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Key budget issues

on June 17, 2014 10:33 AM

A look at key areas of focus in the budget debate:

PENSIONS

Corbett backs a House plan to create a new hybrid pension plan for most future public employees that is expected to save more than $10 billion over 30 years. Democrats favor leaving the pension system alone.

The bill would combine a limited traditional, defined-benefit pension with a 401(k)-style defined-contribution plan to provide a smaller benefit than current employees receive.

The state’s largest teacher union opposes the bill, saying it would not produce taxpayer savings in the short-term and would undermine the retirement security of future employees.

The hybrid bill has been sidelined in the House at least temporarily.

LIQUOR

The House passed a Corbett-backed privatization bill last year that would have phased out the 600 state liquor stores and generated more than $1 billion in one-time fees by allowing the sale of more than 2,000 new wine and liquor licenses.

The bill, staunchly opposed by state employee unions, went nowhere in the Senate. That chamber’s efforts to cobble together an alternative have focused on liberalizing the sale of wine and beer while retaining the state stores as Pennsylvania’s only liquor retailer and maintaining state control over wholesale purchasing. Democrats oppose the bills.

Corbett has said he would sign the House bill. He says any changes should promote competition, provide convenience and not cost any additional taxpayer dollars.

TAXES

Tax collections have lagged projections in recent months.

The result, say both the Corbett administration and legislative analysts, is a potential shortfall of at least $1.2 billion over two years.

Other budget-related developments could push the total toward $2 billion.

They include the possible rejection by the Legislature of Corbett’s plan to postpone $170 million in public pension payments; a possibly adverse court ruling on the transfer of $190 million from the Oil and Gas Lease Fund; and revenues from a new tax on small games of chance in bars coming in $75 million lower than projected.

 

Corbett has not ruled out raising taxes to avert politically painful spending cuts, but views it as a last resort.

Democrats, including gubernatorial standard-bearer Tom Wolf, are calling for a new tax on natural-gas extraction, which could generate hundreds of millions in the first year.

They are also proposing the expansion of Medicaid eligibility under the 2010 federal health care law, which would save an estimated $600 million next year.

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