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State Budget, Pension Reform, Reducing the Legislature in Harrisburg

The General Assembly is officially engaged in the state budget process, which with any luck will conclude on time, at the June 30 deadline. Similar to recent years, passing a fair and on time budget will continue to be a struggle as the state slips further and further into debt with lower than expected revenue numbers and a pension crisis with no immediate end in sight.

According to numbers released this week by the state Dept. of Revenue, the General Fund received $108 million less than expected in May, making the total collections for the fiscal year $532.5 million below estimate. Other revenue sources, including sales tax, PIT, corporate taxes, Motor License fund, inheritance tax, and “sin” taxes (i.e. cigarettes, gambling and liquor) were all low.

The vehicle that will become the 2014-15 state budget bill has not yet been introduced. Making light of a heavy situation, Majority House Appropriations Chair Bill Adolph (D-Delaware) said that he and his Senate counterpart Jack Corman (R-Centre) are “arm wrestling” over who will introduce the budget vehicle. Adolph said he anticipates a bill next week and consideration before the full House the week of June 16.

One huge piece of the state budget picture is the cost of funding state employee pensions.  For several years, legislators and the Administration have been considering various changes to limit the annual costs of funding these benefits. Rep. Mike Tobash (R-Schuylkill) has proposed a reform package that the Public Employee Retirement Commission said this week could save the state’s pension plans more than $11 billion during the next 30 years.

The savings from his plan would come by shifting the risk from the Commonwealth and school districts to new hires, and establishing a reduced benefit tier for new employees. Gov. Corbett said yesterday that he fully supports the Tobash bill, and House Majority Leader Mike Turzai called for passage of the legislation.  House Democratic Appropriations Chairman Joe Markosek called for public hearings on the bill before any legislative action.

Also of note, this week the Senate State Government Committee approved two bills that would reduce the size of the legislature – House Bill 1234 (Smith) and Senate Bill 324 (Vogel). SB 324 was amended in committee to eliminate the Lt. Governor position and reduce the number of justices and judges on the PA Supreme Court and the PA Superior Court, respectively.