HAZLETON – State Department of Revenue Secretary Dan Meuser outlined the facts according to the Corbett administration affecting the state budget Wednesday during an appearance in Luzerne County.
• Fact: Mandated state contributions to state worker and teacher pensions will increase by $700 million in 2013-2014, and by an additional $800 million the following year.
• Fact: Welfare programs will account for 40 percent of the state's 2013 budget, the state's largest expenditure at more than $10 billion in total.
• Fact: The state lost approximately $800 million in federal stimulus funding it received in the 2009-2010 and 2010-2011 fiscal years, much of which it had invested in education.
These are just facts, Meuser said. These are the things the governor has to look at every single day.
Meuser, a Shavertown resident and former president of Pride Mobility Corp. in Exeter, addressed the Hazleton Rotary Club about Gov. Tom Corbett's plan to increase state revenues and streamline the state budget. He was invited to speak by the club and state Rep. Tarah Toohil, R-Butler Twp., a Rotary member.
Meuser said job creation is key to increasing state revenue because personal income and sales taxes make up the lion's share of the $28.7 billion the state expects to take in next year, about $20 billion combined. Taxes on corporations will account for only about $2.5 billion of that budget, even though Pennsylvania has one of the highest tax rates of all states.
The fact is, job creation is the answer to personal prosperity, state advancement and revenue, and that's where the focus needs to be, Meuser said.
He touted tax credits for corporations that create jobs as a way of increasing overall revenue for the state, especially the resource manufacturing tax credit proposed to entice the Shell Oil Co. to build a natural gas processing facility, called an ethane cracker, in Beaver County. The facility would cost at least $2 billion to build, and create about 10,000 construction and plant jobs, according to published reports.
Phasing out capital stock and foreign franchise taxes will also relieve more than 100,000 small business owners of more than $800 million in tax liability, enabling them to create jobs, Meuser added. Corbett intends to phase them out completely by 2014, according to the Department of Revenue's website.
The Corbett administration's plan to streamline state expenditures, the other side of the budget-balancing equation, are focused on improving efficiency in state government and curbing waste and fraud in the state's welfare programs.
Welfare programs are now the state's single largest expenditure, with the Department of Welfare receiving more than $10 billion, about 40 percent of the state budget, annually, Meuser said.
The Department of Welfare has already eliminated approximately $250 million in welfare abuse under the Corbett Administration by conducting more frequent audits, more closely reviewing whether applicants meet eligibility requirements and, in a limited number of cases where a welfare recipient has been convicted of a crime, drug testing, Meuser said.
Meuser also tackled attacks on the governor's cuts to the state's second-largest expenditure, education, claiming Governor Corbett has no interest in cutting education funding.
The reductions in state spending on education in 2011-2012 occurred because federal stimulus money the state had invested in the previous two budget years ran out, and the state reverted to 2008-2009 education funding levels, he said.
Meuser said investment in both basic education and job training is a priority for Corbett and a necessity to create an educated workforce ready for the jobs of today and tomorrow.
Under the Corbett administration, the state has enacted some of the most aggressive education reforms in state history, including an educational improvement tax credit, opportunity scholarship program and teacher evaluation system, Meuser said.
The new Keystone Works program, which allows the unemployed to participate in on-the-job training for up to eight weeks while continuing to collect unemployment benefits and provides a $1,500 tax credit to companies who hire one of those trainees, tackles both job creation and job training together, he added.