Education spending remained flat. The pipeline for new school construction projects shuts down October 1, when a funding moratorium goes into effect. And higher education dodged a big funding cut for Pennsylvania's 2012-13 state budget.

Gov. Tom Corbett signed the measure into law on June 30 and while the moratorium left architects concerned there was cause to celebrate: historic preservation won a battle, under the $27.66 billion spending plan.

After more than a decade of fighting, architects and preservationists finally succeeded in enshrining into a law an historic preservation tax credit that is expected, as it has in 29 states, to create jobs, revitalize communities and increase economic activity.

The Historic Preservation Incentive Act, signed into law by the governor as part of the state budget, provides $3 million annually for historic preservation projects that rehabilitate buildings and homes.

While it isn't the $10 million sought by the bill's sponsor, Sen. Lloyd Smucker R-Lancaster, neither is it the $500,000 mentioned, though perhaps not seriously, during negotiations. It's a framework on which to build, according to the senator.

While the regulations need to be written over the next few months, the program went into effect July 1 and offers a 25 percent state tax credit for the rehabilitation of qualified income producing buildings that are also using the federal tax credit.

The first tax credits will not be issued until after July 1, 2013. Just like the federal program, this credit is issued after the project is completed.

Developers will be able to use both the existing 20 percent federal tax credit along with the 25 percent state credit, which is expected, as it has in other states, to help lure investment into Pennsylvania.

Data show that the 29 states with state credits tend to have an advantage over states that do not have tax credits in attracting investment in historic rehabilitation, said Caroline Boyce, CAE, Executive Vice President of AIA Pennsylvania.

"AIA Pennsylvania lobbied for 16 years to get this legislation passed," Boyce said. "This is a victory for AIA PA's legislative advocacy program, and for the work of the Pennsylvania Architects PAC, which supports candidates who understand our issues."

No doubt, the program is small - $3 million annually with an individual project capped at $500,000 - but it's a good start, said Betsy Masters, AIA, Chair of AIA Pennsylvania's Government Affairs Committee.

"While this is a modest program initially, with a $3 million annual cap, we will be able to prove the effectiveness of the program and work to build it in the future," Masters said.

Smucker, who championed the bill through budget negotiations - Rep. Robert Freeman, D-Northampton, advocated for it in the House - resisted an attempt to lower the per-project cap from $500,000. He also secured a commitment from leadership to increase the annual cap next year.

While there's some concern the $500,000 per-project cap could, theoretically, mean six projects could swallow up the annual $3 million tax credit, Mindy Crawford, executive director of Preservation Pennsylvania, believes that's unlikely.

"A lot of developers have told us there are projects that are smaller," Crawford said. That makes the tax credit critical because the numbers for some smaller projects could not work financially without the state tax credit, she said.

Regardless, (it's anticipated that as the tax credit bears economic-development and job-creation fruit the legislature and governor will increase the funding) the program is expected to make Pennsylvania more competitive.

Crawford said for years Pennsylvania has been at an economic disadvantage because it has been surrounded by states - Delaware, Maryland, Ohio, and New York - that offer historic preservation tax credits. New Jersey does not offer tax credits.

"We think there will be an uptick in projects," Crawford said.

Urban advocates in particular anticipate over time a surge in the development of historic old properties that until now have often been demolished because the cost of rehabilitation is too expensive.

"I think now, in urban centers, we'll see the greater benefit," said John Campbell, executive director of Historic Harrisburg Association.

Campbell said the state tax credit coupled with the federal credit will make projects much more affordable. "I think you'll see more projects and I think there'll be less demolition."    

Elsewhere in the budget, funding for public schools, the 14 state-owned universities, and state-related schools remained relatively flat. Institutions such as Penn State and the University of Pittsburgh were relieved at not seeing their subsidy cut 20 percent. In turn, they agreed to keep tuition hikes low for the fall.

What is worrisome, though, is the law the governor signed imposing a nine-month moratorium on accepting new applications for funding public school construction projects starting Oct. 1 and going through June 30, 2013.

The Corbett administration wants to re-evaluate the PlanCon to determine whether changes are needed in a program that hasn't been examined for many years to determine whether the money is spent under the best possible policies and procedures.

"I don't think it's ever been look at this intensively," said Drew Crompton, chief of staff and counsel for Senate Pro-Tempore Joe Scarnati.

A committee involving the Department of Education, school district officials, legislators and other stakeholders will meet possibly as early as this fall for a comprehensive study, including whether the state should still fund school projects.

That seems less likely, but what will be discussed is whether the state should focus funding on building projects in economically disadvantaged school districts instead of providing funds, as it does now, on the criteria of first-come, first-served.

Other issues are determining what is financially more efficient - funding renovations of old school buildings or focus funding on new construction? Democrats and Republicans alike want to see cost efficiencies, but they also want to see school projects that are energy efficient and environmentally and technologically smart.

"It's going to be a very comprehensive overview," said Timothy Eller, spokesman for the Department of Education.
The committee will present its findings and recommendations, which will have the administration's imprimatur on them, to the General Assembly no later than May 1, 2013. It is expected that whatever is agreed upon will be part of the 2013-14 budget.

Meanwhile, school districts can continue to plan and prepare for new projects, but nothing is going into the pipeline for consideration until after next June 30.

Finally, on other budget issues, no action was taken on the recommendations from the governor's task force to provide money to repair Pennsylvania's deteriorating bridges and roadways, keeping the state's now enormous transportation funding crisis simmering.

But $38 million for the Keystone Recreation, Park and Conservation Fund was restored, though cheering was dampened by a $12 million cut in the budget for the Department of Environmental Protection.