Pension fix splits lawmakers

HARRISBURG — The state, which has limped along without a budget for close to six months, now faces two possible spending plans from lawmakers pressing for a way to end the prolonged standoff.

The state Senate passed a $30.8 billion budget Monday, with a plan to reform state government pensions. The House on Tuesday is poised to pass a separate plan, spending $500 million less than the Senate bill.

Both chambers are controlled by Republicans.

The biggest difference in the plans is how much they devote to public schools, a priority of first-term Democratic Gov. Tom Wolf.

“That’s the most important thing,” said Senate Majority Leader Jake Corman, R-Centre County, while speaking to reporters Monday afternoon. “These are bills the governor will sign and bring this saga to an end.”

Appropriations Chairman Bill Adolph, R-Delaware County, says the House plan is funded with about $309 million in new taxes on tobacco products and licensing fees from gambling. For example, the House plan applies the state personal income tax to proceeds from lottery winnings.

Adolph described the House budget as “the art of the possible.”

It would increase basic school funding by $100 million, while the Senate would add $365 million, according to data provided by each chamber’s appropriations committees. 

The House bill spends $5.6 billion on basic education funding, while the Senate proposes spending almost $5.9 billion.

Democrats say they’re supporting the Senate approach and haven’t had time time to analyze the House bill.

State Rep. Bryan Barbin, D-Cambria County, said he thinks the Senate bill will pass the House, too, if leadership in the chamber allows a vote to happen. The earliest the House can take up the Senate bill is Wednesday.

Senate Republicans haven’t explained how they would pay for increased spending.

As the House plan eyes increases in tobacco taxes and gaming fees, Republican lawmakers panned an idea to raise money by removing certain sales tax exemptions.

“We don’t have the votes for a sales tax increase,” said Rep. Kurt Masser, R-Northumberland County. He is a member of the Appropriations Committee, who voted in favor of the House budget on Monday.

Barbin noted 71 exemptions to the state’s sales tax. The state could easily get more money by getting rid of a few of those, he said.

“We’ve got the worst set of exemptions in the country,” he said. “It’s hypocritical to say we can’t we can’t pass a state budget because you don’t want to get rid of some of them. You are making excuses.”

He didn’t pinpoint any in particular, though discussions last week suggested that lawmakers were looking at taxing things like sales of amusement park and movie tickets, as well as parking charges.

Sen. Elder Vogel, R-Lawrence County, said discussions about paying for the Senate plan have been on a back burner. Talks will heat up once everyone sees which plan passes.

The Senate plan is part of a broader framework that includes pension reform and a move to loosen the state’s liquor monopoly.

Pension legislation will lessen taxpayer risk by introducing a 401(k)-style component. It also scales back benefits for current employees, which has prompted the threat of a union lawsuit.

Vogel said the pension bill gets the state “out of the risk business,” because it will no longer have to pick up the cost of guaranteed retirement benefits even when earnings from investments are lagging.

Senate President Pro Tempore Joseph Scarnati, R-Jefferson County, said the increased spending in the Senate plan is necessary to get a deal that allows Republicans to accomplish their long-time goals.

“Anyone with an ounce of political savvy is going to know that the governor is going to want something to sign these bills,” Scarnati told reporters.

House Republicans don’t seem to be buying the argument, though.

Many are skeptical that the pension and liquor reforms are substantial enough to offer up a tax increase, said Rep. Tedd Nesbit, R-Mercer County.

John Finnerty covers the Pennsylvania Statehouse for CNHI’s newspapers and websites. Reach him at jfinnerty@cnhi.com.