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Governor Edward G. Rendell The Pennsylvania economy is making a significant rebound. Since 2003, our economy has grown by 120,000 new jobs. USA Today recently identified Pennsylvania as the only major industrial state showing gains in personal income. In the last three years, the number of new businesses has grown each year to record numbers. These gains are the result of the mutual hard work of the legislature and my office to craft and enact the economic stimulus package, and the strategic investments we have made in our education system, our environment and our communities. We are now seeing record job growth, along with new businesses, increased income and improved profits -- the byproduct of which are state revenues that are more robust than expected. The Department of Revenue now estimates that the 2005-06 fiscal year revenues will exceed budget projections by more than $700 million. After accounting for supplemental appropriations for the 2005-06 budge, and the required transfer of 25 percent of the remaining revenue surplus to the Rainy Day Fund, we now project that Pennsylvania will conclude this fiscal year with a revenue surplus of approximately $260 million. I have directed the Secretary of the Budget to submit a supplemental request to the Chairs of the Appropriations Committees shortly. This request will propose that we apply almost $100 million to further cut business taxes and to help our working families by making contributions to college savings plans tax-free. The request will also propose that additional funds be directed to three primary areas: to cover the costs to the state budget caused by federal budget cuts, including the flawed federal prescription drug program; to address the impact of spiking fuel costs on our citizens; and to increase the health and safety of our communities. Increasing Tax Cuts for Business and Families Over the last three years, we have cut business taxes by almost $800 million; however, the Capital Stock and Franchise Tax still hits Pennsylvania businesses -- particularly manufacturers -- hard. I am convinced that accelerating the phase out of this tax will do more to help Pennsylvania workers than any other business tax change we can afford to make at this time. I will therefore propose that we accelerate the phase-out of this onerous tax by allocating $73 million to further cut this business tax from 5.99 mills to 4.49 mills. Pennsylvania families who scrimp and save to send their children to college are also included in my tax relief plan. While the budget I proposed in February increases funding for student grants, the simple fact is that the price of college is increasingly unaffordable for tens of thousands of hard-working families. In the supplemental budget request, I propose to make contributions toward tuition savings plans -- known as 529 plans -- tax free for Pennsylvanians. Parents should not pay tax on the savings they are setting aside to help their children go to college. This proposal means a savings of $18 million for Pennsylvania families. Coping with New State Costs for Federal Programs While these proposed tax changes are intended to taking us further down the path of prosperity--where jobs are plentiful and businesses expand because they can find highly skilled Pennsylvania workers--a portion of this surplus should be used to pay for unexpected new costs to the commonwealth that have resulted from the poorly designed federal prescription drug program known as Medicare Part D. These funds will also fill holes left in our social safety net programs due to federal cuts and changes in federal rules that push more social welfare costs onto state budgets. Coping with these unfunded mandates imposed on us by the federal government will require $84 million. Alleviating the Impact of the Soaring Cost of Energy The absence of a federal energy policy is also causing costs to rise at every level of government. In this regard, our school districts are particularly disadvantaged. As a result, they are finding it difficult to balance their budgets and keep their school buses running. In the aftermath of Hurricanes Katrina and Rita, we estimate that our schools are paying as much as $25.7 million in unanticipated costs due to the rising price of fuel. In this time of high fuel prices, we must step forward and help our schools meet these costs, and the supplemental request will include funds to alleviate these impacts. My plan would also support Pennsylvanians who purchase hybrids and other alternative fuel cars, and Pennsylvania companies that shift to equipment that run on alternative fuels. I also propose that we increase the funds available under our Alternative Fuel Incentive Grant Program by $6 million. This would allow us to increase our hybrid car rebate program from $500 to $1,000. This increase will ensure that the commonwealth can fully meet the grant applications already submitted to the program by Pennsylvanians making smart alternative fuel decisions. We can now afford to fund the Green Sales Tax Holiday Program so that Pennsylvanians are rewarded for making smart purchases for this program to lower their home energy bills. I will also propose the inclusion of the $5 million necessary to reward energy-wise consumers. Making the Commonwealth Safer The surplus will also allow us to further our aggressive response to public safety challenges. The supplemental request will include funds to increase the number of state troopers to the highest number currently allowed by law and to outfit our troopers with state-of-the-art safety vests. This supplemental request will also improve the technology and laboratory resources for our state police so they can solve crimes more quickly and with greater accuracy. Pennsylvania leads the nation in avian flu preparedness and prevention. However, I believe that we must do more, and I will propose a $1.4 million increase to our Animal Health Commission for additional surveillance of wild and farm animals aimed at keeping our farm animals healthy and free from communicable diseases. Finally, this supplemental budget request will include adjusted expenditure numbers to more accurately reflect costs based on the latest data available, for instance for our Charter School reimbursements, early intervention costs, and for the FY 2006-07 cost of the corrections officers arbitration award. I am pleased with the work being done between my office and the legislature to move the commonwealth forward. We can all take pride in the fact that our economic progress allows us to lower taxes and meet the critical needs of our schools and our communities. I look forward to working with the Legislature over the coming weeks as we finalize a budget that serves the needs of our commonwealth. Sincerely, CapNews Guest Speaker: Archives |
