HARRISBURG, Pa. - Governor Tom Corbett introduced an ambitious 2013-14 budget Tuesday that includes two very controversial measures to balance it -- selling off the state's liquor store system and reforming the state's pension system.
Although the proposed spending plan comes in at $28.4 billion -- $679 million more than this year's budget -- Corbett has yet to ask for a tax increase in his three years as governor.
If the Legislature agrees to put Pennsylvania's 80-year-old liquor system into private hands, Corbett promised to funnel $1 billion in proceeds into an education program called Passport for Learning.
The Passport plan would give money to school districts to improve safety, early learning programs and allow students in grades 6 through 12 better access to science, technology, engineering and mathematics programming.
Corbett said his proposed pension reforms would help the state, as well as municipalities and school districts, escape a "mountain of debt" and "the avalanche [that] could bury our economic growth, swallow up benefits for our elderly, education for our children and transportation for our economy."
Corbett administration officials say the state's unfunded pension liabilities could jump from $1.5 billion to $4.3 billion in the next four years without the reforms.
The governor predicted savings of $175 million in the next year if his reforms are adopted.
That would require all new state employees to be switched to a 401(a) defined contribution plan, and a different formula applied to the future earnings of current employees when pension benefits are being calculated.
Everyone in state government -- including lawmakers -- would be affected by the change, said budget secretary Charles Zogby, who called it "a sheer pain approach."
The governor proposed spending $2 billion more on the state's highway system, saying it would increase safety, encourage commerce and create jobs.
Because PennDOT has focused on repairing or replacing bridges over the last several years, the number of roads in poor condition has risen from 7,500 miles in 2007 to more than 9,200 miles in 2011, administration officials said.
Corbett also suggested cutting a penny in each of the next two years from the 12 cents a gallon flat tax that consumers pay on gasoline at the pump. The 17 percent reduction in the tax would cost the state $55 million to $60 million a year in revenue, said transportation secretary Barry Schoch.
Corbett's budget includes $887 million in tax reductions for businesses, including a drop in the corporate net income tax rate of 9.99 percent that would eventually slide to 6.99 percent by 2025.
It also proposes eliminating 900 jobs, about 400 through layoffs.
During his budget address, Corbett announced that he had sent a letter to U.S. Health and Human Services Kathleen Sebelius saying he will not support a plan to expand Medicaid in Pennsylvania.
Corbett called the plan, which is part of President Obama's Affordable Health Care Act, "financially unsustainable."
He said the federal government is asking for the expansion "without any clear guidance or reasonable assurances."
The plan would have provided health care to hundreds of thousands of residents and the federal government would pay most of the cost.
Several Democrats, including Pa. Rep. Mike Schlossberg, D-Lehigh Co., slammed Corbett's decision.
"This isn't some abstract argument; people will die because of this decision," Schlossberg told WFMZ.com in an email.
Schlossberg said the plan could have created "tens of thousands of new jobs, including hundreds in Allentown."
Another Lehigh Valley lawmaker, Pa. Rep. Dan McNeill, D-Lehigh/Northampton, described Corbett's proposed budget as "disheartening," saying his "education plan does nothing to repair that damage from his previous two budgets, and relies on a one-time grant proposal created by making liquor more accessible to underage children."
But Pa. Rep. Ryan McKenzie, R-Berks/Lehigh, praised the governor's spending plan as "a fiscally responsible budget that lives within our means. ... This proposal is another step in getting Pennsylvania fiscally in order."
WFMZ.com also sought comments on Corbett's budget from State Reps. Mike Tobash, R-Berks/Schuylkill, and David Maloney, R-Berks, but our efforts were unsuccessful.
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