Corbett prepared to miss budget deadline to get his initiatives done

HARRISBURG - Gov. Corbett said Tuesday that he was willing to let the state's June 30 budget deadline pass if legislators don't act on his priority initiatives.

After calling reporters to a news conference, Corbett said he won't approve any plans to use taxes to close a $1.4 billion budget gap without first reining in the skyrocketing cost of public employee pensions, and privatizing the sale of wine and spirits.

"We need to get this done right rather than quickly," he said. "I am willing to be here. . . . No bluster. No threats. These are the facts."

It was a notable departure from Corbett's insistence over the last three years to get budgets passed on time, unlike his Democratic predecessor, Ed Rendell. And though the state does not mandate a budget by July 1, any protracted delay in passing a spending plan could affect state services or halt paychecks to public employees.

It also demonstrated how high the stakes are for Corbett this year - an election year - to push through his agenda. The governor faces anemic public-approval ratings, not to mention a well-funded Democratic opponent in Tom Wolf. Leaving Harrisburg this summer with policy wins could help his reelection campaign.

Still, several people close to the Republican governor privately say that a messy and protracted showdown with the GOP-controlled legislature could damage Corbett's bid for a second term.

For his part, the governor said Tuesday that he remained optimistic that he and the legislature can meet the budget deadline. Senate Majority Leader Dominic Pileggi (R., Delaware) told the Associated Press this week that he was telling his members to prepare to work into July.

Earlier this year, the governor proposed a $29.4 billion budget that, among other things, would boost funding for public schools.

The problem is that state revenue collections have fallen far short of expectations, leaving the administration and the legislature with a $1.4 billion shortfall. How it is resolved - through cuts, new or increased taxes, or a combination of both - remains a question.

The governor said he would not consider any proposals to raise new revenue unless the legislature delivers first on pensions and liquor privatization. Even then, raising any taxes could be a difficult proposition politically for Corbett, who ran in 2010 on a strict no-tax pledge.

Several legislative Republicans have said privately they have heard administration officials discussing a 10-cent increase in the state's cigarette tax, currently $1.60 per pack.

Another option, supported by Democrats and, increasingly, a number of Republicans in the Senate, particularly from the Philadelphia suburbs, is a new tax on the extraction of natural gas from the Marcellus Shale.

Sen. Edwin B. Erickson (R., Delaware) has pushed a proposal to impose a 4-percent tax on drillers, which the senator has said would raise roughly $400 million in the next fiscal year.

Asked specifically about an extraction tax Tuesday, Corbett said, "I don't like a severance tax." He noted that the industry has been paying an impact fee for the last two years - money that, among other things, is funneled back into the communities where drilling is occurring.

Budget Secretary Charles Zogby said Tuesday that the administration was open to "a broad-based revenue discussion." He did rule out an increase in the state's personal income tax, and likely its sales tax.

But like Corbett, Zogby said the legislature needs to deal with the budget's "major cost-drivers" - public employee pensions topping that list - before the administration discusses options for new revenue. That stance comes even though changes to the pension system are not expected to quickly generate revenue for the state. Only a very aggressive liquor privatization plan would raise new money, legislative aides say.

Failure to address those mean a bare-bones budget that contains none of the increases Corbett wants for public schools and people with disabilities, he said.

"Given the current revenue situation, we are looking at having to strip out all the initiatives that the governor had," said Zogby. "So there is no money for basic education, no money for pre-K, no money for special education, no money to provide the middle-class [higher education] scholarships, no money for the intellectual disabilities wait-list."

As it stands, negotiations in the legislature on both liquor privatization and changes to the pension system are bogged down in disagreements, aides say.

Pileggi, the Senate's majority leader, said Tuesday that work on liquor and pensions proposals continue. But, he said, "I am not sure that the passage of time will change the view of the body on any of these issues."

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