Corbett
Corbett

HARRISBURG, Pa. - Gov. Tom Corbett signed the state budget 10 days late on Thursday and used his line-item veto power to spotlight what he called the Legislature's failure to sacrifice with the rest of government or to curb rising public-sector pension costs that are fueling school tax increases.

Corbett, a Republican who is running for re-election but down in polls to Democrat Tom Wolf, delivered the news in a lively, campaign-style speech that recounted his accomplishments and took on lawmakers and public-sector labor unions.

He said he wanted to avoid any more school property tax increases to cover pension obligations, and criticized the GOP-controlled Legislature for refusing to contribute any of its approximately $150 million six-month operating reserve to help state government close a massive deficit.

Overall, he struck $65 million from the Legislature's own appropriations and another $7.2 million in earmarks and other spending items picked by lawmakers, noting that the proposal sent to him last week increased the General Assembly's own $320 million budget by 2 percent.

"They filled the budget with discretionary spending and then refused to deal with the biggest fiscal challenge facing Pennsylvania, our unsustainable public pension system," Corbett told reporters.

The pension systems for public school and state government employees represent a growing financial strain on budgets, but despite pressure from Corbett over the past couple of years, no deal has made it to his desk.

He said lawmakers left Harrisburg for the summer "with unfinished business. They need to come back and enact pension reform."

He also accused unions of blocking the progress of a pension system overhaul he had proposed in February, although elements of it were variously opposed by Democrats and Republicans.

Democrats had protested that it would slash future pension benefits, while conservatives protested that it would postpone more legally obligated pension payments. In the end, a bill backed by Corbett could not emerge from the House, but would not have meant any immediate or substantial savings for the state or school district budgets.

Critics also pointed out that a 2010 law already reduced future pension benefits and postponed some pension payments.

Forcing the Legislature to drain half its reserve to make up for his line-item vetoes would leave it with a three-month operating reserve. The Legislature manages it in secret and has created no special rules to limit its size or use.

"That is such an important item for them, they can take that money from this huge reserve," Corbett said. "You know, Pennsylvania doesn't have a reserve, we don't have a rainy day fund, but the Legislature does?"

Democrats quickly counterattacked, accusing Corbett of scapegoating teachers and lawmakers while pursuing school funding cuts they say have contributed to higher property taxes.

"What Pennsylvania needs right now is serious leadership willing to stand up for education, the environment and middle-class families," said Sen. Mike Stack, a Philadelphia Democrat who is running for lieutenant governor. "Instead, we have an indecisive governor using political maneuvers to mark up a budget already filled with gimmicks and patches and destined to become unraveled long before next year's deadline."

The governor's actions did not affect a bill hung up in the Legislature to increase Philadelphia's sales tax on cigarettes. City officials say the new money is needed to open city schools this fall.

The Republican-penned state budget plan passed both chambers without a single vote from a Democrat, and Corbett has said his administration did not agree to all the final details.

The big task for Republicans was to address a massive and unexpected collapse in tax collections that helped tear a gaping $1.7 billion hole into the $29.4 billion budget plan that Corbett proposed in February. The one he signed Thursday was $29 billion.

It does not increase taxes and is supported by an approximately 3.3 percent revenue growth projection while cutting business taxes.

The package authorizes a spending increase of $651 million, or 2.3 percent, over the current year's approved budget. It adds another $220 million to the books of the recently ended fiscal year, rather than the new fiscal year, making the entire package an $871 million increase, or about 3.1 percent.

The new spending goes largely toward public schools, prisons, pension obligations, health care for the poor and social safety-net programs. To plug the deficit, it relies on more than $2.5 billion in one-time stopgaps, the biggest use of stopgaps outside of the three years around the Great Recession.