Governor Tom Corbett today signed House Bill 2328, the 2014-15 state budget, and House Bill 278, the 2014-15 Fiscal Code. Concerned with the revenue assumptions used by the House and Senate in crafting their budget, the governor chose to use his line-item veto authority to reduce spending and ensure the state was meeting revenue estimates.
“Every day, Pennsylvania families sit around their kitchen tables figuring out how to make ends meet,” Corbett said. “Balancing income against spending is how the state budget is supposed to work as well. As elected leaders our duty is to sit around the budget table and answer tough questions.
“As they did in the last three budgets, agencies sharpened their pencils, set priorities, and spent what they had – not what they wished they had. We made tough decisions so that funding for critical programs and services that benefit the people of Pennsylvania would go unharmed. It is what I promised the people of Pennsylvania I would do, and, frankly, it is what they expect and deserve from their state government.
“The same, however, cannot be said for the General Assembly.”
The governor noted the budget passed last week included no new taxes and supported key administration priorities in this budget, including:
- Ready to Learn Block Grant: $100 million increase (to $200 million total)
- Pre-K Counts: $10 million increase (to $97 million)
- Special Education: $20 million increase (to $1.05 billion)
- A new Ready to Succeed Scholarships program: $5 million
- Intellectual Disabilities Waiver: $13 million initiative to address waiting lists
- Services to Persons with Disabilities and Attendant Care: $9 million to serve an additional 1,599 individuals with physical disabilities
- Child Advocacy Centers: a new $2 million program for child protection
- Primary Health Care Practitioner: $1 million increase (part of the Healthy PA initiative)
- Community-Based Health Care Subsidy: $2 million increase (part of the Healthy PA initiative)
“While I am pleased they supported my priorities in this budget − investing more money into our children’s education, reducing waiting lists for services for people living with disabilities, and increasing access to health care in rural and underserved areas of Pennsylvania – the final budget they sent me, coupled with their failure to address critical challenges facing our state, cause me great concern,” Corbett added.
“Facing a $1.5 billion deficit and struggling to provide adequate funding for essential programs, the General Assembly instead chose to increase their own $330 million budget by 2 percent. It is charging the taxpayers an additional $5 million to pay for its parking. It refuses to use any of its own six-month surplus – $150 million in taxpayer-funded budgetary reserves – to help with the budget gap. It filled the budget with earmarks driven by high-powered lobbyists. And it refused to deal with the biggest fiscal challenge facing Pennsylvania: our public pensions.
“For this reason, I am forcing mutual sacrifice with the General Assembly through the governor’s ability to line-item veto and hold spending in budgetary reserve. Today, I am item vetoing $65 million in General Assembly spending and an additional $7.2 million in legislative-designated spending.”
The commonwealth’s official estimate is $60 million lower than the revenue estimates in the General Assembly budget. Item vetoes are as follows:
- General Assembly Operating Appropriations: $65 Million
During budget negotiations, the governor asked the General Assembly to use $75 million of its $150 million in reserves to help balance the budget. Because the General Assembly did not include this funding in its budget and at the same time relied on aggressive revenue assumptions, the governor chose to reduce the General Assembly’s spending, which will cause the General Assembly to spend down its reserves to a more reasonable level.
In the spring, the governor directed agencies under his jurisdiction to identify any available funds that could be used to help balance the budget. As a result of the governor’s direction, commonwealth agencies returned nearly $425 million of unneeded funds.
- Other Appropriations: $7.2 million of reductions in total
- Treasury: Intergovernmental Organizations: Line-Item Veto of $45,000
- DCED: Community Development Financial Institution Grants: Line-Item Veto of $250,000
- DCED: Intergovernmental Cooperation Authority: Line-Item Veto of $300,000
- DCNR: Heritage and Other Parks: Line-Item Veto of $500,000
- DEP: Environmental Program Management: Line-Item Veto of $150,000
- DEP: Sewage Facilities Planning Grants: Line-Item Veto of $700,000
- DGS: Rental, Relocation and Municipal Charges: Line-Item Veto of $5 million
o The General Assembly added funding to DGS’ budget for parking costs and then gave itself the authority to move that funding to its budget. Given the level of legislative reserves that remain, the Governor chose to eliminate this funding.
- Labor and Industry: General Government Operations: Line-Item Veto of $250,000
- DMVA: Civil Air Patrol: Line-Item Veto of $100,000, which DMVA states is not necessary
Another $20 million in line-item vetoes include transfers to the General Fund:
- The Machinery and Equipment Loan Fund: from $100 million to $85 million. A reduction in the proposed amount was necessary to ensure sufficient funding for important economic development projects.
- Small Business First Fund: from $100 million to $95 million. A reduction in the proposed amount was necessary to ensure sufficient funding for important economic development projects.
In addition to the $20 million reduction in the transfers from special funds, the commonwealth’s official revenue estimate is projected to be an additional $40 million lower than the revenues in the House and Senate plan.
On pension reform, the governor commented, “The General Assembly failed to enact a meaningful plan that would benefit all homeowners, school districts and job creators in the Commonwealth. Instead, it is forcing more than 163 school districts to raise property taxes on hard-working Pennsylvania families to pay for skyrocketing pension costs. It has failed the people of Pennsylvania.
“I ask the citizens of Pennsylvania to join in this fight and demand that the legislature address the most important fiscal challenge facing Pennsylvania. Today, we spend 63 cents of each and every new tax dollar that comes into the state on pension costs. This is absolutely unsustainable, and it is devouring our state’s budget.
“We can protect the pension benefits of retirees and current public school and state government employees, while making reforms to the system for new hires. This is a reform plan that has been debated across the state and in the halls in the Capitol for three years.
“It is time to stop ‘talking around the edges’ and enact meaningful reform. Pennsylvania families and taxpayers deserve nothing less.”
At the time that the General Appropriation Bill and other appropriation bills are presented to the governor for approval, the official revenue estimates for the budget year are established by the governor.
If the appropriations passed by the legislature exceed the revenue estimates plus any available surplus, the governor has the authority and duty either to veto entire appropriation bills or to reduce the amount of appropriations in order to produce a budget that is in balance with total resources available. The governor also has the power to reduce or item veto any appropriation he thinks excessive or unnecessary even if the total appropriations passed by the legislators do not exceed estimated resources available.
A governor’s item veto may be overridden by a two-thirds vote of each house of the General Assembly.
More information on the 2014-15 state budget, including the governor’s veto message, can be found at www.budget.state.pa.us.