Report Calls for State Budget that Boosts Jobs, Long-Term Prosperity

HARRISBURG, Pa., March 3, 2011 /PRNewswire/ -- Coming out of the recession, Pennsylvania must take a forward-looking approach to the state budget that focuses on creating jobs and ensuring our long-term economic success, according to a report released Thursday.

With only five days to go until Governor Corbett unveils his 2011-12 budget blueprint, the Pennsylvania Budget and Policy Center and PennFuture teamed up to produce the new report which outlines a series of budget principles to promote a more prosperous Pennsylvania.

"Pennsylvania should spend every tax dollar wisely and effectively, but we don't want to see a budget that sets our recovery back, puts children and seniors at risk, and shift more costs on to local property taxpayers," said Sharon Ward, Director of the Pennsylvania Budget and Policy Center.

"We want to see a budget that continues to invest in communities and families, in infrastructure and innovation, and in clean energy," added Jan Jarrett, President and CEO of PennFuture. "The choices made now by Governor Corbett and the Legislature will determine Pennsylvania's path well into the future."

The report, "Principles for a Better Budget," finds that Pennsylvania weathered the recession better than most states with an unemployment rate well below the national average for 35 of the 36 months of the recession. The Commonwealth ranked third among all states in job creation last year, adding 65,000 new jobs. By contrast, New Jersey, which has taken an axe to its budget, came in dead last in 2010 job creation.

"Pennsylvania's above-average performance during and after the recession is no accident," Jarrett said. "Smart, strategic investments made the difference."

Principles for Prosperity

The report outlines strategies for creating jobs, promoting long-term economic success and bolstering investments in clean energy and energy efficiency.

Deep spending cuts will put thousands more Pennsylvanians out of work, potentially derailing the economic recovery, the report notes. Instead, an investment approach is needed.

For instance, with construction costs much cheaper in the wake of the recession, the state could get more bang for the buck by undertaking bond-financed infrastructure and school projects and energy efficiency retrofits. Policymakers should also work with the natural gas industry to train more Pennsylvanians to take Marcellus Shale drilling jobs. Too often those good-paying jobs go to out-of-state workers.

To ensure our long-term economic success, the report urges Governor Corbett and policymakers to maintain current funding levels for PreK-12 and higher education, despite the loss of federal funds, and to continue investments in early childhood education. Citing a decade of research, the report notes that every tax dollar invested in early childhood programs returns $7 to $16 in savings and increased earnings.

The report also notes the importance of clean energy investments to Pennsylvania's economy and recommends that the state increase renewable energy standards to keep our clean economy growing and producing jobs.

Taking a Balanced Approach

The report makes the case for good government reform, including more transparency and accountability in the capital budget process and in the distribution of economic development subsidies and tax breaks.

It also recognizes that costs must be cut and sets forth strategies for long-term cost savings. But Ward warned the state cannot rely on cuts alone, without sacrificing key investments in schools, services that protect children and seniors, energy and the environment, and jobs.

"We need to take a balanced approach that includes budget savings, accountability and new revenue," Ward said. "Cuts, especially to schools and county services, will only shift the cost of critical services onto local property taxpayers."

The report recommends that lawmakers enact revenue measures that are widely supported by Pennsylvanians and would allow the state to balance the budget while creating jobs, preserving critical services, and avoiding a property tax shift:

• Enacting a natural gas drilling tax, which exists in every other major gas-producing state;
• Extending the tobacco tax to cigars and smokeless tobacco as nearly every other state does;
• Enacting a temporary surcharge on capital gains and other unearned income;
• Lifting the cap on the oil franchise tax; and
• Replacing the state's 12-cent liquid fuels tax with a sales tax and allocating a portion to public transit.

View the full report online: http://www.pennbpc.org/2011-budget-principles.

The Pennsylvania Budget and Policy Center (PBPC) is a non-partisan policy research project that provides independent, credible analysis on state tax, budget, and related policy matters, with attention to the impact of current or proposed policies on working families. To learn more, go to www.pennbpc.org.

PennFuture is a statewide public interest membership organization that advances policies to protect and improve the state's environment and economy. PennFuture has experts and attorneys, outreach workers and communicators, lobbyists and educators, all working with local groups and citizens across the state to adopt and enforce great public policy. To learn more, go to www.pennfuture.org.

SOURCE Pennsylvania Budget and Policy Center