DN Editorial: How Gov.-elect Corbett can fill $4 billion deficit

Posted: January 03, 2011

LAST WEEK, Gov. Rendell sent Gov.-elect Tom Corbett a transition handbook, which included thousands of pages about each agency under control of the governor. We're glad Rendell left Corbett a map to help navigate the tricky road ahead, since it's projected that Pennsylvania will have a $4 billion deficit next year.

Pennsylvania's budget problems present a special challenge for Corbett, who campaigned on a pledge that he would not raise taxes. Below are some choices - each tough for Corbett in different ways - that could be made to help solve the state's budget problems after he is inaugurated Jan. 17.

Squeeze money out of Marcellus Shale.

Call it a tax, call it a fee, we don't care. Just get some money from the companies drilling for natural gas in the Marcellus Shale region of the state. This is a great issue for Corbett to show his independence from special interests, since the natural gas industry dumped hundreds of thousands of dollars into his campaign war chest. It's also a great move for the troubled state budget: the Center on Budget and Policy Priorities estimates that we've lost more than $118 million in revenue since Oct. 1, 2009, because we don't have a severance tax. Corbett needs to figure out a compromise that will generate money needed to offset the negative impact of drilling on our roads, bridges and environment.

Close corporate tax loopholes.

The state tax code is littered with loopholes that favor big corporations and wealthy special interests. For example, the so-called "Delaware Loophole" allows big corporations to avoid paying state taxes by using a post office box in Wilmington as their address. Another troubling loophole is the "sales tax vendor discount," which essentially gives companies a break for paying their sales tax on time. If this outdated break were eliminated, it would generate about $76 million in revenue.

Get the prison budget under control.

Last year, the state increased spending on prisons by $137 million, pushing the total to about $2 billion. That's about 7 percent of the state budget, which is way too much. How do we get here? According to a 2008 report from the Pew Research Center, Pennsylvania has the second-longest prison sentences in the country. Many of these are mandatory minimums for minor drug crimes, which has contributed to the prison population growing by 280 percent in about 30 years. We hope that Corbett - who has been a tough-talking prosecutor for most of his career - can use his law-enforcement credentials to bring some common sense to the so-called "War on Drugs" and prioritize alternatives to incarceration.

Don't be afraid to wrestle the Legislature.

Pennsylvania has one of the largest legislatures in the nation, with a budget of more than $300 million and nearly 3,000 employees. Corbett should take a hard look at reducing the size of the Legislature, a proposal that was recently endorsed by the incoming speaker of the House. Corbett will need the support of lawmakers for his other initiatives, but that shouldn't stop the incoming governor from calling out lawmakers' wasteful spending. It's also another opportunity for Corbett to show his independence, since both houses of the Legislature are controlled by Corbett's own party.

For more coverage on the city and state budget, go to www.ourmoneyphilly.com

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