As deadline looms, Pa. Senate passes no-tax budget

HARRISBURG - As a midnight deadline loomed to pass a state budget, the Republican-controlled legislature approved a $29.1 billion spending plan Monday that would not raise any taxes or impose new ones.

The plan passed both chambers largely along partisan lines, with the House giving its stamp of approval shortly before 10:30 p.m. In doing so, the GOP-controlled legislature sent Gov. Corbett a spending blueprint that includes some increases for public schools and social safety net programs, while filling an estimated $1.5 billion budget gap largely with onetime fund transfers and delayed payments.

It was unclear whether Corbett, facing a difficult reelection campaign in the fall, would sign the budget, as the legislature had not yet delivered on his priorities. They include a proposal to rein in the cost of public employee unions.

Also up in the air was whether the final budget would include language to allow Philadelphia to impose a $2-per-pack tax on cigarettes, which could raise about $80 million for city schools. In a late-in-the-day maneuver, Democratic senators from Philadelphia struck a deal with their Republican colleagues and slipped the tax language into a budget-related bill, which the full Senate is expected to vote upon on Tuesday

Sen. Jake Corman (R., Centre), who chairs the Appropriations Committee, said he believed the state, though struggling under the weight of an unexpected shortfall in tax collections, is still making "strategic investments."

"We put together a responsible budget based on sound information," Corman said.

Sen. Vincent Hughes (D., Phila.) disagreed, calling it "the flimflam sham budget."

"The Wimpy approach to budgeting," Hughes, the ranking Democrat on the Appropriations Committee, said of the budget for the fiscal year that begins Tuesday.

The Senate vote was mostly along party lines: All Democrats voted against it, and all but one Republican approved it.

Sen. Chuck McIlhinney (R., Bucks) said in a statement that he voted against it because he was angry about the budget plan's allowance of additional gas drilling on state forest lands to raise revenue.

Senate Republicans had been willing to consider raising revenue through tax increases - including a new tax on the extraction of natural gas from the Marcellus Shale - but Republicans in the House took a hard line against any new or increased taxes.

Under the Republican plan, spending would increase by about 2.5 percent over the current year - but the package also adds $220 million to this year's budget. Though there would be increases for public schools and social safety-net programs, they are not what Corbett originally asked for when he unveiled his proposal this year.

For instance, Republicans are seeking to pare back Corbett's "Ready to Learn" program from $240 million to $100 million. The way it stands, Philadelphia stands to receive $33.7 million under Ready to Learn.

Republicans have also been unable to agree on a plan to rein in the cost of public employee pensions. The Senate late Monday did pass a bill that would require elected officials, including legislators, judges, the governor, and the attorney general, to move into a 401(k)-style plan.

But that is a far cry from the overhaul Corbett is seeking, which would affect all new employees.

On Sunday, Corbett and House Republican leaders had given Philadelphia Democrats an ultimatum: Vote for the GOP pension plan in return for Republican support for an increase to the cigarette tax in the city.

Democrats criticized the ultimatum as political horse trading that holds the welfare of Philadelphia schoolchildren hostage.

Mayor Nutter, who was in Harrisburg on Monday pushing hard for the cigarette tax, said it was time to remove politics from the decision-making. He said that without the money, the district will have to ax an additional 1,300 positions - and schools will not be safe to open in the fall.

"Pension reform is important," Nutter said Monday. "But at some point in time you just have to do the right thing. And anybody who chooses politics over children is really not fit for public service."

Late Monday, Senate Democrats, including Hughes and Anthony Hardy Williams (D., Phila.), led an effort to amend a budget-related bill called the municipal code bill to include the $2-per-pack cigarette tax for Philadelphia. The final vote on it is expected Tuesday, but based on Monday night's 40-10 vote on the amendment, it appears safe.