Corbett getting resistance from Pennsylvania GOP leadership

Cautioned on pensions, LCB plans

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HARRISBURG -- Gov. Tom Corbett's soon-to-be-unveiled plans for overhauling the public pension systems and privatizing liquor sales are being met with a critical eye in the state Legislature, where top Republican lawmakers raised questions Tuesday about backing for both proposals.

As the governor prepares to roll out his budget next week, he has been met with blowback on issues he hasn't fully articulated to the public, or, apparently to the leaders of his own party.

Senate President Pro Tem Joe Scarnati, R-Jefferson, expressed concerns to reporters about changing how current state employees accrue retirement benefits, saying he'll need to see dollar figures on potential savings before determining whether to pursue that route.

House Speaker Sam Smith, also a Jefferson County Republican, said lawmakers should be cautious about counting on savings from pension overhauls in the upcoming budget year given the likelihood of a lengthy court battle over any eventual changes.

Speaking a day before Mr. Corbett's anticipated announcement of a large-scale liquor privatization plan, the men also offered narrower approaches on how to make the sale of wine and spirits more consumer-friendly.

Mr. Scarnati reiterated his support for pursuing plans to "modernize" those sales either before or alongside efforts to move alcohol sales into private hands. Mr. Smith said an approach in which some but not all aspects of liquor sales are privatized may gain more legislative support.

"In looking at what happened over the last two years in particular in the House and Senate" regarding failed liquor privatization efforts, "it seems to me logically that where we might end up is with a hybrid where we're providing private opportunities but not exactly abolishing the system," Mr. Smith said.

The governor has pointed to privatizing liquor sales, finding more transportation infrastructure dollars and reforming the retirement systems for state and public school employees as three major policy priorities going into this year's budget season.

While his plans for pensions and transportation are expected to wait until he unveils his budget proposal next week, he'll be releasing details of how he plans to get state government out of the alcohol business -- and what to do with the resulting revenue from selling liquor licenses -- during an event today.

"There are three areas where you can say, 'Where can we put it?' We believe it's $1 billion if we get the full privatization we want," he said at a news conference Tuesday in Moon. "I suspect that will be the discussion in the General Assembly and everybody will have their perspective on that."

Mr. Scarnati said during an interview with reporters Tuesday that any attempt to link the governor's proposals on liquor and transportation -- using the revenues from one to aid in the costs of the other -- in an effort to ensure approval would be premature.

"I think that that is a showing of bad faith and, quite frankly, I think that people are sick of Washington-style politics," Mr. Scarnati said. "I'm not going to play the game. I want transportation done. It should rise and fall on its own merits."

The governor would not say if his budget explicitly ties all the funding changes together. "I don't think I'm linking. Maybe the people who make the votes are linking," he said.

On pension reform, Mr. Scarnati expressed skepticism about tying public school funding too closely to finding savings in state retirement contributions, an approach that has been indicated by the governor and his budget secretary in recent days. Mr. Scarnati said any potential cut to public education would be "a very sensitive issue" that would make a budget agreement more difficult.

"I don't see the likelihood of this body going along very well in reducing funding for public schools," he said.

Both GOP leaders noted that changing the future benefits of current workers -- a likely component of the governor's plan, according to budget secretary Charles Zogby -- could trigger litigation.

"We're for trying to tackle the pension issue, just not necessarily wanting it to be financially accounted for in this budget," Mr. Smith said.

"When do we put the money in the bank?" Mr. Scarnati said. "We've got to be able to find a solution to this that makes sense, that doesn't involve legal challenges."

He described switching new employees to 401(k)-style plans as "the tourniquet that stops the bleeding" of the underfunded retirement systems for state workers and school employees. For current state employees, the senator said he wants more details on the potential savings of adjustments to future benefits.

The state's two major pension systems -- for state and public school workers -- have unfunded liabilities of more than $44 billion, with the required state contribution for next fiscal year rising by about $511 million.

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Staff writer Tim McNulty contributed. Harrisburg bureau chief Laura Olson: lolson@post-gazette.com or 717-787-4254. Karen Langley: klangley@post-gazette.com or 717-787-2141.


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