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Budget Signed, Governor Challenges Legislature on Pension Reform

Governor Tom Corbett finally signed the fiscal year 2014-15 state budget, but not without sending a message to legislators by vetoing $72.2 million in funding earmarked for the Senate and House which included $65 million in their general appropriations and $7.2 million in legislatively designated spending.

Corbett also used a line-item veto to scratch out $65 million, or 20 percent, of the Legislature’s operating budget. The last time a governor used the power of a line-item veto to eliminate part of the Legislature’s budget was 1978 under Gov. Milton Shapp, said House Parliamentarian Clancy Myer.

The General Assembly can override a governor’s veto by a two-thirds majority vote, but no decision has yet been made a legislative response.  In 1978, lawmakers overrode Shapp’s veto.

The Governor also blue-lined $20 million in transfers from the Machinery and Equipment Loan Fund (MELF) and Small Business First Fund.  Legislators had sought $200 million from those funds. One unintended consequence of this transfer has been elimination of a special MELF program promoted by the Administration to provide low interest (1.75%) loan financing to Pennsylvania companies wishing to expand and create or maintain jobs. Companies had until June 30 to apply for the funds, which they were surprised to learn this week are no longer available.

During the budget signing press conference, Corbett made his disappointment with the General Assembly clear, challenging legislators for not standing up to unions and passing meaningful pension reform. He accused both chambers of not being financially responsible for the taxpayers of Pennsylvania.

“As they did in the last three budgets, agencies sharpened their pencils, set priorities, and spent what they had – not what they wished they had,” said Corbett. “We made tough decisions so that funding for critical programs and services that benefit the people of Pennsylvania would go unharmed. It is what I promised the people of Pennsylvania I would do, and, frankly, it is what they expect and deserve from their state government.  “The same, however, cannot be said for the General Assembly,” he noted.

“The governor’s actions seemed to us to be about politics and not about the hard work of governing,” House Majority Leader Mike Turzai (R-Allegheny) said last week.  “You can’t lead from behind, you gotta lead from out front,” he added.

“We are disappointed that the Governor has not, to date, been able to work effectively with the Republican majorities in the House and Senate to address important fiscal issues impacting our state,” m Senate GOP leadership, said in a statement, which adds “linking pension reform to punitive program cuts is not a winning strategy.”

They said, “The state budget process is not a game to be played and vital government programs should never be placed in jeopardy. Putting the needs of Pennsylvania residents ahead of politics has always been, and continues to be our top priority.”

Corbett insisted that public pension reform was critical, noting that one-third of the state’s districts cited pension costs when they received state permission to raise property taxes in the upcoming school year beyond an allowed rate. Corbett continued his efforts last weekend, with robocalls across the southeastern corner of the state criticizing the Republican-controlled Legislature for sending him a budget “loaded with perks and earmarks.” The governor warned of impending property tax increases without action from the General Assembly.

The House will return to session on August 4 to, among other things, consider a bill that would authorize Philadelphia to impose a cigarette tax to fund its schools.

The Governor’s actions are under increasing legal scrutiny as well. Parts of the budget package are now an exhibit in a 2-year-old lawsuit that is seeking to stop Pennsylvania from allowing more natural gas drilling on publicly owned lands and diverting the drilling proceeds away from a land conservation fund.

The budget package establishes the state’s authority to enact a new round of leasing of publicly owned lands for natural gas drilling and authorizes the diversion of another $220 million from the fund into the state government’s operating budget.

Lawmakers are saying the $7 million in line-item vetoes by Corbett of earmarks or spending items picked by lawmakers were unprecedented and possibly unconstitutional.

Corbett’s office insists he had the legal authority — most of it was for the cost of a new parking deal negotiated by his administration — but lawmakers say it may have crossed a constitutional line from blocking spending to blocking wording that instead gave direction to spending already authorized elsewhere.