Gov. Tom Corbett refuses to sign state budget

HARRISBURG -- With an hour left in Pennsylvania’s fiscal year, Gov. Tom Corbett said in a statement last night he would withhold his signature from a $29.1 billion budget sent to him by the Republican General Assembly while he considers its effect on the state.

In his statement, the Republican governor cited the failure of legislators to deliver measures reshaping the retirement systems for state and public school workers. He cited the rising costs of pensions under current law.

“The budget I received tonight makes significant investments in our common priorities of education, jobs and human services,” he said. “It does not address all the difficult choices that still need to be made.”

Mr. Corbett said he would continue to push for a pension bill and that he was “withholding signing the budget passed by the General Assembly while I deliberate its impact on the people of Pennsylvania.”

After months of lower-than-expected revenue collections, state budget writers faced a shortfall of more than $1 billion. Despite talk earlier in June of increasing or implementing new taxes, such as a severance tax on natural gas drilling, legislators on Monday sent the governor a proposal that instead bridged the gap through fund transfers, one-time revenue sources and cuts from the spending levels Mr. Corbett had proposed in his February budget address.

The final state spending plan before Mr. Corbett faces the voters in November is the first he has not signed by the new fiscal year. As he returned to his office after House passage, Speaker Sam Smith said the governor had made his legislative priorities clear.

Mr. Smith said, “Why would he rush to sign this without trying to get the other things he’s looking for? “But there’s a balanced budget on his desk by midnight.”

The budget that passed the House, 108-95, Monday night closes a shortfall of more than $1 billion by appropriating unspent funds from the current year, shortening the waiting period before the state can seize unclaimed property, shifting expenditures for home- and community-based services from the general fund to the lottery fund and transferring to the general fund money from special funds, such as the Small Business First Fund and Machinery and Equipment Loan Fund, two economic development programs.

In the Senate, Appropriations Committee Chairman Jake Corman, R-Centre, said the budget would meet the main obligations of state government despite hundreds of millions of dollars lost to changes in federal policies.

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

One of the largest sources of savings in the plan is a delay, into the next fiscal year, of the $394 million monthly payment to Medicaid managed care organizations. The budget also assumes $125 million in savings from the governor’s Healthy PA proposal, his alternative to making more low-income Pennsylvanians eligible for Medicaid under the federal health care law. The federal government has not approved the proposal.

The budget assumes revenue growth of 3.5 percent in the new fiscal year, a projection greater than the 3.2 percent increase the state Independent Fiscal Office forecast.

Democrats decried the plan, saying it relies upon gimmicks and one-time fixes to plug the revenue hole. Sen. Vince Hughes, D-Philadelphia, called it “the flim-flam sham budget” during floor debate.

The budget cleared the Senate, 26-24, with all Democrats and one Republican, Sen. Chuck McIlhinney of Bucks County, opposed.

In the House, Rep. Joe Markosek of Monroeville, the ranking Democrat on the Appropriations Committee, said the budget “simply masks the state’s serious fiscal problems, delaying the day of reckoning to another day, for a new legislative session and, likely, a new administration.”

It was unclear if legislators would accommodate Mr. Corbett’s insistence on a pension vote. The governor’s administration has been pushing a plan that would move new employees to a combined traditional pension plan for the first $50,000 of income and 401(k)-style plan for additional earnings. Critics have said the plan does nothing to make up for years of under-funding by the state or pay off the existing $50 billion unfunded liability in the state’s pension plans and would contribute a relatively small amount of savings. A new proposal by Republicans in the House would direct savings to pay into the unfunded liability.

Despite weeks of attempting to bring the measure to a vote, House Republicans have been unable find enough support in their caucus to bring the plan to the House floor, though a spokesman for House Majority Leader Mike Turzai, R-Marshall, said the issue could still come to the floor later this week. Mr. Corbett tried unsuccessfully Sunday night to convince Philadelphia Democrats to get on board with the plan in exchange for the legislature authorizing a cigarette tax to aid that city’s schools.

The Senate unanimously approved a plan Monday night to move all elected officials into a 401(k) plan, though it was generally regarded as more of a symbolic gesture than closing a budget gap.

The Capitol hallways rung Monday afternoon with the chants of activists who traveled to Harrisburg to oppose the budget. Brenda Marks, who works in the Pittsburgh Public Schools as an emotional-support paraprofessional, said she has witnessed reductions in school staff. Increases in education funding in the pending budget would not make up the difference, she said.

“What they’re claiming to give back this year is just a mere fraction of what they have taken away,” she said.

Karen Langley:, 717-787-2141 or on Twitter @karen_langley. Kate Giammarise:, 717-787-4254 or on Twitter @KateGiammarise.

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