HARRISBURG – Despite the current economic crisis, Gov. Edward G. Rendell outlined a blueprint for the commonwealth to create new opportunities while not imposing any new hardships on struggling Pennsylvania families and businesses as he presented his fiscal year 2009-2010 proposed budget to the legislature.
“We face a projected budget deficit today of $2.3 billion as a direct result of the national economic recession and despite the fact that our problems are largely not of our own making, we nevertheless have to act now to put our financial house in order,” said Rendell. “The budget that I propose is designed to attack these problems today.
“It preserves core, essential services and provides for the thousands of Pennsylvania working families who are struggling to hold on, while not subjecting them to a broad tax increase. Furthermore, while I recognize that inequities still exist in our business tax system, I believe it is vital to protect the $1.6 billion in business tax cuts that we have enacted since 2003. That’s why I propose to continue the phase-out of the Capital Stock and Franchise Tax for this year, which will boost our total business tax reductions to $2 billion in the last six years.
“To raise business taxes at this time could cause a reduction in much-needed spending and business investment,” added the governor.
The governor said his proposal will help put more Pennsylvanians to work, rebuild the state’s infrastructure, shore up key industries, make businesses more competitive, and, ultimately, position the state to emerge from the challenging times stronger.
“Our work together has put us in a position to weather this economic storm far better than most states,” Rendell said to the General Assembly. “Since 2003, we have invested more than $3.2 billion in an unprecedented effort to stimulate Pennsylvania’s economy, attracting at least $8.6 billion in new private capital investment that has helped create and retain 288,000 jobs here.
“Notwithstanding all of these efforts, we are now faced with the worst recession since the Great Depression and I am convinced that the crisis we face provides extraordinary opportunity for our commonwealth. If we get this right, we can chart a course that ensures our long-term fiscal stability and propels a remarkable Pennsylvania recovery.”
Continue Rebuilding Pennsylvania
Rendell’s 2009-10 proposed budget continues Pennsylvania’s job-creating infrastructure investments with an $537 million for Rebuild PA projects that includes:
$200 million for bridge repairs;
$294.5 million for water, sewer, flood control and dam projects;
$42.5 million for rail and aviation improvement projects; and
Another $1.9 billion in base Motor License Funds will be directed to bridge and highway repairs.
“Rebuilding our infrastructure represents a great opportunity to put our citizens to work. Given the absence of construction in the private sector, I am confident that we can use state and federal road and bridge funds to put Pennsylvanians to work in short order,” said the governor, noting that the repair work he proposes to more than 5,000 miles of roads and 450 bridges could put 84,000 Pennsylvanians to work.
He also cited vast freight rail expansions planned by CSX and Norfolk Southern. Together, these companies will spend more than $2.7 billion to improve their capacity to move more goods through Pennsylvania and provide permanent good-paying jobs to more than 2,000 residents.
Support for Business Programs and Projects that Work
The governor’s budget proposal also extends the commonwealth’s commitment to helping communities and state-owned universities undertake job-creating construction projects and attract new businesses by providing:
$130 million—or double the current fiscal year’s appropriation—to support capital projects at the Pennsylvania State System of Higher Education’s 14 universities.
$100 million in funding for important campus projects at the University of Pittsburgh, the Pennsylvania State University, Lincoln University and Temple University.
$60 million to reinvigorate the successful Business in Our Sites Program so more shovel-ready sites can be developed across the state that attract new businesses.
$40 million to support water and wastewater infrastructure projects related to economic development.
$10 million to build upon the successful Infrastructure Facilities Improvement Grant Program and begin clearing the pipeline of eligible projects awaiting support. Every $1 million of funding for this program creates approximately 2,000 new jobs.
“All of these state investments leverage private sector funds for business operation, expansion and site upgrades,” said the governor. “By putting more state funds on the table, companies will need less private financing, and as a result new projects can become more viable. We cannot let the state of the credit markets shut down our economy. I believe, as I did when I proposed the stimulus in 2003, that these funds will make it possible for Pennsylvania companies to weather this recession and hopefully come out of it even more competitive than they are today.”
Moving Closer to Energy Independence
Beyond investments in communities, infrastructure and brick and mortar projects, Rendell reiterated that Pennsylvania must make new investments in how energy is produced and used. He praised a bi-partisan plan to strengthen the Alternative Energy Portfolio Standards Act by increasing the use of solar energy and other renewable energy sources and developing new technologies that will reduce greenhouse gas emissions from fossil fuel-generated energy. The law mandates that by 2021, at least 18.5 percent of all electricity sold at retail in Pennsylvania be generated from alternative and renewable sources.
“If passed, I believe this proposal will further stimulate job creation in the commonwealth in a sector that holds real promise for decades ahead, but we also need to advance our progress toward energy independence by enacting a Pennsylvania Green Building Code,” said the governor. “If we are going to become energy independent and reduce greenhouse gas emissions we need to push the envelope on conservation. A Green Building Code does exactly that. It’s good for Pennsylvania’s economy, and it’s good for Pennsylvania.”
Higher Education as an Economic Engine, Tool for Future Growth
“Here in Pennsylvania, we must target investments that continue to improve the ability of our fellow citizens to compete in the global economy,” Rendell said. “That means continuing to make investments that produce better-educated workers. And that should come as no surprise, given the way that the recession is impacting our workforce. Education is the best defense against recession.
“Investments in higher education may be the single most important thing we can do to grow our economy over the long term, and it is unquestionably one of the best ways to prevent, or at least limit, the impact of any recession in the future,” added the governor who noted that the state’s 14 universities are enormous economic engines for the communities in which they are located.
He also cited December figures that show the unemployment rate for college graduates was 3.7 percent compared with 8.4 percent for those without college degrees.
The budget proposal includes two new initiatives designed to make college more affordable for the state’s families so that 20,000 additional students can enroll in college once fully implemented. The governor’s plan would:
-Restore $35 million in cuts that would have occurred next year because of PHEAA’s reductions to education grant programs.
-Increase in funding for enrollment at community colleges across the state by $15 million. Of this amount, $10 million will make it possible for 10,000 more students to receive grants to study in community colleges next fall.
-Provide critically needed college tuition assistance to Pennsylvania families earning less than $100,000 a year through the Pennsylvania Tuition Relief Act. All incoming students who qualify and seek to attend public or community colleges will pay what they can afford in accordance with established financial aid practices.
For more information on the Governor’s fiscal year 2009-10 proposed budget, visit here.