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February 5, 2013

Corbett budget plan would boost spending by 3 percent

ASSOCIATED PRESS Associated Press

HARRISBURG — Highlights of Gov. Tom Corbett’s 2013-14 spending plan for the year that starts July 1. Corbett announced the plan today.

THE BIG PICTURE:

— Increases overall state spending by nearly 3 percent to $28.4 billion.

— Raises $28.4 billion through taxes, fees and other revenue sources.

— Does not increase the personal income tax or sales tax.

TAXES

— Phases in an increase on the wholesale tax that gas stations pay on gasoline, the Oil Company Franchise Tax, over five years by uncapping the average price used to calculate the tax. That increase, which would help finance a five-year, $5.3 billion transportation initiative, would be partially offset by a phased-in reduction in the liquid fuels tax from 12 cents a gallon to 10 cents a gallon over two years.

— Begins in 2015 to phase in a reduction in the corporate net income tax rate from the current 9.99 percent to 6.99 percent in 2025. Also increases the maximum net operating loss deduction from $3 million to $4 million in 2014 and to $5 million in 2015.

— Continues the phase-out of the Capital Stock and Franchise Tax by reducing the rate from 1.89 mills to 0.89 mills this year and eliminating the tax altogether in 2014.

PENSIONS

— Reduces future benefits for current state workers and school employees by reducing the “multiplier” used to calculate those benefits, reducing annuity payments to employees who withdraw their contributions and capping pensions at the Social Security wage base.

— Requires that new hires be automatically enrolled in a proposed 401(a) defined-contribution retirement savings plan and that they contribute at least 6.25 percent of their salary.

— Reduces the employers’ (taxpayers’) share of funding the state’s two major pension funds to 2.25 percent, yielding savings that the administration has already subtracted from agencies’ 2013-14 budgets. The percentage would increase by 0.5 percent until it reaches 4.5 percent or the annual required contribution rate.

— Maintains current benefits for retirees.

EDUCATION

— Increases funding for public school instruction and operations by $90 million to nearly $5.5 billion.

— Maintains spending for higher education at this year’s $1.2 billion level.

— Finances a proposed Passport for Learning block grant program for public schools with $1 billion over four years from the sale of licenses under Corbett’s sweeping liquor-privatization initiative.

JOBS

— Consolidates eight existing revolving-loan programs under the Pennsylvania Business Development Authority into a single pool totaling $1.1 billion to streamline the process for businesses seeking capital.

— Increases funding by $10 million for the PA First program, which helps businesses that plan create jobs in Pennsylvania.

MISCELLANEOUS

— Includes nearly $15 million for three new state police cadet classes that are expected to train 290 troopers, plus $6 million for 90 new civilian police dispatchers.

— Provides nearly $40 million to expand home- and community-based services for people with intellectual and physical disabilities.

— Changes certain motor-vehicle rules, including the authorization of a fee option in lieu of license suspension for driving without insurance. Moves vehicle registration renewals to a biennial cycle, instead of once a year, and moves driver license renewals to a six-year cycle instead of the current four-year cycle.

— Outlines the administration’s pending contract with the British national lottery operator to take over management of the Pennsylvania Lottery. The company pledges $34 billion in profits to the state over the next 20 years.

— Summarizes the far-reaching, but purportedly budget-neutral, plan to replace the more than 600 state liquor stores with twice as many privately run liquor and wine stores. It also would allow beer and wine sales by retailers that include big-box stores, grocery stores, pharmacies and convenience stores.

——— 

Sources: State budget documents, Corbett administration.

 

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