Pennsylvania Gov. Tom Corbett. (AP/Chris Knight)
Pennsylvania Gov. Tom Corbett. (AP/Chris Knight)

HARRISBURG, Pa. - A big year for tax collections, some new sources of cash and delayed pension and health care bills would help pour hundreds of millions of dollars of new money into education and social services under Gov. Tom Corbett's biggest spending plan for Pennsylvania state government unveiled Tuesday.

Corbett, a Republican who is facing a tough re-election battle, wants to create a big new grant program for public schools, boost money for a range of social services and start offering scholarships to Pennsylvania students in the fiscal year starting July 1. For Corbett, who balanced his first two budgets with cuts to public schools and social services, it's a turnaround in direction, but it will require some crafty, and perhaps risky, moves to accomplish.

Overall, Corbett will propose a $29.4 billion budget that increases spending by almost 3.7 percent over the current year. The total increase would be more than $1 billion, although a portion would go on the books of the current budget.

The state government for the first time is projected to break $30 billion in revenue for its main bank account that finances public schools and universities, social services, health care, pensions, debt and prisons. That increase is more than 4 percent over the $29.1 billion expected this year, the biggest such increase in revenue since the economy began recovering from the recession in 2009.

Corbett is not proposing to increase income or sales taxes, the two biggest pillars of the state budget.

It would be the biggest one-year spending increase under Corbett, who took office in 2011 facing a collision of a slumping post-recession economy, soaring pension obligations and the end of the federal government's bailout of state governments.

To spread new money to education and social services without raising taxes, Corbett must deal with more than $1 billion in costs for public employee pensions and health care for the poor.

He will count on more than $300 million in new money from newly legal gambling in bars, a stepped-up government seizure of unclaimed investment and bank accounts and royalties from the extraction of natural gas from beneath publicly owned lands.

Meanwhile, he will look to postpone nearly $600 million in Medicaid and pension payments until later years and divert $225 million in securities from a health care investment fund to cover more of the state's pension costs. Delaying the pension payments by reducing the allowable increase will also save school districts $130 million next year, administration officials say.

Complicating things are a drop in federal Medicaid funds of more than $340 million a year and new administrative costs under the 2010 federal health care law, the Corbett administration said. It is counting on $125 million in savings through changes he wants to make to the Medicaid program.

Highlights of Gov. Tom Corbett's spending blueprint for the 2014-15 year that starts July 1:

THE BIG PICTURE:

- Increases overall state spending by 3.3 percent to $29.4 billion.

- Generates more than $30 billion through taxes. fees and other revenue sources,

TAXES/REVENUES

- Contains no new taxes, but Corbett signed two major new revenue sources approved late last year - higher fuel taxes and motor-vehicle fees to finance transportation work and the legalization of small games of chance - and they will be in effect for their first full year.

- Continues to phase out the Capital Stock and Franchise Tax, which was targeted for elimination this year but is now slated to expire in 2016.

- Reduces the time period in which unclaimed property must be held by outside institutions from five years to three, generating $150 million in one-time revenue.

- Allows limited natural-gas drilling on state-owned parks and forests if they do not require any additional surface impact, generating $75 million in immediate revenue and additional future royalties.

EDUCATION

- Combines $240 million in new money with the current funding for the decade-old school accountability block grant program to create a proposed $341 million Ready to Learn block grant program that will provide a menu of options that school districts on how they can use the money.

- Provides $25 million through the Pennsylvania Higher Education Assistance Agency for new merit-based Ready to Succeed scholarships for students pursuing two- or four-year post-secondary degrees.

- Eliminates a provision that allows charter schools to collect double payments for employees' pension costs, saving more than $62 million.

- Increases special education funding by $20 million.

- Increases spending on early-childhood education by $10 million, providing access to pre-school programs for nearly 1,700 additional children.

- A $10 million increase for a "hybrid learning" program that encourages educators to apply technology to improve student performance, allowing an additional 100 schools to participate.

- A $500,000 increase for public libraries.

JOBS

- A $5 million increase for PA First to expand job training and other activities that help businesses seeking to relocate or expand in the state.

- Injects an additional $1 million into a $5 million Targeted Industry Program, which provides grants to students seeking certification in high-demand industry such as energy, diversified manufacturing and food production.

- A $1 million increase in state funding that will leverage nearly $4 million in federal money to expand on-the-job training for young people with disabilities through the state Labor and Industry Department.

- A $500,000 increase for the Partnership for Regional Economic Performance to expand technical consulting to manufacturers seeking to move their overseas operations to Pennsylvania.

PENSIONS

- Reduces an anticipated $610 million increase in the state's share of pension costs for state and school employees by postponing some immediate payments while reducing benefits for future public employees to cover that cost. It is expected to save the state and school districts about $300 million.

- Transfers $225 million in private equity investments and cash reserves from the Tobacco Settlement Fund and Health Venture Investment account to the school employees' pension fund.

HEALTH CARE/SOCIAL SERVICES

- Projects $125 million in savings next year from his Healthy PA plan, which includes proposed reforms to the state's Medicaid program and his proposal to use federal Medicaid expansion money to buy private health insurance for an estimated 500,000 newly eligible people under the federal Affordable Care Act.

- Doubles funding for the community-based Health Care program, providing $4 million for four new facilities.

- A $4 million increase to recruit and retain physicians, dentists and other health-care professionals in rural parts of the state by repaying their education loans.

MISCELLANEOUS

- A $45 million increase to repair and improve state parks and forests.

- Nearly $14 million to finance four new Pennsylvania State Police cadet classes and 350 new troopers.

- Nearly $10 million to provide a single access point to collect, coordinate and report child abuse and neglect cases.

- An increase of $1.4 million, or 10 percent, for domestic violence programs.