For the second year in a row, Governor Corbett and state lawmakers enacted an on-time budget that does not raise taxes and keeps spending in line with available revenues. Improved collections allowed lawmakers to restore vital funding to education and human services, and approve a $27.656 billion budget that promotes business growth and job creation. The Greater Philadelphia Chamber of Commerce was pleased to play an active advocacy role in advancing many of the issues detailed below.
To improve Pennsylvania’s business climate and create jobs, the 2012-13 budget continues the phase-out the Capital Stock and Franchise Tax, and implements a 100% single sales factor to base state business taxes on sales, not assets.
To ensure access to a high quality education and a pipeline of skilled workers, the new spending plan restores $246 million in proposed cuts to Higher Education, which means level state funding for Temple and Lincoln Universities, and the fourteen schools in the Pennsylvania State System of Higher Education. Funding for Community colleges is also maintained at current levels. The state budget restores $62 million in formula funds for the Commonwealth Universal Research Enhancement (CURE) Program and $75 million in additional Agency allocations means that student grants through the Pennsylvania Higher Education Assistance Agency (PHEAA) will continue at current year levels. Institutional Assistance Grants (IAGs) were held at $24.4 million.
Lawmakers also succeeded in restoring K-12 education funding to current levels. Some school districts may even see increases through the $100 million added to the state’s Accountability Block Grant program, which offers flexible funding to schools for programs such as full-day kindergarten, pre-kindergarten and other priorities important to local schools. An additional $49 million was also approved to aid distressed school districts.
Further, the original Educational Improvement Tax Credit (EITC) program was expanded from $75 million to $100 million for businesses that provide scholarship aid to low- to middle-income private school students. Of that amount, $60 million will go for private school scholarships, $30 million for educational organizations that offer special programs for schools, and $10 million for pre-kindergarten private school programs. Lawmakers also increased the maximum household income limits for students involved in the program from $60,000 to $75,000, starting on July 1, 2013, and incrementally with the rate of inflation thereafter. And, a new EITC program will provide an additional $50 million in opportunity scholarships to rescue students from the lowest-performing 15 percent of public schools. As many as 160 Philadelphia public schools, more than one half, may qualify, and 11 other regional school districts have at least one school in the bottom 15 percent: Bristol Borough, Bristol Township, Chester Upland, Chichester, Coatesville, Norristown, Octorara, Pottstown, Southeast Delco, Upper Darby and William Penn. The scholarships would allow eligible children to attend nonpublic schools and out-of-district public schools in Pennsylvania that choose to voluntarily participate in the program. A company could get up to $400,000 a year in tax credits for making scholarship donations, with that amount increasing in future years.
Other education-related initiatives that passed the legislature include a measure to establish a process to identify and deal with distressed schools and another to change the way public school teachers are evaluated, from a system now based entirely on classroom observation to one that would be based in part on student scores.
Budget negotiations also focused on county-based human services funding. Lawmakers restored $84 million, or 10 percent of a proposed 20 percent reduction in county hum