surplus that should have mitigated the spending cuts. There was no surplus, only a larger amount of revenue than projected, which did help reduce some of the budget cuts to education. Governor Corbett also successfully reserved some of the extra revenue to replenish the Commonwealth’s rainy day fund, which Rendell had drained. Regardless of whether there was a surplus in the general fund, even the general fund balance does not take into account the over $3 billion Pennsylvania still owes the federal government for unemployment compensation. 

     Public and higher education spending had grown in Pennsylvania much faster than inflation, which made it a reasonable part of the state budget from which to eliminate wasteful spending by forcing school districts and the four state-owned universities to make the same sort of sacrifices that private industries and citizens are making. Furthermore, most school districts had spent the Obama stimulus money in their general funds projects instead of on temporary projects, as they had been advised to do. The end of the stimulus does not represent a cut, as many liberal big-spenders in the education industry claim, but a return to the previous level of spending. Those districts that followed the advice not to spend the stimulus money except on temporary projects were well-prepared for the state budget cuts because they had already factored the end of the stimulus into their budgets.

     The welfare reform bill Governor Corbett signed into law will provide for better enforcement against waste, fraud and abuse, thereby saving Pennsylvania taxpayers hundreds of millions of dollars, in addition to the recently-approved budget cuts. One provision would require those convicted of drug felonies to be tested thrice a year. Other provisions of the new welfare law will reduce some reimbursement rates and require more co-payments for recipients of certain benefits who earn twice the poverty limit. Unlike other states, Pennsylvania had hardly implemented any welfare reform in the 1990s. The Commonwealth allows too many loopholes and bureaucratic discretion for any effective reform. The new law will reduce the amount of payments to those who are not eligible, but more fundamental reform is needed. Nonetheless, it is a good start. I urge the Pennsylvania legislature to consider more significant welfare reform.