HARRISBURG -- Sitting in shirtsleeves in his budget secretary's office, by a sign reading "Nothing stimulates the imagination like a budget cut," Gov. Tom Corbett refrained from explaining ahead of Tuesday's annual address just how he will propose closing a shortfall projected at $1.3 billion.
But the governor, a Republican facing re-election in November, and aides did offer broad outlines of the proposals on pensions, education funding and other topics that will mark his fourth annual fiscal plan for Pennsylvania government.
Mr. Corbett ran on a pledge against raising taxes, and he and his aides repeatedly have said the rising state pension payments set by a 2010 law -- next year, a $610 million increase -- are not sustainable. In his budget address last year, the governor proposed an ambitious overhaul plan that included changing the calculation of benefits that would be earned by current and state and public school workers in future years.
Labor unions balked, promising lawsuits based on past state Supreme Court rulings, and legislative leaders said they were wary of counting on the outcome of litigation.
Now, in an interview late last week, the governor and aides said his second shot at pension changes would focus largely on the other aspects of last year's plan: a new system for future hires and accompanying reductions in the growth of employer contributions. The administration's proposal is projected to reduce next year's contributions by about $171 million for the state and $131 million for school districts.
"I think we're looking at future workers," Mr. Corbett said. "Would I like to do the other one? Yeah."
But, his budget secretary, Charles Zogby, said: "It's clear that there are not majorities in either chamber for current employee reforms."
Where last year Mr. Corbett had called for future hires to be diverted into a 401(k)-style defined-contribution plan, Mr. Zogby said the administration now is contemplating a hybrid-style plan that would allow new hires to participate in a traditional pension plan, but only to a certain salary limit. Contributions based on additional earnings would go into a defined-contribution plan.
Still, Mr. Zogby said, the pension plan is not settled.
"It's a very fluid situation," he said. "We don't have sort of buy-in or sign-off from any and all quarters, and one of the reasons you're not going to see a very detailed plan."
Union representatives said they were pleased Mr. Corbett appears to have backed away from the benefits of current workers, but they remained skeptical of the administration's pension plans.
"I have to see the numbers," said David Fillman, executive director of AFSCME Council 13. "How it affects the unfunded liability. And how it affects the benefits of future employees if current employees aren't in the mix."
Funding for education -- particularly how Mr. Corbett and legislative Democrats tally the use of federal stimulus money and increased state payments into the teachers pension system -- has been a major source of discord throughout his administration. On Friday, Mr. Corbett was coy about a reported proposed increase in funding for K-12 education.
"I believe it's substantial," he said. "We'll see what you think. We'll see what supporters think. We'll see what opponents think."
The proposal will include the first increase in years in funding for special education, Mr. Zogby said.
No matter the number, it is unlikely to satisfy Democrats, who disagree with the decisions Mr. Corbett has made in reducing business taxes and handling the ending of federal stimulus money.
"Democrats say that this is Corbett's choice -- that he chose to cut business taxes by $1.2 billion during his first three years, rather than fund our schools, care for our kids and support other critical programs," said Miriam Fox, executive director for Democrats on the House Appropriations Committee. She also faulted his refusal to expand eligibility for Medicaid under the federal health care law.
Senate Minority Leader Jay Costa, D-Forest Hills, also pointed to Medicaid, saying that opting into the expansion would create jobs in the state. Mr. Costa called for increasing education funding by $250 million to $300 million, as well as boosting funding for human services programs, such as those addressing mental health and problems with drugs and alcohol.
The budget proposal will include increased costs for the federal health care law, less reductions from the health plan the governor hopes to enact, which includes Medicaid changes that would require federal approval.
While Mr. Corbett will continue pushing for overhaul of the system of state liquor sales, his budget proposal will not reflect such changes, Mr. Zogby said.
The administration has unveiled proposed boosts in various funding streams. They include an increase of $2.2 million for domestic-violence and rape-crisis programs and an additional $10 million for Pennsylvania Pre-K Counts, which would provide early learning for an additional 1,670 children. Another proposal, for a $22.4 million increase, would provide home- and community-based services to 1,100 additional people with intellectual disabilities, according to the administration.
Karen Langley: firstname.lastname@example.org, 717-787-2141 or on Twitter @karen_langley. Kate Giammarise: email@example.com, 717-787-4254 or on Twitter @KateGiammarise.