Liquor sales, pensions among Pennsylvania Legislature's several challenges

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HARRISBURG -- With a transportation funding law on the books, Pennsylvania lawmakers return to work today to an agenda that includes the other high-profile issues -- overhaul of liquor sales and pensions -- that ensnared budget talks in June.

The topics have been priorities of Gov. Tom Corbett, and Republican legislative leaders agree that an impending spike in state pension contributions -- including an increase of $610 million just next year -- calls for considering changes to the retirement plans for teachers and state workers.

Recent weeks also have seen a renewed effort by proponents of dismantling the state system of wine and liquor sales. Republican legislative leaders have been meeting with Lt. Gov. Jim Cawley, whom Mr. Corbett asked shortly before the holidays to lead the talks, according to Chad Saylor, a spokesman for Mr. Cawley.

House Majority Leader Mike Turzai, R-Bradford Woods, a champion of liquor privatization, said the talks are "moving in a positive direction" but that they remain a work in progress, and Mr. Saylor said participants are far from consensus.

"The main focus is on the consumer and making the whole system more consumer-friendly," Mr. Saylor said. "If you drill down into the details as to what that would mean, that's where things get a little more challenging."

Those details stopped Republicans from getting a bill to Mr. Corbett's desk last year. The House had more aggressively pursued liquor privatization, in March passing legislation intended to phase out the state retail stores while moving to divest of the wholesale business. A measure that cleared a preliminary vote in the Senate in June would authorize only leasing that operation, while preserving more opportunity for some state retail stores to remain open.

In an interview late last month, Senate Majority Leader Dominic Pileggi, R-Delaware, made it sound unlikely his members would embrace the House's approach.

"We unanimously, as the Senate Republican caucus, supported some very substantial reforms when we last visited this issue," he said. "I don't believe we are prepared to move any further than that."

Democrats in both chambers have opposed dismantling the state liquor system, which last year returned $512 million to the treasury. The House Democratic leader, Frank Dermody of Oakmont, has discussed the topic in recent months with Senate President Pro Tem Joe Scarnati, R-Jefferson, who has expressed concern that closing the state stores could leave his rural constituents without access to wine and liquor. Mr. Dermody described their talks as preliminary and informal.

The return to voting session days this week comes three weeks before Mr. Corbett unveils his proposal for the annual state budget beginning July 1. Without changes, the state faces a budget shortfall of approximately $1.3 billion, according to the administration.

The increase in contribution to the teachers and state workers retirement plans accounts for a sizable portion of the projected increase in spending, and Jay Pagni, spokesman for Mr. Corbett, described pension changes as "imperative."

In his budget address last year, Mr. Corbett proposed a pension overhaul plan that would divert new hires into a 401(k)-style defined contribution plan while also changing how benefits for future years of service are calculated for current employees.

But union leaders promised to challenge any changes for current workers in court, and legislative leaders expressed concern about pursuing the measures.

Republican leaders now are voicing interest in the switch to a defined contribution plan for new workers.

Mr. Pileggi said there is "very, very strong support" in his caucus for acting on pensions, and his spokesman, Erik Arneson, said Mr. Pileggi believes shifting to the defined contribution for new hires is the best way to proceed.

Democrats have opposed further changes to the pension plans, arguing that those put into law in 2010 will restore healthy funding ratios in the coming years. "If invested wisely and managed properly, with the proper payments from all the parties that are involved -- the employees and the employers -- it will operate and work and do the job it's supposed to do," Mr. Dermody said. "We need to keep our promise."

Republican leaders in both chambers also plan to take up legislation dealing with charter schools -- an area in which the House and Senate have not found agreement -- and property taxes, on which several proposals have been made, including one to freeze property taxes for seniors and another to replace the school property tax with increases in the sales tax and personal income tax rates.

Democrats in the House plan to advocate for raising the minimum wage from $7.25 an hour, while Senate Democrats are continuing to push for Pennsylvania to make more low-income people eligible for Medicaid through the federal health care law. Mr. Corbett has put forward an alternate proposal, which would require approval from the Obama administration, to use federal money to help pay for private health insurance for that population while also enacting requirements, such as monthly premiums and work search, for the state Medicaid program.

Karen Langley:, 1-717-787-2141 or on Twitter @karen_langley.

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