Senate panel OKs Nutter's budget plan

A state Senate panel has unanimously endorsed a bill to reform Pennsylvania's municipal pension laws and allow Philadelphia to increase its sales tax.

An amendment the Senate Finance Committee approved last night would overhaul the pension law, setting new financial standards for the thousands of municipal funds in the state and providing a combination of relief and regulatory intervention for those that run into trouble.

The amendment, which could go to the floor for a full Senate vote as early as tomorrow, also would allow Philadelphia to raise its sales tax from 7 percent to 8 percent for five years. The tax hike would raise an estimated $580 million that would be used to pay off pension contributions that the city has deferred.

The House has approved legislation that includes a different set of pension reforms, as well as the Philadelphia tax authorization. Both chambers would have to approve identical legislation before any reforms could take effect.

Mayor Nutter, who has said the tax increase is necessary to avert the layoffs of thousands of Philadelphia city employees in a matter of weeks, attended yesterday's committee meeting and was circumspect after the vote.

"This is one step closer" to passing the bill, Nutter said, noting that he had not reviewed the final version of the Senate amendment.

Under the amendment, the city would have to freeze pension benefits for current employees and adopt revised benefits for new employees. The amendment mandates that the new plan cost no more than 75 percent of the existing plan.

Sen. Patrick Browne, the committee chairman and main sponsor of the amendment, said 40 percent of Philadelphia's payroll goes into pension contributions in contrast with 4 percent for state government.