HARRISBURG -- When legislators return to Harrisburg today after a three-week break, they'll face a daunting task and a looming deadline -- to pass a balanced budget by June 30, in spite of a projected revenue shortfall of at least $1.3 billion.
"All options truly are on the table," said Drew Crompton, chief of staff and legal counsel to Senate President Joe Scarnati, R-Jefferson. "It's not all the options except the ones we don't like. It's truly all options."
The state's fiscal year ends June 30 and the General Assembly must finalize a 2014-15 spending plan by that date.
Gov. Tom Corbett, who faces low poll numbers and an election in November, has proposed a $29.4 billion general fund budget, an increase of 3.3 percent from the current fiscal year. His proposal puts additional millions toward education, which critics have hammered the Republican governor on for the past three years.
Democrats and other critics have said too much of Mr. Corbett's plan relies on overly rosy revenue projections and taking money from one-time sources.
Senate Majority Leader Dominic Pileggi, R-Delaware, said legislators will meet this week and start by discussing "a spending plan that matches available revenues and see what that looks like, and see whether members prefer that approach. If that's the preferred approach, we'll pursue that. ... If that product does not appear to be able to gain sufficient support, then we'll look at what additional revenues might be necessary."
Mr. Pileggi said there are 20 to 30 "potential revenue-generating ideas," including a natural gas extraction tax.
Mr. Corbett, who was elected on a pledge against tax increases, has repeatedly said he does not favor such a tax.
The House Republican caucus is generally not supportive of such a measure, either.
"We're not advocating that right now," said Steve Miskin, a spokesman for the caucus.
Mr. Miskin said a proposal to privatize state liquor stores that passed the House last year would generate $1 billion in revenue through wholesale and retail licensing, and additional license fees and renewals.
"That is a huge revenue enhancer that would resolve a lot of problems," he said.
Democrats have advocated a variety of revenue-raising policies, including a natural gas severance tax, taxing smokeless tobacco and cigars, and modernizing state-owned wines and spirits stores to have more flexibility and be open additional hours.
At this point, Democrats -- the minority party in both the House and Senate -- have not been included in budget negotiations, said Senate Minority Leader Jay Costa, D-Forest Hills.
"Last time I looked, we have 23 [senators] that represent over 4 million folks in Pennsylvania and they also want a voice at the table," Mr. Costa said. "We want to be part of the solution. That's the bottom line."
Democrats have also continued to push for a Medicaid expansion in the state as permitted under the Affordable Care Act, saying Pennsylvania is leaving hundreds of millions of dollars untapped by not accepting federal funds for this purpose.
"Medicaid expansion is key to helping solve this budget crisis," said Miriam Fox, executive director for Democrats on the House Appropriations Committee.
An alternative to such an expansion, Mr. Corbett's Healthy PA proposal, is still undergoing review by federal officials.
While that process is ongoing, Mr. Pileggi said he doesn't see the Legislature intervening.
"So long as the governor's application is still pending with the federal government, that process should play through," he said.
One of the most closely watched and hotly contested subjects in the budget is sure to be education funding.
Throughout his term in office, Mr. Corbett has been dogged by the cuts schools received his first year, when federal stimulus funding came to an end. The governor has maintained that he has directed record levels of state money to schools -- though he, unlike legislative Democrats, counts rising pension payments.
In February, Mr. Corbett proposed a new $240 million Ready to Learn block grant to train teachers and develop curriculum. Low-performing schools would pick from a few options for using the money, while high-performing schools would have greater discretion.
"The governor has proposed, and we have supported, the concept of increasing education spending," Mr. Pileggi said last week. "That's a very sensitive topic for our members. That's an area that I think will receive added scrutiny and added attention. ... There is very broad support for increased education spending. And it is hard to get to increased education spending when you have a gap to fill. That's part of the discussion -- what do we do with the education spending items? [That's] probably the most sensitive part of the whole discussion."
Kate Giammarise: email@example.com, 717-787-4254 or on Twitter @KateGiammarise. Karen Langley contributed.