Corbett won't sign Pa. no-tax budget yet

Gov. Corbett, right, with Lt. Gov. Jim Cawley, left at a Sunday news conference.
Gov. Corbett, right, with Lt. Gov. Jim Cawley, left at a Sunday news conference. (AP)
Posted: July 02, 2014

HARRISBURG - Gov. Corbett refused late Monday to sign a $29.1 billion budget that the Republican-controlled legislature scrambled to deliver to him just 90 minutes before the midnight deadline.

The legislature approved a plan that includes some increased money for schools, and would not raise any taxes or impose new ones.

But Corbett, a Republican facing a tough reelection battle in the fall, signaled disappointment that the legislature was unable to deliver on one of his priorities: a measure that would change pension benefits for new employees.

"The budget I received tonight makes significant investments in our common priorities of education, jobs, and human services," the governor said in a statement shortly before 11 p.m. "It does not address all the difficult choices that still need to be made. It leaves pensions, one of the largest expenses to the commonwealth and our school districts, on the table."

He added: "I will continue to work with the legislature toward meaningful pension reform. I am withholding signing the budget passed by the General Assembly while I deliberate its impact on the people of Pennsylvania."

It was unclear how long Corbett, who has often boasted of his record of delivering on-time budgets, would hold out. A protracted stalemate could affect the state's ability to pay bills or workers.

The plan passed both chambers largely along partisan lines, with the House giving its stamp of approval shortly before 10:30. In doing so, the GOP-controlled legislature sent Corbett a spending blueprint that includes some increases for public schools and social safety-net programs, while filling an estimated $1.5 billion budget gap largely with onetime fund transfers and delayed payments.

But up in the air was whether the final budget would include language to allow Philadelphia to impose a $2-per-pack tax on cigarettes, which could raise about $80 million for city schools. In a late-in-the-day maneuver, Democratic senators from Philadelphia struck a deal with their Republican colleagues and slipped the tax language into a budget-related bill, which the full Senate is expected to vote upon on Tuesday.

Sen. Jake Corman (R., Centre), who chairs the Appropriations Committee, said he believed the state, though struggling under the weight of an unexpected shortfall in tax collections, is still making "strategic investments."

"We put together a responsible budget based on sound information," Corman said.

Sen. Vincent Hughes (D., Phila.) disagreed, calling it "the flimflam sham budget."

"The Wimpy approach to budgeting," Hughes, the ranking Democrat on the Appropriations Committee, said of the budget for the fiscal year that begins Tuesday.

The Senate vote was mostly along party lines: All Democrats voted against it, and all but one Republican approved it.

Sen. Chuck McIlhinney (R., Bucks) said in a statement that he voted against it because he was angry about the budget plan's allowance of additional gas drilling on state forest lands to raise revenue.

Senate Republicans had been willing to consider raising revenue through tax increases - including a new tax on the extraction of natural gas from the Marcellus Shale - but Republicans in the House took a hard line against any new or increased taxes.

Under the Republican plan, spending would increase by about 2.5 percent over the previous year - but the package also adds $220 million to that year's budget. Though there would be increases for public schools and social safety-net programs, they are not what Corbett originally asked for when he unveiled his proposal this year.

For instance, Republicans are seeking to pare back Corbett's "Ready to Learn" program from $240 million to $100 million. Philadelphia stands to receive $33.7 million under Ready to Learn.

Republicans have also been unable to agree on a plan to rein in the cost of public employee pensions. The Senate late Monday did pass a bill that would require elected officials, including legislators, judges, the governor, and the attorney general, to move into a 401(k)-style plan.

But that is a far cry from the overhaul Corbett is seeking, which would affect all new employees.

On Sunday, Corbett and House Republican leaders had given Philadelphia Democrats an ultimatum: Vote for the GOP pension plan in return for Republican support for an increase to the cigarette tax in the city.

Democrats criticized the ultimatum as political horse trading that holds the welfare of Philadelphia schoolchildren hostage.

Mayor Nutter, who was in Harrisburg on Monday pushing for the cigarette tax, said it was time to remove politics from the decision-making. He said that without the money, the district will have to ax an additional 1,300 positions - and schools will not be safe to open in the fall.

"Pension reform is important," Nutter said Monday. "But at some point in time you just have to do the right thing. And anybody who chooses politics over children is really not fit for public service."

Late Monday, Senate Democrats, including Hughes and Anthony Hardy Williams (D., Phila.), led an effort to amend a budget-related bill called the municipal code bill to include the $2-per-pack cigarette tax for Philadelphia. The final vote on it is expected Tuesday, but based on Monday night's 40-10 vote on the amendment, it appears safe.

Its fate in the House was less certain.

Corbett said that while he backs a cigarette tax to support Philadelphia schools, he still wants to see votes on a pension plan.

"While this action addresses the immediate needs of the Philadelphia School District, let me be clear: I continue to fight for meaningful pension reform for Philadelphia schools and all schools across the commonwealth, which will provide a long-term solution for them," Corbett said.

By the Numbers

$29.1B

Pennsylvania spending plan.

$2

Philadelphia per-pack cigarette tax's fate was uncertain.

$80M

Amount tax would generate for schools.


acouloumbis@phillynews.com

717-787-5934 717-787-5934 @AngelasInk

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