By Melissa Daniels | PA Independent

HARRISBURG — The state House has the Senate’s state budget plan, but a mix of opinions portend a controversial approval process.

House Majority Leader Rep. Mike Turzai, R-Allegheny, said he sees “a lot of positives” in the plan, keeping the budget at a level that won’t lead to a tax hike while accounting for extra revenue collected this spring.

“It’s a good work product, it is under the rate of inflation and it is taking into account revenues and projections that were not in front of the governor when he did his proposal in February,” Turzai said.

The Senate’s budget plan totals more than $27.6 billion, which is $517.2 million, or 1.9 percent, more than Gov. Tom Corbett‘s budget request in February.

Turzai called the total spending amount “a ceiling,” echoing comments by Corbett earlier Wednesday.

State Rep. Daryl Metcalfe, R-Butler, said the increase leads the state in the wrong direction.

“Last year, we tried to reset some of the spending, but I think we still had a continued reset to do this year,” Metcalfe said. “We need to work to reduce spending, not pump $500 million back into the budget the governor proposed this year.”

Spending on welfare and subsidies for higher education, he said, are increases that, conversely, could be cut. Assistance to colleges and universities, he says, isn’t helping the average taxpayer.

“The more subsidies pumped into higher education, the higher the cost will be to the student, to the taxpayer,” he said.

Some members of the House GOP favor the Senate’s increase, but would rather see money go to human services, instead of higher education.

House Democrats, meanwhile,  already are expressing concern over the spending plan, including the restoration of money for education, higher education, long-term care and funding for the disabled.

“What the Senate has done today has not restored anything, quite frankly,” said state Rep. Joe Markosek, D-Allegheny. “There is not anything in here for our major, major transportation problem.”

State Rep. Bill Adolph, R-Delaware, is chairman of the House Appropriations Committee. He said the House will probably begin looking at the plan May 29.

He said any increases in spending would have to be accompanied with the appropriate funding.

“We’ve heard an awful lot about how they want to spend it, but they never come up with a plan for how,” he said.

By Eric Boehm | PA Independent

HARRISBURG — The state Senate approved a $27.6 billion budget Wednesday afternoon and will now let the House tackle how much Pennsylvania should spend next year.

The Senate plan represents a $500 million increase from Gov. Tom Corbett’s proposal in February, with increases aimed at basic education, higher education and human services programs. Notably, the budget restores the entire funding cut proposed by Corbett for the state’s colleges and universities.

The Senate’s budget maintains some of the more controversial parts of Corbett’s budget, such as the elimination of cash-assistance welfare payments for the poor.

Republicans said the budget made prudent increases in light of increased revenue in recent months while maintaining fiscal accountability and planning for long-term costs.

“This is a responsible, sustainable state budget,” said state Senate Majority Leader Dominic Pileggi, R-Chester.

Democrats were sharply divided; 12 voted with the Republican majority, eight Democrats opposed it.

State Sen. Anthony Williams, D-Philadelphia, urged fellow Democrats who supported the budget to reconsider.

“It’s one thing to be in a conversation when you’re wrestling with the other side,” Williams said. “But when you’re wrestling with yourself, I find that to be duplicitous and paradoxical.”

Williams and other Democrats who voted against the plan said it should include further increases for education and welfare, along with changes in the tax code to get more revenue from gas drillers and companies using loopholes to avoid paying taxes.

State Sen. Vincent Hughes, D-Philadelphia, said Democratic support for the budget was important to maintain their voice in the budget discussion, an important part of getting the funding increases.

“It’s better to be bipartisan in this process, especially when it is going in the right direction,” Hughes said.

Corbett on Wednesday called the $27.6 billion spending figure a ceiling, but the governor has not commented on the specifics of the Senate’s plan.

Corbett in recent weeks has repeatedly urged caution on using higher-than-expected revenue this year in next year’s budget. He has pointed to long-term costs such as state pensions and debt-service payments, which will increase in coming years.

The real haggling over the budget will happen in the state House, where the Republican majority appears to be divided over the Senate’s addition of $500 million in spending.

House Democrats already have voiced concerns over the Senate-passed budget and are less likely to support a plan that does not spend more on education, welfare and other programs.

By Eric Boehm | PA Independent

HARRISBURG — A state Senate panel voted unanimously Tuesday to add $500 million in spending to Gov. Tom Corbett’s budget proposal.

The half-billion spending boost came from better-than-expected tax revenue in recent months, which has left Pennsylvania with a smaller deficit to be closed at year’s end.

The proposal moves to the Senate for a final vote as early as Wednesday. If it passes, it heads to the House.

State Sen. Jake Corman, R-Centre, chairman of the appropriations committee, said the increases were within the revised revenue estimates, made available last week. The $550 million carryover, Corman said, will be needed as the state faces increases in pension costs and Medicaid payments.

Spending will grow about 2 percent over the current year.

“I think it’s fiscally responsible, and it reflects the revenues of today,” said Corman, noting the governor’s proposal in February was made with a different set of fiscal assumptions, which changed in the spring.

Corbett’s budget had set aside $719 million to close an expected deficit at the end of the fiscal year in June.

But higher-than-expected tax collections in April led the state’s Independent Fiscal Office last week to anticipate a $300 million deficit for the end of the year. That report allowed for the additional spending in this year’s budget, as well as preparation for higher costs in coming years, Corman said.

Democrats joined in supporting the budget and, too, pointed to cheerier revenue projections.

State Sen. Vincent Hughes, D-Philadelphia, minority chairman of the committee, said the governor’s original budget failed to meet residents’ concerns, or the state’s fiscal reality.

“Now that the dollars have come in, we have a document in front of us that better represents the dollars available,” Hughes said. “We feel this is worthy of moving the process forward.”

Funding for higher education is the biggest change when the governor’s proposal is juxtaposed with the plan advanced Tuesday.

One year after the four state-related universities — Penn State, Pittsburgh, Temple and Lincoln — took a 20 percent budget hit, Corbett proposed another 20 percent funding cut for all except Lincoln, which was flat-funded.

State subsidies account for less than 10 percent of those schools’ overall budgets.

But the heads of the universities promised to keep tuition hikes “to a minimum,” Corman said, so the Senate committee voted Wednesday to restore the proposed cuts.

The university presidents during budget hearings this spring said state funding kept college affordable for more students by allowing for reduced in-state tuition.

The average tuition increase at Penn State has been more than 8 percent annually, but the school increased tuition less than 5 percent last year, when it took a cut in state aid, according to research from the Commonwealth Foundation, a free market think tank here.

The plan also adds $50 million to help close budget gaps at the state’s most financially troubled school districts, though senators say the number of qualifying districts has not been determined.

Unlike cities, which can enter an official state program for financial distress, school districts have no such indicator, meaning the final version of the state budget would have to create a formula for awarding the extra cash.

Democrats tried unsuccessfully to add another $250 million for various social-service programs, including cash assistance for those in need and child-care programs, which, Hughes said, would help unemployed Pennsylvanians get back to work.

Republicans voted away those amendments.

State Sen. John Blake, D-Lackawanna, said he hoped the House would take note of the Senate’s bipartisan support for a “vastly improved budget bill.”

But budget bipartisanship is probably an endangered idea.

Though Corbett’s office House Republicans would not comment on specific line items that got increases in the Senate plan, both have held a more conservative view of government spending over the past two years, since Republicans took control of all three parts of the budget process.

Kevin Harley, Corbett’s spokesman, said the governor was looking forward to negotiations with the House and Senate, but the focus should be on long-term cost drivers, such as increasing pension costs and debt-service payments that go beyond a one-year budget.

“If we’re above estimate, that’s terrific, but we have to be prudent at the same time. There are many long-term expenses that are mandates that we cannot disregard,” Harley said. “What the governor is trying to do is go from a tax-and-spend mentality to a build-and-save mentality.”

Steve Miskin, spokesman for House Majority Leader Mike Turzai, R-Allegheny, said Wednesday that the House GOP is evaluating the Senate increases.

If additional funding is available, House Republicans would give priority to education, including higher education, he said.

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“The key is that it has to be sustainable with the revenue,” Miskin said.

By Eric Boehm | PA Independent

HARRISBURG — Reforming Pennsylvania’s pension plans is the only option.

“Either we’re going to have to increase spending dramatically, or cut spending dramatically or reform the pension system,” said state Sen. Jake Corman, R-Centre, chairman of the Senate Appropriations Committee, on Tuesday.

Taxpayer contributions to the State Employees Retirement System, or SERS, and Public School Employees Retirement System, or PSERS, will climb from $1.6 billion in next year’s budget to more than $4 billion in 2016 and as high as $10 billion by 2035, according to projections from the two pension funds.

SERS has a $12 billion unfunded liability and PSERS, a $26 billion unfunded liability.

Corman said the pension situation is expected to play into this year’s budget discussion because of the coming increase, mirroring comments made in the past month by Gov. Tom Corbett, who has likened the pension crisis to a “Pac-Man” eating away at revenue that could be spent elsewhere in the budget.

Since most of the existing pension costs resulted from benefits state and public school employees have earned, any reforms would do little to solve the immediate crisis, but could defuse costs in later years by changing benefits for future employees.

Still, Corbett and Corman said they do not have a specific plan on how to reform the system at this time.

“We’ll have to wait and see where the body is,” Corman said, referring to the General Assembly.

Last week, Corbett said he was still being educated on possible solutions and alternatives.

Many conservatives have advocated for a change from the existing defined benefit plan — in which pension benefits are guaranteed as a formula of years worked and salary — to a defined contribution plan where workers can invest a portion of their pay in a retirement account, similar to a 401(k) plan in the private sector.