A Capitolwire Column
By Peter L. DeCoursey
HARRISBURG (June 22) – After years of questions about how much Gov. Tom Corbett really cares about the conservative education reforms he espouses, he just gave a clear answer in the budget framework: education reform comes right at the top.
It even comes ahead of the reigning goals that have dominated the governor’s tenure: spending less money and fattening the state revenue surplus.
Even EITC vouchers, which are pretty clearly the governor’s third priority in education reform, rank higher than his spring-long obsession with ending the year with a $500 million revenue balance.
After the governor and GOP legislative leaders finished forging their $27.656 billion framework Wednesday, legislative budget negotiators say the money is there to fund a $25 million expansion of the Educational Improvement Tax Credit. That would expand its regular program to give tax credits to businesses that give middle-class and working-class kids scholarships to private schools from $75 million to $100 million.
It would also create a new $50 million EITC 2.0 program – maybe called EISC, the S standing for scholarship – to fund bigger scholarships than EITC offers, for poor kids trapped in bad, usually dangerous schools.
But that money is going to come from revenues and the balance sheet, not by cutting other programs on the spend side of the budget, said Drew Crompton, chief of staff to Senate President Pro Tem Joe Scarnati, R-Jefferson. The comment of Crompton, a key drafter of the forthcoming tax code bill, was confirmed by House Appropriations Committee Chairman Bill Adolph, R-Delaware.
Kevin Harley, the governor’s communications director, responded: “We are still negotiating with the House and Senate on specifics and, per our agreement with the legislative leaders, are not discussing publicly” those matters.
Adolph and Crompton said the amount left on the state balance sheet by this budget was still under discussion, pending what happened in the House on EITC, a business tax cut, education reform and vouchers.
To review briefly, the House-Senate proposed budget left next year with $267 million in the state’s till. Corbett wanted $500 million. Then, as they negotiated the budget, June gave them both a present – an estimated $100 million in revenues above estimate.
Which means that since the governor agreed to the House-Senate spending proposal of $26.656 billion, that $100 million – perhaps more if June gets still better – gets added to that $267 million.
Even better, that strong June and the strong March and April before it led the administration to bump up its overall by about one half of a percent, nearly $140 million.
So the spring in general and June in particular added $240 million to the bottom line: $100 million now and $140 million additional projected revenue for next year.
Which meant the governor could meet the legislative spend request and have his $500 million year-end balance.
But no one was hailing that as a win where both sides got what they wanted: the Senate got their spend and the governor got his surplus.
When I asked why, it was because that year-end balance had a claimant in addition to saving it for next year’s pension hike and welfare cost spikes: the EITC Twins, 1.0 and 2.0.
If 2.0 can pass the House, then that is $50 million more spent out of Corbett’s end-of-the-year bottom line.
Because Corbett has already agreed to cut his $500 million year-end balance to $430 million, to pay for EITC Classic and the final step of the Single Sales Factor phaseout.
The House has pushed hard for $13 million to finish single sales factor, to finally base state corporate income taxes on sales by corporations, not on their assets. This change is known as Single Sales Factor and the House, Senate and various governors have moved this forward until the tax is 90 percent based on sales. This proposal would finish it.
Corbett supports it, as does the Senate GOP, but the House sorta jammed it into these negotiations and got it included. The Senate and governor are OK to accept that one.
So that and the $25 million for EITC Classic got the year-end balance down to $430 million as PA Independent reported.
If EITC 2.0 is approved, that drops the year-end balance to $380 million, negotiators said.
Because as legislative leaders have made really clear for quite awhile, they don’t want to cut $75 million from their other restorations of Corbett’s cuts: $245-million plus for universities, $124 million for school early childhood block grants and fiscally-failing schools, $82 million for county welfare and intellectual disability serves.
But now they don’t have to find that $75 million from their spend. Instead, they say it will come out of revenues. That does not increase the state spending, but it does come out of the year-end balance.
So the question now is, can the House pass it? If it can, the money is there, and after some kvetching in the Senate, because Senate Education Committee Chairman Jeff Piccola, R-Dauphin, has been little-consulted so far on the EITC proposals, it probably passes there.
It will still have a battle because pension payments apart, Corbett has cut public school state funding compared to when he took over, even not counting federal stimulus money. Even counting pension payments and the restored $100 million for block grants, it is a modest $200 million or so above the pre-stimulus 2008 levels.
And this is not the kind of education spending increase the establishment in that field will welcome or support.
But EITC is very popular and doesn’t need the support of the public education community to be enacted, even with this new voucher verson.
And Corbett has been clear for three years that this, not annual increases for public education, is his idea of how to improve education in the state.
So we have a bunch of examples of how much Corbett cares about education reform: it ranks higher than the traditional GOP governor penchant for under-counting revenue. It ranks high enough to cut the year-end balance by $120 million if EISC passes.
Gov. Corbett’s third-ranking education reform, EISC vouchers, ranks right up there with not spending money and business tax cuts. That’s as high a rank as Corbett gives anything.