Corbett objects to spending growing surplus on schools

HARRISBURG, Pa. - Gov. Tom Corbett on Tuesday poured cold water on optimism from some legislators that a growing state cash surplus could be used to ease spending cuts he is proposing to such areas as education, saying it might be wiser to hold the money in reserve or use it to pay down debt.

Corbett spoke at a National Federation of Independent Business event in downtown Harrisburg, where he was warmly received, while a few blocks away more than a thousand union members gathered at the Capitol to rally against the spending cuts the Republican governor has proposed, particularly to education and health care.

Corbett acknowledged that the cuts he is proposing to balance a multibillion-dollar projected deficit will inflict pain and require patience from Pennsylvanians. But he also suggested that suppressing the growth of government spending now will encourage private-sector growth and, as a result, strengthen the economy.

"We have to understand that this is not about the one-year cycle of this budget," Corbett told the luncheon. "It is about the generational cycle of these children, so that they have a Pennsylvania to live in, to grow up in and raise their children in."

School teachers at the rally scoffed at Corbett's notion of pain. They pointed out that he opposes a tax on the state's booming Marcellus Shale natural gas industry and that state law does not require many businesses to pay Pennsylvania's corporate net income tax.

In the meantime, many of the state's school districts, particularly the poorest ones, are preparing to raise taxes, lay off staff, end programs or close buildings, among other measures to absorb expected cuts in state aid.

"Even in all the years I've been teaching, this is the worst we've seen in attacks on public schools," said Kristine Kostura, who teaches in the Catasauqua Area School District. "The bottom line is none of this is good for children."

Corbett spoke a day after his Department of Revenue reported a $506 million surplus as of the end of April, more than six times the $78 million surplus that Corbett had projected to be left over when the fiscal year ends in two months.

On Tuesday, Corbett said he worried that the economy is fragile, and contrasted it to an economy that is healthy and showing the kind of sustained growth that can draw businesses to Pennsylvania. He also cautioned that tax collections in May or June could disappoint and cut into the current surplus.

"We'll certainly sit and talk to the Legislature," Corbett told reporters after his speech. "But I think next year's going to be a difficult year. Just look at the economic projections, nobody sees us taking off. This is gradual growth."

No budget bill has been introduced in the House, where constitutionally such legislation must start. A spokesman for leaders of the House Republican majority, Steve Miskin, said a budget bill would probably be introduced next week.

Overall, Corbett is projecting a $4.2 billion budget shortfall in the fiscal year beginning July 1. He is proposing to address the gap through $2.6 billion in spending cuts and other measures that do not require raising taxes.

Corbett's biggest proposed spending cuts are in education, including slashing more than $1.6 billion for public schools and 18 state-supported universities. Lawmakers have roundly criticized those cuts, and Democrats say that using the surplus, adopting certain operational changes in various programs, closing tax loopholes and putting off business tax breaks planned by Corbett would largely alleviate the need for spending cuts.