State Reps Get Earful Over Corbett Budget

Their message was loud and clear. Over 120 people braved tornado warnings and pouring rain on April 20 to storm into Fowler Family Southside Center and let four state representatives know, in both Spanish and English, what they thought of Governor Corbett's proposed $27.3 billion budget. 

Teresa Donate, a professor at Northampton Community College, summed up the mood of this crowd. "Vengo prendia en candelo!" she fumed. Translated, that's "I'm on fire."

This anger is in stark contrast to the electorate's mood when Tom Corbett was first elected just last November, in a near landslide. Now, his approval ratings hover at just 34%. According to State Rep. Joe Brennan, it's a direct result of Corbett's budget message. Because the Governor is unwilling to enact any tax hikes, options are limited.

"We're competing for a pot of $27.3 billion," explained State Rep. Joe Brennan, who explained that increases in one area will mean cuts somewhere else.

Brennan, joined by State Representatives Bob Freeman and Steve Samuelson made clear they oppose Corbett's no-tax-increase budget, which closes a $4.2 billion deficit with draconian cuts in spending to education, state jobs, environmental protection and community and economic development.

Only State Rep. Doug Reichley, the sole Republican on this panel, told everyone he opposes any tax increase to close a deficit gap. 

"We are in the worst economy in 70 years," he said. "The Lehigh Valley has the second highest unemployment rate in the state. ... What I get is people complaining, 'Stop raising taxes. Cut the spending.'" 

1. Education Cuts. - Corbett's budget eliminates $550 million in basic funding as well as an additional $260 million in school district grants for kindergarten and prekindergarten. It slashes another $650 million for higher education. And that's why Teresa Donate is on fire.

She told the state representatives that these cuts bring Northampton Community College back to 1995 levels, although enrollment has doubled since that time. She warned these cuts will impact minorities the most. "What do we tell them?" she asked. "Who's going to tell them there is no longer an American dream?"

She was joined by two local lawyers, Edward J. White and Don Miles. Ideological opposites, they agree on the importance of education. White, a former intern for Congressman Don Ritter, even paraphrased LBJ's claim that all the ills of the world could be solved with just one word - education.

Southside Bethlehem advocate Roger Hudak told state representatives that 250 Donegan Elementary school students, 98% of whom are at the poverty level, have seen their PSSA scores go up as a result of after school programs.

He scoffed at reducing spending for education as a way to "take back our country." "Take it back to what? The '30s?" he asked.

Reichley explained that many of the education cuts are the result of the stimulus coming to an end. "Some of us in the legislature warned school districts, 'This funding level will not continue, and the state will not be there to pick up the slack. ...'" He added that many of the people now being laid off were hired with stimulus money. "We told you this might happen."

But State Rep. Steve Samuelson disputed Reichley's claim. "That is not entirely true because that is only part of the story," he said, indicating that stimulus money for education was about $654 million, but Corbett has cut $1.1 billion.

He noted that, if Corbett was simply returning funding to 2008 levels, Bethlehem Area School District would lose $2.5 million. But it's losing $7 million. In Allentown, a return to pre-stimulus spending would mean an $8 million loss. But they're being cut $15 million. East Penn School District should be cut $1 million, but is losing $2 million.

2. Environmental cuts. - At a time when much of Pennsylvania is in a natural gas drilling bonanza, Corbett proposes eliminating $31 million from the Departments of Environmental Protection and Conservation & Natural Resources. He imposes no severance tax for Marcellus Shale.

Speaking for the Sierra Club, Bethlehem Attorney Don Miles called these cuts an "assault on Pennsylvania's environment," noting this is the third year in a row in which the environmental budget has been reduced. Miles told state representatives there are 30 drilling inspectors for 6,000 Marcellus Shale wells, and added that Corbett is now filling his government with energy industry executives and "polluters." He called for a severance tax, and State Rep. Bob Freeman echoed Miles' concerns.

But Doug Reichley reminded everyone that the gas companies already pay income and local taxes, and provide jobs.

"It's very popular here, where we don't have any natural gas, to say, 'Put a tax on it.' I would suggest to many of you ..., go up there [in the northern tier]. There's record level employment. There's record level income for those people, who for decades have been in the economic backwash of this Commonwealth. They now regard natural gas as the arrival of the golden goose, and resent people from our area telling them we're going to start taxing activities that are now providing them that income." 

Reichley agreed that some kind of impact fee is needed, but it still would not raise enough money to supplant the cuts being proposed.

3. Human Services Recipients Scared. - John Buss, a blind man who receives adult services and was led to the podium, wondered what will happen to him. His program has been cut. Wheelchair-bound Yvette Ortiz claimed that the Human Services Development Fund is the only thing keeping her out of a nursing home. That's been eliminated.

4. All Weed, No Seed. - Laura Accetta, who manages Easton's Weed and Seed program, claims it impacts 11,000 people, and is one of 17 such programs throughout the state. Under Corbett's proposed budget, Easton will lose $140,000, 70 percent of its total revenue.

"Crime is at its lowest rate in 40 years in Easton," remarked Acetta, who wonders why Corbett would eliminate a program that reduces crime while increasing spending to incarcerate people. 

5. The Delaware Loophole. - State Rep. Bob Freeman proposed one way to raise up to $1 billion in new revenue, the Delaware Loophole bill.Freeman, Brennan and Samuelson are all sponsors.

Here's how the loophole works. A Pennsylvania corporation sets up a shell company in Delaware, which charges the Pa. corporation a "royalty" for using its trademarked name or patent. That Pa. company deducts this royalty from its income, reducing or outright eliminating its tax burden. As a result, over 70 percent of multi-state corporations doing business in Pennsylvania - places like Wal-Mart or Home Depot - paid no corporate net income taxes in 2007. An additional 10 percent paid $1,000 or less -- about as much income tax as a family earning $33,000.

This bill would also lower the corporate income tax rate from 9.99% to 7.4% over the next three years.

According to Steve Samuelson, this loophole has been closed in 23 or 24 states.

"I don't see how anybody with a heartbeat could listen to these stories and not be concerned," said CACLV's Alan Jennings, who hosted this forum. Reichley cautioned everyone this is just a proposed budget, but whatever passes is going to be a Republican budget.

State Rep. Joe Brennan reminded everyone that Republicans hold 112 of 202 seats in the House and 30 of 50 seats in the Senate. Reichley indicated that the House Republican proposal would provide more funding for education than the Governor has proposed.

As people began to applaud, Reichley stopped them. "Hold on. Don't applaud yet. It's not going to replace everything that he proposed to cut."