HARRISBURG, Pa. (AP) Gov. Tom Corbett on Tuesday proposed a hold-the-line budget of $27.1 billion, with no tax increases, deep cuts to higher education assistance and a range of cost-cutting in services for the poor, elderly and disabled.

Corbett's proposal for the 2012-13 fiscal year that begins July 1 comes as his administration grapples with lackluster tax collections and hundreds of millions of dollars in higher costs for debt, health care and pensions.

Cuts would be widespread across state agencies. Meanwhile Corbett's plan would cut business taxes and he promised to roll out details soon of a new program that, he said, would create an employment market that matches job seekers with hiring employers.

In his address to lawmakers, Corbett, a Republican, called his budget "lean and demanding."

"It is a budget that proposes more in the way of reforms by continuing to change the culture of government from one of entitlement to one of enterprise," he added. "These tough decisions will lay the groundwork for the prosperity of tomorrow."

Along with lobbyists, dozens of demonstrators wearing black shirts that read "Gov. Corbett, Whose side are you on? Stand with the 99 percent" roamed through the Capitol during Corbett's speech.

Republicans, who control the Legislature, lauded the governor's proposal as a disciplined one that would protect taxpayers struggling during a turbulent economy.

"It's still $27 billion, it's a significant amount of money, and we're really living within our means and prioritizing those hard-earned tax dollars," said House Majority Leader Mike Turzai, R-Allegheny.

Democrats, however, criticized it as a cruel budget that would pile more pain onto the state's neediest while doing little to help them improve their lives.

"If you are on the low rung of the economic ladder in Pennsylvania, this governor has his foot on your neck," said Sen. Vincent Hughes of Philadelphia, the ranking Democrat on the Appropriations Committee.

Perhaps the most glaring cuts are a proposed reduction of about $230 million, or 25 percent, for the State System of Higher Education, Penn State University, University of Pittsburgh and Temple University, a year after cutting the schools by almost 20 percent. Community colleges would see a 4 percent cut and grants through the Pennsylvania Higher Education Assistance Agency would see a 6 percent cut.

Public schools, which had to absorb about $860 million in spending cuts this year, would see their basic subsidies rise about $45 million to $5.4 billion, but would lose $100 million in grants that helped fund full-day kindergarten and other programs.

In his proposal, Corbett would fold the public school aid with subsidies for transportation and other costs into a proposed new block grant that would give school boards more control over how the money is spent. Special education would get another $1 billion.

He also would institute hundreds of millions of dollars in cost-saving measures to offset a rising tab for services for the poor, elderly and disabled and keep the Department of Public Welfare budget roughly level at $10.5 billion.

Among them is a plan to save $319 million by eliminating cash payments for about 60,000 participants in the General Assistance program for people who do not qualify for federally funded welfare. It also would impose new eligibility rules, including minimum work requirements, for about 30,000 recipients who receive Medicaid benefits, administration officials said.

Corbett also would package funding together for at least a half-dozen social and human service programs such as child welfare and mental health counseling that counties administer. The idea is to give the counties more flexibility in using the money, but he also would extract a 20 percent cut that assumes counties can save money through fewer audits and reduced administrative work.

Corbett said his aim was to "right-size" the state welfare system and "give incentives to those who are able to transition from the welfare line to the employment line while it gives real relief to our poor."

For businesses, Corbett would continue the phase-out of an asset tax that businesses pay called the capital stock and franchise tax, reducing expected collections by about $250 million next year.

On law and order, Corbett proposed $1.9 billion for the state prison system, and he credited cost-saving measures there with the first budget in 10 years that would not need an increase for the Corrections Department. His budget also would provide $7.9 million for a new class of 115 cadets at the Pennsylvania State Police academy to begin in June, still leaving the agency with a projected 500 vacancies by June 2013, the administration said.

Corbett with support from Republican lawmakers this year enacted a $27.1 billion budget that reduced spending by about 3 percent. However, tax collections are lagging and Corbett's budget chief, Charles Zogby, said Tuesday that the current budget is expected to end in June with a $719 million shortfall.

While revenue is expected to increase in 2012-13 by more than $1 billion, much of it will be consumed by fixed increases in pension and debt costs.

Corbett's budget also did not address the state's deteriorating highways and bridges, but he promised to work on a solution in the months ahead.