Corbett leaves budget unsigned after lawmakers clash on spending plan

By Andrew Staub | PA Independent

HARRISBURG, Pa. — Gov. Tom Corbett’s holding out.

Corbett delayed signing the $29.1 billion state budget that Republican lawmakers sent to his desk late Monday night, making good on statements that he was willing to forgo an on-time budget if it meant the General Assembly would make sweeping changes to public pension plans.

“I will continue to work with the Legislature toward meaningful pension reform,” Corbett said in a statement that left him some wiggle room. “I am withholding signing the budget passed by the General Assembly while I deliberate its impact on the people of Pennsylvania.”

While the question remains how long Corbett will hold out, Democratic legislators and government observers raised concerns about how long the budget will hold up. They argued the spending plan is full of “gimmicks” and could implode on the next governor, whether it’s a re-elected Corbett or Democratic nominee Tom Wolf.

“It leaves a ticking time bomb that will explode before the year is out,” Sharon Ward, executive director of the left-leaning Pennsylvania Budget and Policy Center, said in a statement.

While proposing no new taxes, the spending plan includes an assumption that revenue will grow by 3.5 percent next year, which would be $224.3 million more than the Independent Fiscal Office estimated in June.

State Sen. Vincent Hughes, the Democratic chairman of the Senate Appropriations Committee, called the revenue expectations questionable.

“There’s going to be hell to pay next year,” he said.

Critics also pointed to the lack of new recurring revenue and a reliance on $246.6 million in fund transfers and iffy money — such as the millions that would come with the approval of Corbett’s Healthy PA Medicaid reform plan — as evidence the spending plan is unsustainable.

Democratic lawmakers also blasted its lack of Medicaid expansion and severance tax on natural gas extraction while comparing the budget to a used car that will stop running come January.

Republicans, who authored the budget and put up all the votes for it in both chambers, had a different view. The budget is responsible, they said, while also arguing that lawmakers have used one-time transfers before.

State Sen. Jake Corman, the Republican chairman of the Senate Appropriations Committee, said his chamber based the estimates off the Independent Fiscal Office’s more optimistic projections from May. He also noted that June revenue has come in about $61 million higher than expected.

“We met the challenge again this year to balance the budget without going to the people of Pennsylvania to say that we need more,” Corman said.

The budget accounts for $40 million from the state’s Enhanced Revenue Collection Account, $75 million from a yet-awarded casino license and $95 million from expanded gas drilling in state parks and forests — a plan that has yet to be fully detailed by the Corbett administration.

The budget also restores $48 million in tax credits that the House originally wanted to suspend for two years and continues the phase-out of the capital stock and franchise tax. It also includes funding for Corbett’s Ready-To-Learn block grant funding for education, though that didn’t stop protesters from gathering outside the governor’s office Monday.

The Senate approved the bill 26-24, with all Democrats and one Republican, state Sen. Chuck McIlhinney, voting no. That started the clock ticking on the state House.

As the midnight deadline approached, Democrats in the House echoed the same debate that played out in the Senate, saying the budget was built upon shaky math and criticizing the one-time transfers, such as the $30 million that was taken from a loan fund for volunteer fire, ambulance and rescue companies.

State Rep. Dan Frankel, D-Allegheny, called the spending a “Ponzi scheme,” while state Rep. Jeff Pyle, R-Armstrong, countered that the state has to live within its means.

“For me, going to the tax base and strapping them for more money is not a first option. It’s a final option,” Pyle said.

Republicans won out, with the House passing the budget by a 108-95 vote just before 10:30 p.m. That placed it on Corbett’s desk in time for him to sign another on-time budget.

The governor has made on-time budgets a staple of his tenure so far, but he indicated earlier this month he was OK finishing late this year if it meant getting pension reform done.

That didn’t happen Monday, although the state Senate did approve legislation that would move the state’s elected officials into a 401(k)-style pension plan upon their election, re-election or retention.

Corbett’s looking for more, hence his decision to leave the budget in limbo.

Staub can be reached at Andrew@PAIndependent.com. Follow @PAIndependent on Twitter for more.