Tuesday, November 24, 2015

Budget update

Capitolwire: Framework collapse avoided; broad-based tax hikes, property tax relief no longer included.

By Chris Comisac and Kevin Zwick

HARRISBURG (Nov. 24) - Remember two weeks ago when the budget framework collapsed until it didn't?

Well, it happened again.

Late Tuesday afternoon, building off of Gov. Tom Wolf's comments a day earlier that the framework was “in deep peril,” the rumblings coming out of the Republican House and Senate leadership seemed to indicate the two-week-old budget framework was about to implode.

Then, in less than an hour, between 5 p.m. and 6 p.m., catastrophe was avoided, yet again.

"We're very comfortable and optimistic that we can have this done in short order next week," Senate Majority Leader Jake Corman, R-Centre, said after exiting a meeting with Wolf Tuesday evening. "Right now, we're on track with the framework we agreed to."

"These things go back and forth all the time,” he said. “Things go up and down, people get excited."

The Wolf administration cast the situation in a more negative tone.

“As we have said, Republican leaders communicated directly to Gov. Wolf late last week that they do not have the votes for the framework they agreed to with the governor and stood with him to announce,” wrote Wolf spokesman Jeff Sheridan in an email. “Tonight’s latest theatrics are just an outgrowth of that. 

“Talks continued with Republican leaders tonight and will take place in the coming days. As the governor said yesterday, he wants a budget by next Friday.”

No framework details were offered by leaders outside the governor’s office following their meeting with Wolf. Leaders said they still have to brief their caucuses. The plan, say GOP leaders, is to come back to the state Capitol next week and begin moving budget bills reflecting the framework.

House Republican aides told Capitolwire the framework no longer contains a property tax relief component, nor does it include a broad-based tax increase.

During the last two weeks, both components have been the source of significant pushback by rank-and-file members of both political parties.

On Monday, Wolf, remarks at the Pennsylvania Press Club, said the plan is to “keep overall spending to $30.745 billion and reduce one-time fixes from $2 billion in the 2014-15 budget to $700 million with the goal of eliminating the one-time fixes in the 2016-17 budget.”

The House Republican aides said the overall budget spend number of the still in-play framework remains roughly in the area identified by Wolf on Monday. To get there, the House and Senate GOP caucuses have been reviewing other recurring revenue sources to produce the revenue needed to balance the budget.

However, and as noted by Wolf on Monday, there will be some one-time funding used to balance out the plan, House Republican aides confirmed.

The hiked education funding for the current fiscal year appears to have remain unchanged: an additional $350 million for basic education, $50 million more for special education, an additional $60 million for pre-K programs, and a $75 million increase for higher education. 

On Monday, Wolf was light on the details about the framework’s plans for liquor and pensions.

From the information supplied by House Republicans, it appears there’s an effort to do the following for liquor: wine at grocery stores; beer, wine and liquor at beer distributors; legalized direct shipment of wine; a full lease of the wholesale liquor system (which Wolf discussed briefly on Monday); and an expectation of as much as $300 million in additional recurring revenue from the changes. 

The union representing the few thousand workers isn't thrilled with Wolf's plan to privatize management of the state store system, but isn't putting up opposition because Wolf's management outsourcing plan guarantees the unionized workforce keeps their jobs. 

On pensions, the details are still a bit elusive.

However, most of the components affecting current employees that had been agreed to in prior pension proposals offered by both the GOP and Wolf appear as though they’ll be included in the pension proposal: risk sharing, the revenue neutral lump sum payment option, and the anti-spiking provisions.

In addition, a hybrid pension plan is being developed, or as Wolf described it on Monday, “a side-by-side plan, defined benefit, defined contribution, 401-K.” 

The proposal looks like it could include a 50/50 split of the employee pension contribution between the defined benefit portion (which would offer a reduced benefit compared to the current pension plan) and the 401(k)-style portion. No other details were available Tuesday night.


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