Pension reform, layoffs highlight Corbett budget
HARRISBURG -– Gov. Tom Corbett today asked the Republican-controlled Legislature for pension reform, transportation investments and a $90 million increase in basic education funding in his 2013-2014 budget.
The Republican governor’s $28.4 billion blueprint, if approved by lawmakers, is $679 million higher than the current year’s budget and includes no tax increase. It does, however, propose 400 layoffs, plus the elimination of 500 other positions.
Corbett also said he will not expand Pennsylvania’s Medicaid system because it lacks flexibility and would cost $200 million to implement.
Pennsylvania’s constitution requires a balanced budget to be adopted by June 30.
Without pension reform, Corbett said employer contributions in the state’s two pension programs -– the State Employee Retirement System and the Public School Employees’ Retirement System –- would balloon from its current 11.5 percent and 12.36 percent, respectively, to around 30 percent in five years.
His proposal would not affect any benefits already accrued by current employees nor will retirees lose any benefits, but new employees would be automatically enrolled in a 401(a) plan and they will be required to contribute at least 6.25 percent of their salary.
“The reality is our pension costs are taking most of our available revenue growth. And, when you couple that with the growth in mandated expenditures, the reality is that to fully make our pension contributions … we would have to go into the general fund, without reform, and make deep cuts,” said Charles Zogby, budget secretary.
Elsewhere, Corbett is asking for the removal of the Oil Company Franchise Tax cap. The controversial proposal, if approved, would generate $5.3 billion over five years. The new money, the governor said, would help pay for road, bridge and other transportation infrastructure improvements.
He also wants to increase the Net Operating Loss cap to $5 million and begin a 10-year reduction of the Corporate Net Income Tax, starting in 2015. The CNI is now 9.99 percent.
As the governor said he would in the weeks leading up to today, Corbett said he wants to privatize the management of the Pennsylvania Lottery, sell the state’s liquor stores, and provide nearly $15 million to train about 300 new state police troopers.