Budget stalled, Senate goes home, House wrangles on pension changes

Posted: July 02, 2014

HARRISBURG - The Senate went home. The governor was largely silent.

And as the first day of a new fiscal year without a state budget neared an end, House members met behind closed doors for hours on Tuesday, trying to find consensus on changes to the pension system - but refusing to move on a proposed a cigarette tax that could fund Philadelphia schools.

Almost a day after legislators handed him a $29.1 billion budget on time and with no tax increases, Gov. Corbett still had not signed it, or signaled if or when he would. His spokesman, Jay Pagni, said the governor was reviewing the plan.

Corbett's last public statement had been near midnight Monday, when the governor said he would not sign the budget without "meaningful" action aimed at reining in the cost of public employee pensions.

"Nothing has changed," Pagni said Tuesday evening.

Whether Corbett was girding for a showdown with legislators was unclear. The law does not mandate that a budget be in place by July 1, and the governor's office issued a statement Tuesday promising that state government and services "will continue uninterrupted."

But a prolonged stalemate could eventually jeopardize the state's ability to pay its bills and employees. It also could affect Corbett's reelection bid. The governor faces a tough battle in the fall and has been banking on getting the legislature to pass at least one of his priorities: making changes to the state's pension system.

A push in the House to move on a pension proposal backed by Corbett appeared to hit a brick wall Tuesday. That measure would affect only new government and school employees, who would see a portion of their salaries go into a 401(k)-style retirement plan.

By late afternoon, their counterparts in the Senate had left for the holiday weekend, but with the option to return if needed to vote on a new proposal.

Before they left, senators approved a bill with language allowing Philadelphia to impose a $2-a-pack cigarette tax to fund city schools. The tax would raise about $80 million annually. But its fate was also unclear.

Steve Miskin, spokesman for Republicans who control the chamber, told The Inquirer early in the day that the lower chamber had no plans to consider the measure.

Philadelphia Democrats late Tuesday night mounted an effort to force a swift vote on the issue, but were thwarted by their Republican counterparts.

Rep. Bill Adolph (R., Delaware), who chairs the powerful House Appropriations Committee, said he was committed to bringing the measure to a vote, but stopped short of saying when that would happen.

"I will do everything in my power and ability," he said.

Could it be pushed to the fall?

"Not necessarily," Adolph said.

House Majority Leader Mike Turzai (R., Allegheny) also would not give a direct answer on a timeline for a vote.

Mayor Nutter, who has been working the hallways of the Capitol pushing for the cigarette tax, stressed Tuesday night that the clock was ticking.

If the House does not move to give Philadelphia the authority to tax cigarettes, the district will have to cut 1,300 positions, a move that would make it unsafe to open schools come September.

"There is a lot of uncertainty here," the mayor said. "The children of Philadephia - and their parents, and their teachers - certainly deserve the security of knowing that 21/2 months from now, they are going to be able to go to school, have a teacher, be in a safe enviroment, and get a high quality education."

The House is scheduled to return Wednesday to consider several budget-related bills.

House Republicans have complained that their Democratic colleagues have been unwilling to work with them on issues of importance to school districts across the state, including Philadelphia.

Topping that list is the pension bill backed by Corbett, which Democrats have said they believe is ill-planned and does not address the core problem of the roughly $50 billion unfunded liability in the pension system.

The House began debating the measure Tuesday. But the discussion was cut short after Rep. Gene DiGirolamo (R., Bucks) led a successful effort to send the bill back to his Human Resources Committee, despite a plea from House Majority Leader Mike Turzai (R., Allegheny) to continue debate. DiGirolamo opposes the bill.

Democratic Rep. Cherelle Parker, who heads the House's Philadelphia delegation, said Tuesday that she and others have signaled to Turzai their strong support for the cigarette-tax hike in the city.

She also said that while the delegation does not support the specific pension bill being considered, its members have made it clear they are willing to work with Republicans on ways to raise revenue for the budget.

"We work in the business of government and politics, and part of what we do is compromise," Parker said.

The Senate also approved the fiscal code, which contains language necessary to implement the budget, and gave approval for funding for the "non-preferred" colleges - Temple, Pitt, Lincoln, Pennsylvania State University, and the University of Pennsylvania's Veterinary School.


aworden@phillynews.com 717-783-2584

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