Pennsylvania budget calls for deep spending cuts

corbett, pennsylvania, public employees, state workers, health care, salary freeze, pay freeze, budget, shortfallPennsylvania Gov. Tom Corbett is asking state workers to give up pay increases and contribute more to their health care. By Tami Luhby, senior writer

NEW YORK (CNNMoney) -- Calling the state's fiscal problems unprecedented, Pennsylvania Gov. Tom Corbett unveiled Tuesday a budget that asks state employees to forgo pay increases and pay more for their health care.

The state is facing a budget gap of more than $4 billion, and its new governor is keeping his promise not to raise taxes to close it. Instead, he is looking for concessions from public employees and for cuts from a wide array of agencies. Also, some 1,500 positions would disappear in the budget that cuts overall spending by 3%.

"We have to spend less because we have less to spend," Corbett said. "We must tax no more because people have no more to give."

Corbett, a Republican, is tackling his budget problems in much the same way as other governors around the nation. Many are taking an ax to employee compensation, education and social services. But unlike state leaders in places such as Wisconsin and Ohio, Corbett is not looking to reduce public worker unions' collective bargaining rights.

Hits to state workers

The governor is leaning hard on education -- both K-12 and college level. Together, these suck up 38% of the state budget.

"Education cannot be the only industry exempt from recession," Corbett said. "We need to change the whole system. We need a new set of priorities: child, parent and teacher -- and in that order."

Corbett is asking teachers to freeze their salaries for a year, saying it would save $400 million, and he wants school districts to be allowed to furlough employees during tough budget times.

But he still plans to cut $550 million from basic education funding. He is also looking to reduce state mandates and promote school choice. And he wants to allow voters to rule on property tax hikes school districts may propose to make up for state funding cuts.

The state university system would see its state funding slashed $271 million, while Penn State, University of Pittsburgh, Temple and Lincoln universities would lose half their funding.

The governor also said he will be looking for salary roll-backs and freezes from the state's 62,000 employees, as well as having them pay more for health care.

And he wants to start discussions on fixing the pension system, which could mean higher contributions or less generous benefits.

Encouraging growth

Like many of his peers, Corbett said the key to improving the state's fiscal situation is stimulating economic growth.

Corbett plans to do this by eliminating a tax on supplies and goods, as well as by retaining a bevy of business tax credits. And he rejected the idea of taxing gas from the Marcellus Shale, as some have urged him to do.

He also wants to enact tort reform to limit companies' legal liability costs, promising that unlike his predecessor, he would sign such a bill. And he wants to look at privatizing some state industries, particularly liquor sales.

"Government is not meant to be the answer for jobs," he said. "The private sector is."

Not everyone loses out in Corbett's budget plan. The governor plans to fund two new classes of troopers for the Pennsylvania State Police, as well as pour $2 million into the Safe School Initiative. And he would spend $3.4 million to hire 53 new parole officers to reintegrate more inmates into society.

"We need to be tough on crime, but we also need to consider the fiscal implications of our prison system," he said. "We need to find additional parole officers to help freed inmates make the transition from the prison yard to Main Street." To top of page

Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 32,627.97 -234.33 -0.71%
Nasdaq 13,215.24 99.07 0.76%
S&P 500 3,913.10 -2.36 -0.06%
Treasuries 1.73 0.00 0.12%
Data as of 6:29am ET
Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET


Bankrupt toy retailer tells bankruptcy court it is looking at possibly reviving the Toys 'R' Us and Babies 'R' Us brands. More

Land O'Lakes CEO Beth Ford charts her career path, from her first job to becoming the first openly gay CEO at a Fortune 500 company in an interview with CNN's Boss Files. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.