Governor Tom Corbett in his annual budget message to the General Assembly last week proposed to continue a policy of restraint in public spending that, over the past two years, has eliminated a $4.2 billion deficit without raising taxes.

"We stopped our fiscal cliff before it even had a name," Corbett said in his budget address before the General Assembly on February 5. "And we didn’t do it by raising taxes and increasing spending."

Overall, the budget calls for only a slight increase in spending over last year – $28.4 billion in revenue compared to the $27.7 budget he signed in July 2012.

The budget asks for additional reductions in business taxes, which Corbett never mentioned in his address. The budget also contains a plan to fund road and bridge repair and asks for the elimination of the state liquor store system.

On the tax front, Corbett’s budget continues the phase-out of the capital stock and franchise tax, a tax levied even when businesses suffer a loss. The phase-out began in 2000 and the tax is scheduled to disappear entirely in January 2014.

His plan also calls for the gradual reduction of the corporate net income tax, the nation’s highest rate, from 9.99 percent to 6.99 percent. And, under his plan, the cap on net operating loss deductions would increase from $3 million or 20 percent of income to $5 million or 30 percent of income.

Nearly $2 billion in additional spending each year will be available for roads, bridges and mass transit under the plan. The money would be raised by eliminating what Corbett called an "artificial cap" on the wholesale prices of fuel.

"The tax was enacted when no one thought gas would go above $1.25 a gallon," Corbett said.

Finally, Corbett again called for selling off the state liquor monopoly and investing the proceeds in public education.

"Selling liquor is not a core function of government," he said. "Education is."

The state House of Representatives and Senate are set to hold a series of budget hearings and negotiations will intensify in the spring before the June 30 fiscal deadline.