State budget creates schism

Corbett, GOP leaders at odds on pensions, line-item vetoes

HARRISBURG — Gov. Tom Corbett on Thursday signed the Pennsylvania budget while vetoing $65 million in funding for the General Assembly, setting off criticism from Republican leaders who challenged Mr. Corbett’s claim that they had failed to pursue an overhaul of the state’s pension systems and, more broadly, his leadership.

At a morning news conference, Mr. Corbett, a Republican, said he had made the legislative reductions and struck $7.2 million in other funds because the Legislature in the face of a $1.5 billion deficit chose to increase its own funding while declining his call to remake the retirement benefits of future state and school workers.

“They filled the budget with discretionary spending and then refused to deal with the biggest fiscal challenge facing Pennsylvania: our unsustainable public pension system,” Mr. Corbett said. “For these reasons, I am forcing mutual sacrifice with the General Assembly through the governor’s ability to line-item veto and hold spending in budgetary reserve.”

Republican legislative leaders, some of whose staffs said they learned Thursday morning of the governor’s plan, responded with force.

“While we share the desire to enact statewide pension reform, linking pension reform to punitive program cuts is not a successful strategy,” Senate President Pro Tem Joe Scarnati, Senate Majority Leader Dominic Pileggi, Senate Appropriations chairman Jake Corman and Senate Republican Whip Pat Browne said in a joint statement. “We are disappointed that the governor has not, to date, been able to work effectively with the Republican majorities in the House and Senate to address important fiscal issues impacting our state.”

House Majority Leader Mike Turzai, R-Marshall, said the administration’s statement that it had placed earmarked items in a budgetary reserve means loss of funding for the Special Olympics, after-school learning programs for low-income children and research on cystic fibrosis. He questioned why Mr. Corbett had not succeeded in advancing other Republican priorities.

“We’d like the governor’s leadership on some of these issues,” Mr. Turzai said. “Where has been the effort to get liquor privatization over the goal line? We call upon the governor to use his bully pulpit and his capital to get liquor privatization done.”

Staff in the Republican and Democratic caucuses of the House and Senate said their lawyers were examining whether the Pennsylvania Constitution permits a governor to use the line-item veto within the fiscal code, as Mr. Corbett did, as well as in the general appropriations bill.

“This would allow any executive to strike language they don’t agree with in any bill if they can make some sort of stretch argument that it relates to the appropriations bill, and that’s not what the Constitution says,” said Drew Crompton, chief of staff and legal counsel to Mr. Scarnati. “They overreached, plain and simple.”

Jay Pagni, spokesman for Mr. Corbett, said the governor acted within his authority.

“The governor has the ability to line-item veto any piece of legislation with an appropriation in it,” he said. “Only the appropriation. There are appropriations within the fiscal code, too.”

Mr. Corbett has maintained that the state cannot afford to pay the pension contributions required under a 2010 law while also meeting its other commitments. The House earlier this month stopped short of voting on a plan that would enroll new state and public school workers in a hybrid pension plan intended to reduce costs and investment risk for the state.

“Pennsylvania’s Legislature is a full-time legislature,” the governor said Thursday. “The General Assembly left Harrisburg earlier this month with unfinished business. They need to come back and enact pension reform.”

Asked if he would call a special session, Mr. Corbett said only: “All options are on the table.”

Mr. Turzai noted the state’s Public Employee Retirement Commission found last year that transitioning to a 401(k)-style plan for new state and public school workers, as Mr. Corbett previously proposed, could cost billions of dollars over the coming years.

“It’s why his plan never got any traction,” Mr. Turzai said. “We in the House hit the ground running and decided we had to come up with an approach that was transitional in nature and that actually produced savings to the systems and not costing the systems.”

He said the House would attempt to vote a pensions bill, among other items, when it returns to session Aug. 4.

The hybrid approach under consideration in the House could save employers $11 billion over 30 years, according to a retirement commission note.

Mr. Corbett in his remarks said “special interest groups” were taking credit for blocking movement on the pensions bill.

David Broderic, spokesman for the Pennsylvania State Education Association, the state’s largest teachers union, said: “The governor can try and blame anyone he wants, but the fact remains his misguided pension plan didn’t pass because it’s a bad plan. Legislators know it and that’s why they refused to support it.”

Pensions were not the only issue Mr. Corbett cited in his decision to trim the general fund budget to a little more than $29 billion. His office said the state’s official revenue estimate is $60 million less than the projection in the budget that cleared the House late June 30.

Democrats stayed mostly quiet Thursday. Senate Minority Leader Jay Costa, D-Forest Hills, said in a statement: “Governor Corbett’s action today clearly illustrates the Republican gridlock and dysfunction that has descended on state government. It is hard to fathom what Governor Corbett believes he can achieve.”

Through the line-item veto, the governor cut $65 million from about $330 million in appropriations for the General Assembly and government support agencies. His office said he had asked legislators during budget negotiations to put $75 million of their $150 million reserves toward balancing the budget, but that they declined.

Mr. Corbett also struck $5 million from the Department of General Services and smaller amounts from various agencies, including $300,000 from the appropriation for the Intergovernmental Cooperation Authority in Pittsburgh. The ICA had been slated to receive $550,000, up from $228,000 last year. The governor’s office said conversations with the ICA led it to conclude the increase was not necessary.

The governor’s office had said government operations continued after June 30, when the previous fiscal year ended, through the use of federal and previously appropriated state funding.

Karen Langley: or 717-787-2141 or on Twitter @karen_langley. First Published July 10, 2014 12:00 AM

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