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Corbett proposes more money for schools, changes to state employees' pension benefits

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Proposed spending plan for the year starting July 1

• Increases overall state spending by nearly 3 percent to $28.4 billion

• Raises $28.4 billion through taxes, fees and other revenue sources

• Does not increase the sales tax or personal income tax

• Phases in an increase on the wholesale tax that gas stations pay on gasoline over five years by uncapping the average price used to calculate the tax

• Phases in a reduction in the corporate net income tax rate from 9.99 percent to 6.99 percent by 2025

• Reduces pension benefits for state workers and school employees by reducing the “multiplier” used to calculate benefits, reducing annuity payments to employees who withdraw their contributions and capping pensions at the Social Security wage base

• Requires that new hires enroll in a proposed 401(a) defined-contribution retirement savings plan

• Increases funding for public school instruction and operations by $90 million to nearly $5.5 billion

• Maintains spending for higher education at this year's $1.2 billion level

• Provides nearly $40 million to expand home- and community-based services for people with intellectual and physical disabilities

• Moves vehicle registration renewals to a biennial cycle, instead of once a year, and moves driver license renewals to a six-year cycle

Source: AP

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By Brad Bumsted and Kari Andren
Tuesday, Feb. 5, 2013, 11:56 a.m.

HARRISBURG — Gov. Tom Corbett on Tuesday proposed a $28.4 billion state budget for 2013-14 that increases state spending 2.4 percent and, at least for now, declines participation in the expansion of Medicaid under Obamacare.

Overall, the budget boosts funding for basic education and mental health programs and seeks to alter pension benefits for current and future state employees. It reflects Corbett's agenda to sell state liquor stores; provide money for roads bridges and transit; and begin to reduce Pennsylvania's $41 billion pension liability gap.

“Now is the time to be bold,” he said.

Corbett said “without serious reforms, it would be financially unsustainable” for Pennsylvania to expand Medi­caid, an option the Affordable Care Act, known as Obamacare, gave the states. His budget does not anticipate “opting in” to the expansion, said Budget Secretary Charles Zogby.

“We cannot afford to expand a broken system,” Corbett said, referring to Medicaid, the nation's largest health insurance program for low-income people.

Corbett told a joint session of the General Assembly that he advised Health and Human Services Secretary Kathleen Sebelius of Pennsylvania's position by letter.

“The federal government must authorize real flexibility and innovative reforms that empower us to make the program work for Pennsylvania,” Corbett told lawmakers. The state needs a “clear answer” on the costs, he said.

His action brought a sharp rebuke from Democrats, who claimed he would turn down hundreds of millions of federal dollars.

“The Republican governors of Arizona, Nevada, New Mexico, North Dakota and, now, neighboring Ohio have agreed to accept vital federal funds to improve health care and because they know it's vital for their state's economies,” said Rep. Dan Frankel, D-Squirrel Hill.

House Appropriations Chairman Bill Adolph, R-Delaware County, argued that Corbett said no because “we got no information.”

Other Republicans applauded Corbett's choice.

“The governor's decision to not expand Medicaid was the right decision,” said Rep. Tim Kreiger, R-Delmont. “... I think it's clear the program doesn't work.”

Unless lawmakers take steps to fix soaring pension costs, they will consume “the commonwealth's ability to fund core programs and services,” the governor said.

His plan to auction 1,200 retail licenses for wine and liquor would provide $1 billion over four years to public schools, for initiatives such as school safety. “Selling liquor is not a core function of government,” Corbett said. “Education is.”

“The linkage between the two is wrong,” said Senate Minority Leader Jay Costa, D-Forest Hills.

Corbett said his budget proposal does not raise taxes.

But motorists might pay higher prices at the gas pump as a result of Corbett's chief means of raising money for transportation.

“Transportation is the bloodstream of our economy,” the governor said. “If it fails, our economy fails.”

He would generate $5.3 billion over five years, mostly from gradually eliminating a cap on the tax that gasoline wholesalers pay. The 19.2-cents-per-gallon tax would rise almost 150 percent to 47.7 cents in the fifth year, based on current wholesale values.

“We have no idea where prices will be in the future,” Transportation Secretary Barry Schoch said, noting increases haven't always resulted in higher pump prices.

Corbett proposed reducing the liquid fuels tax that consumers pay at the pump by 2 cents a gallon, or 17 percent.

The state can increase funding for key programs, including education, because of the austere approach to his first two budgets, Corbett said. When he took office in 2011, Corbett faced a $4.2 billion deficit.

“We have worked together to bring spending under control,” Corbett said. “We have worked together to reduce taxes, putting more money into the pockets of our hard-working taxpayers and small business owners.”

Brad Bumsted and Kari Andren are staff writers for Trib Total Media. Bumsted can be reached at 717-787-1405 or Andren can be reached at 724-850-2856 or Staff writer Tom Fontaine contributed.

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