Corbett to lawmakers: Change state pension system

HARRISBURG - Tackle the state's pension problem. Then we'll talk.

So said Gov. Corbett in a message to legislators Tuesday, laying out a road map of how he expects budget talks to proceed over the next few weeks.

In a brief interview with reporters, Corbett said that if the GOP-controlled legislature moves on a bill to change the state's pension system for future state and school employees, he will consider tax-increase proposals to plug the budget gap. Sluggish tax collections have left Corbett's $29.4 billion proposed budget out of balance by at least $1.2 billion.

The Republican governor, up for reelection this year, would not say which tax-increase proposals he would consider.

"If we can't get pensions done, I'm not open to anything," Corbett said. "They've got to move on it."

The deadline to pass a state budget for the fiscal year is June 30. Corbett said some budget woes this year were due to reductions in federal money, including Medicaid reimbursements.

Corbett has said he supports legislation, currently in the House, that would create a hybrid pension system for new employees, combining a traditional publicly financed pension with the 401(k)-style plan. The proposal, which would not affect current state and public school employees, faces union opposition, and many Democrats in the legislature have said they will not support it. On Tuesday, it appeared stalled.

Steve Miskin, spokesman for House Republicans, said that his caucus' members were discussing the plan and that it could come up for a floor debate Wednesday.

Among the revenue-generating taxes under discussion is one on the extraction of natural gas from the Marcellus Shale. The Republican chairmen of the House and Senate Appropriations Committees have said the measure would likely have to be considered.

Supporting such a tax would be a reversal for Corbett, who for years has opposed taxing the industry. He did sign off, in 2012, on an impact fee on drillers - a levy lower than what many other states impose.

Corbett also campaigned in 2010 on a strict no-tax pledge, so supporting any tax increase could leave him vulnerable to attacks from political opponents.

Corbett also said Tuesday that one of his priorities this year was to privatize the state's liquor sales. Republicans who hold a majority in the Senate have been working on a proposal to allow private retailers, such as restaurants and grocery stores that have a special license, to sell wine.

That proposal would keep the state-run store system, and even expand their hours of operation on Sundays and holidays.

That measure was in limbo Tuesday, though that could change by the end of the month.

That would only be one hurdle. The other would be persuading Republicans in the House, who last year passed a much more aggressive liquor privatization plan, to support it.