Debate continues as Pa. budget deadline nears

HARRISBURG - Debate began Monday in the state House on a general appropriations bill that will take shape in the coming days as the 2014-15 state budget, signaling the start of the final stage of the budget process a week before deadline.

But the legislation, described as a "vehicle," contains no specific line items or revenue sources to close a budget deficit estimated at roughly $1.5 billion.

Gov. Corbett has said he is willing to push the budget settlement beyond the end of the fiscal year on June 30 to win passage of two key priorities: pension reform and liquor privatization.

On Monday his budget secretary, Charles Zogby, echoed the governor's position, saying the state's $560 million pension obligation in the coming year is evidence that the system needs to be fixed.

"If it means going beyond the 30th to get pensions done to get a good budget, he'll do that," Zogby said.

Zogby said Corbett wants to end the state's "prohibition era" control of liquor stores, but recognizes that more limited proposals involving expanded sale of wine and beer in non-State Stores appear to have a better chance at passage.

Zogby acknowledged that neither pension reform nor liquor sales changes would address the current budget crisis.

While he would not say a tax hike was inevitable, Zogby conceded that a range of revenue proposals, including a shale gas drilling severance tax and tobacco taxes, are open for consideration.

"At this stage we are not in a position to rule out anything," Zogby said, with the exception of increasing the personal income tax and the sales tax.

House Democrats, speaking during a late afternoon floor debate, assailed the governor for holding up the budget over pensions and liquor, saying they fear the final budget will be fast-tracked and patched together with "onetime budget gimmicks."

"It will have disastrous consequences for Pennsylvania schools and the economy," said Rep. Joe Markosek (D., Allegheny), the ranking Democrat on the Appropriations Committee. "We have reached the threshold of pain for cuts."

The $29.4 billion spending plan unveiled by Corbett in February was based on revenue that did not materialize, and included additional funding for education and human services.

Now lawmakers are faced with how to preserve funding across the board at last year's levels.

"The goal is to have a budget on time," said Steve Miskin, spokesman for House Republicans, adding debate would continue on Tuesday.

The House took a nibble out of the deficit Monday by passing a proposal - largely along party lines - to suspend a variety of economic development tax credits that could save between $125 million and $180 million.

House Majority Leader Mike Turzai (R., Allegheny) said the plan was to "across the board put tax credits on hiatus." Democrats opposed the elimination of tax credits that help preserve and create jobs in struggling communities.

Erik Arneson, spokesman for Senate Republicans, said the upper chamber has positioned a number of budget bills for prompt action when agreements are reached.

"At this point, I don't expect any specific action on those bills" Tuesday, he said.

Meanwhile, 73,000 state employees have been notified that there are no furloughs expected soon, and that workers will continue to be paid in the event no budget is signed by June 30.