HARRISBURG, Pa. (AP) - Gov. Tom Corbett is defending the biggest projected increase in revenue of his administration, saying Friday that it is backed up by economists who advise his administration and his own personal observations that growth is picking up.
The 4 percent increase in the state’s tax collections that Corbett is projecting for the fiscal year beginning July 1 would be the biggest since the economy began recovering from the recession in 2009. It will be necessary to help pay for Corbett’s $29.4 billion spending plan that he proposed Tuesday.
“We see growth in the economy. We employ economists … that believe there will be about a 4 percent growth increase during this period of time,” Corbett told WITF-FM’s Smart Talk program.
Democratic lawmakers say Corbett’s budget is also held together by about $1 billion in one-time money and “gimmicks,” including delaying nearly $400 million in installment payments to Medicaid providers, transferring $225 million of cash and equity investments to reduce the state’s school employee pension payment, postponing $170 million in pension payments and counting $150 million from a stepped-up government seizure of unclaimed investments and bank accounts.
Lawmakers say they will study Corbett’s election-year assumptions closely. Should tax collections fall behind an official revenue projection, postelection spending cuts could be the result. Still, Corbett is not alone in being bullish.
Ryan Sweet, an economist at Moody’s Analytics in West Chester, Pa., said he expects a strengthening economy and hiring over the next three years as businesses invest more and residential housing construction picks up.
“Pennsylvania businesses have squeezed almost as much as they can out of their current workforce, and to meet demand, they’re going to have to hire,” Sweet said.
Job growth has been concentrated in low-paying, low-productivity industries, but Sweet said he expects that to shift, with a surge in hiring in higher-paying, middle-class jobs.
A 4 percent increase would push the state’s overall tax collections past $30 billion for the first time. The current fiscal year’s budget is based on a projection of a 1.6 percent increase in revenue. Tax collections were slightly behind those expectations at the end of January while the rate of job growth in Pennsylvania has slowed every year since Corbett became governor in 2011.
Corbett noted that he read that business leaders are bullish about growth in Philadelphia.
“They were very bullish,” Corbett told WITF’s interviewers. “They see some growth going on down there, and I see it across the state and, frankly, across the country.”
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