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Politics & Government

Corbett's Cowardly Balancing Act

Governor continues corporate handouts and tax loopholes at the expense of kids and the poor.

Down in the polls, Governor Tom Corbett recently complained that he shouldn't be blamed for his proposed education cuts, and he actually has a point, if not the one he intended to make.

The reason that state budgets across the nation are out of balance is the recession. Pennsylvania is not special in this respect. While pension issues present a problem in the medium-to-long term, the 2011 state budget deficit is the result of a huge drop off in revenues. We're still kissing 8% unemployment, fewer people are working and paying taxes, so tax collections have been depressed.

Since tax receipts will return to normal as the economy recovers, the federal government could easily prevent state and local layoffs by extending the stimulus aid for an additional 2 or 3 years until the recovery is less fragile.

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None of the layoffs at the state and local level would be necessary if Republicans and conservative Democrats in Congress were as serious about the jobs crisis are they are hysterical about .

So Tom Corbett is absolutely correct that your Congressman, your Senators, and the President of the United States bear the ultimate responsibility for Pennsylvania's budget woes.

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But he's absolutely wrong that he has no choice but to cut education.

Last week, the AP reported that the state Revenue Department has a $506 million surplus - over six times greater than the $78 million surplus Tom Corbett expected to have left at the end of the fiscal year, 2 months from now.

Mr. Corbett has proposed $1.6 billion in education cuts next year. The difference can easily be made up by closing loopholes, ending corporate handouts in the tax code, and enacting a severance tax on natural gas fracking.

For instance, as my colleague Bernie O'Hare , the Delaware Loophole lets large companies like Wal-Mart and Home Depot pay a 3.09% tax rate intended for small businesses. This would raise about $450 million.

If Pennsylvania levied a statewide severance tax on natural gas drilling, like every other state, that could raise around $400 million annually.

The state tax code is also a mess, with tens of millions of dollars lost to totally random tax exemptions for things like horseshoes, helicopters, malt liquor and candy to name just a few. Last year Ed Rendell proposed to lower the sales tax rate to 4% from 6% while broadening the base to include 74 random exemptions, but it went nowhere. 

You might think an obvious moves like this would be on the table if the state was really facing down the Day of Reckoning scenario Mr. Corbett has described. And yet the Pennsylvania Budget and Policy Center was able to find $1.8 billion in savings from closing loopholes, cleaning up the tax code and enacting a severance tax on natural gas drilling.

It is hard to understand why the Governor thinks he shouldn't take the heat for ending full-day kindergarten all around the state when low-hanging fruit like this remains unplucked. Who could take pity on Mr. Corbett when taxpayers still pay companies a bonus to pay their taxes on time? 

Mr. Corbett deserves the blame for these cuts because he is choosing to balance the budget in a cowardly way: cutting spending on weak claimants - kids and low-income people - while protecting meritless weak claims on taxpayer money.

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