Budget unveiled

Ridge's plan ups spending, cuts taxes

Gov. Tom Ridge presented a $17.8 billion 1998-99 state budget proposal to the state General Assembly in Harrisburg yesterday that highlighted tax reductions for businesses and working families.

The spending plan -- the Republican governor's fourth -- includes a 2.9 percent increase in spending compared to last year's budget, which Ridge said was lower than the average increase in the last decade. When chained with other state funds and federal money, the plan lifts the total budget of the state to $35.8 billion.

"I believe this year represents a moment of truth for state government, a crossroads between the old way of doing business and the new,'' Ridge said. "Harrisburg's history is only too clear -- in good times, a spending spree. Then, when the economy inevitably turns down, a tax increase, at exactly the worst time. That is one tradition we must change.''

One proposed tax cut would exempt from the state personal income tax working families of four that earn less than $25,000 per year. This is expected to cost the state $54.1 million.

Ridge said he intends to combine $22 million in state funds and more than $100 million in federal money to expand welfare-to-work training programs and services.

State Rep. Mike Hanna, D-Clinton/Centre, said the working family tax exemption is a positive note, but added that income taxes as a whole and property taxes were not properly addressed.

"I'm glad he's looking at it, but he's not looking hard enough," Hanna said. "I think the people in the community would have liked to have seen them addressed."

Hanna also gave high marks to the welfare-to-work programs.

"The allowances in child care are excellent in easing the transition from welfare to work," he said. "And transportation can certainly help. Those are excellent proposals that will help those who need it most."

Ridge also presented a package that would raise basic subsidies for the 501 local school districts in the state by 3.5 percent, at a cost of $120.7 million. And in a $38.3 million plan, the State System of Higher Education and community colleges would see 3.25 percent hikes -- with Penn State receiving an additional $9.4 million.

Diane McCormick, press secretary for state Rep. Ivan Itkin, D-Squirrel Hill and minority whip, said the small increase does not bring spending on children in the poorest school districts anywhere near those of the most affluent.

"There's nothing to increase educational equity," McCormick said.

McCormick also criticized Ridge's proposals to cut business taxes. She said although businesses have received more than $3 billion dollars in tax cuts, residents have received a $1 billion increase throughout the years.

"Let's finally start cutting taxes for those who pay taxes," she said.

Pat Conway, president of the Centre County Chamber of Business and Industry, said he is pleased with Ridge's proposals for small businesses.

Conway said these proposals include the $5 million increase of the job creation tax credit and allowing businesses to carry forward losses to reduce future taxes for 10 years. He also said he is satisfied with Ridge's initiative to establish a catalyst fund, in which the state provides $10 million to establish a public-private partnership.

The fund would create a pull of dollars for start-up companies, Conway said.

In addition, Conway said cutting the capital stock and franchise tax is a step in the right direction for helping small businesses.

"We think it will help companies to continue to grow and create more jobs in Pennsylvania," Conway said.

State Rep. Lynn Herman, R-Centre, pointed out that the General Fund will end the current fiscal year with a $281 million surplus.

"I think what the governor emphasized the most is that we in Pennsylvania have enjoyed having a budget surplus in the last three years," Herman said. "This has been accomplished through sound economic policies and restraining excess state spending."