Governor Signs 2011-2012 Budget

On June 30, Gov. Tom Corbett signed the 2011-12 budget, cutting government spending, not raising taxes, including property tax reform and restoring common sense to the state spending process, according to a release.

The $27.15 billion budget cuts overall government spending by more than $1 billion.

"This reality-based budget marks a return to the Constitutional principles that must guide Pennsylvania’s fiscal policy," Corbett said. "It spends no more than we have and it doesn’t pretend we have more than what we have budgeted.

Corbett said he was elected "to change the culture of state government," whic means government must be honest and fiscally responsible.

"The Senate and House join my administration in making these standards a reality," he said.

The legislature also agreed to a key economic proposal for school districts – a referendum on any property tax increase that exceeds the rate of inflation, known as Act 1. Under these changes, any property tax increase above the rate of inflation must be approved by the local voters. Taxpayers in each district will be empowered to decide whether they want a property tax increase to fund a particular program.

"This puts taxing and funding decisions where they belong: in the hands of the voters who are footing the bill," Corbett said. "Who knows better how to spend money in our communities than the citizens who live there?"

The budget is part of a larger Corbett administration initiative that also includes tort reform – signed into law on June 28 – which reforms how damages are recovered in civil lawsuits, ensuring an equitable framework for litigation in the future and improving Pennsylvania’s business climate.

Highlights of the 2011-12 budget include:

• State spending is cut by 4.1 percent, or $1.17 billion, from 2010-11.
• The enacted budget eliminates 66 appropriation line items, cutting $822 million in annual spending. It reduces funding for more than 226 appropriations and consolidates an additional 52 items, to streamline government.
• Administrative spending is reduced by 4 percent and more than 1,000 positions in state government are eliminated. These reductions are achieved in large part by consolidating programs, targeting inefficiencies and reducing or eliminating discretionary financial grants, commonly known as Walking Around Money, or WAMs.
• This marks the start of a commitment to reduce the cost of running state government by 10 percent over the next four years. It is a change in the culture of taxing and spending that has caused the state’s economy to decline.

"No budget is worth the trouble if it doesn’t do something to grow the economy and create jobs," Corbett said. "This budget gets things in the right order and takes another step toward clearing away the tangle and overgrowth of government."

• This budget consolidates and streamlines economic development programs to focus on job creation and attracting businesses to Pennsylvania. In spite of the many difficult choices, this remains a pro-growth budget, built on the proven theory that lower taxes stimulate investment and jobs.
• The budget honors Corbett’s commitment to reinstate the phase-out of the Capital Stock and Franchise Tax. That tax was levied on goods and equipment that a company kept in store, even though it had not been sold or put to use. By eliminating this regressive tax, the governor has given more than 100,000 job creators an estimated $70 million in tax relief. The phase- out of this tax will continue until it is completely eliminated in 2014.
• At the same time, the budget has maintained important tax credit programs. These are the Job Creation and Film Production tax credits. The budget also increases the Research and Development Tax Credits from $40 million to $55 million.
• The budget brings state tax policy into line with the federal tax code. It increases the bonus depreciation deduction to 100 percent for property placed into service before January 2012. This gives businesses room to expand and raises the potential for a surge in purchases for Pennsylvania businesses.

"This budget, built on fiscal discipline and effective government, supports free enterprise and job creation," Corbett said. "It’s a step toward making Pennsylvania a national leader among states in economic success once again."

Click here for more information on the state budget.