Pennsylvania Gov. Tom Corbett prefaced the meat of his budget proposal with a declaration of intent: this year won’t be about cutting, or even holding the line on spending. This year, Corbett’s putting the emphasis on reform.
“Now is not the time to cling to old ideas and the status quo. Now is not the time to make small changes and expect big results,” said Corbett.
For more than a year, Corbett has been promising plans to find a way to pay for the state’s transportation infrastructure needs and to deal with rising public pension costs. The problem for fixing roads, bridges, and public transportation is stark: all told, the costs leave a $3.5 billion deficit annually.
Corbett’s plan aims to generate about $500 million in the coming fiscal year, and more than $5 billion over a five-year period.
That money will come from things like licensing fees, but also from a move to lift the cap on the wholesale gas tax paid by gas stations. Corbett insists he’s not breaking his “no tax” pledge, and that there’s no way to tell how much uncapping the levy would increase gas prices at the pump.
Paying a ‘fair share’
“It is time for oil and gas companies to pay their fair share of the costs of the infrastructure supporting their industry,” said Corbett.
Lifting the cap was recommended by a special panel the governor chose to examine Pennsylvania’s transportation infrastructure funding issue.
But one thing the commission didn’t recommend is also in Corbett’s proposal: a 17 percent reduction in a gas tax paid by motorists at the pump.
Republican Senate Transportation Committee chair John Rafferty says that didn’t come from his panel, either.
“That came from the governor’s office. But we don’t have an issue with it,” said Rafferty.
Democratic Rep. Dan Frankel of Allegheny County says what he heard from the governor falls short of fixing the Commonwealth’s problems.
“This transportation proposal is a small fraction of what his own commission recommended,” Frankel said.
Three-pronged pension reform
The other big reveal from the governor concerns pension reform. The state owes $41 billion to its pension funds for state and school employees. And some argue the retirement plans themselves are too expensive.
Corbett is offering a three-pronged proposal. One: reduce the scheduled payments the state has to make on its pension debt, freeing up some revenue. Two: reduce the future benefits of current employees. And three: enroll future employees after 2015 in a 401-K-style plan — similar to what’s common in the private sector.
His budget office says if all three reforms are enacted, the state’s pension debt will not grow, even though the debt payments will be spread out over a longer period of time.
Democratic state Treasurer Rob McCord, who’s mulling a run for governor, says those types of reforms would amount to a fiscal steroid, not a solution.
“Just popping this sort of fantasy island finance is very dangerous,” said McCord.
But even Republicans seem wary of the governor’s approach. It’s unclear whether the state is constitutionally allowed to change the unearned benefits of its employees.
Backward or forward?
Democratic lawmakers are unimpressed with the governor’s plans. “Timid” was their buzzword.
“All of his proposals either are so timid that they don’t move us forward enough, or actually take us backward,” said Sen. Daylin Leach (D-Montgomery County).
Leach is among those unhappy with Corbett’s call to flat-fund higher education. Others from his party criticize the governor’s proposed $90 million increase in funding for K-12 education, saying it won’t be enough to make schools districts whole after cuts of nearly $1 billion due to the loss of federal stimulus funds.
But Bill Adolph, Republican chairman of House Appropriations Committee, points to the proposed almost with a sigh of relief.
“We’re starting at a much better place this year, said Adolph.
The spending plan also incorporates the governor’s already announced call to sell off the state liquor stores — a proposal of the same ilk as transportation funding and pension reform — heavy lifts, as they say in the Capitol.
One lawmaker assures reporters there will be no “linkage” of one issue to ensure the passage of another. Under this particular spending plan, such a move might make the whole thing unravel.