Pennsylvania's Senate on Monday afternoon resumed debate over the House-approved $29.1 billion budget bill, amid a call by Gov. Tom Corbett to approve his changes to the state pension system.
The deadline for passage is Tuesday.
Corbett, in a Sunday night press conference in Harrisburg, called on Philadelphia Democrats to approve his proposal to steer new hires into a 401(k)-style defined contribution plan in exchange for a $2-per-pack increase in the state's cigarette tax, applicable in Philadelphia only, to help the city's struggling school district.
"I'm giving them the option of being able to help their school district," said Corbett.
The state and the Philadelphia City Council would have to approve the measure. Last year the school district had to borrow $50 million from the city to open its schools on time.
Corbett's proposal, if passed, would not affect the state's unfunded pension liability, which is estimated at roughly $50 billion and has put Pennsylvania under bond rating agency glare.
Standard & Poor's warned in late April that it could lower Pennsylvania's rating from AA in the next few months if a structurally balanced budget and meaningful pension change is lacking. Last year, Fitch downgraded the state to AA from AA-plus with a negative outlook Corbett's proposed changes stalled. Moody's Investors Service rates Pennsylvania Aa2.
Pennsylvania has two employee pension funds, the State Employees' Retirement System and the Public School Employees' Retirement Systems.
Corbett said he would not rule out a special session on pensions should the legislature remain stalled. "I'm keeping all options open," he said.
House Speaker Sam Smith, R-Punxsutawney, said lawmakers in both branches would stay longer, if necessary, to work on pensions.
"The length of that time depends a little on the movement, if you're getting close. We're willing to stick around for a few more days," he said. "But I think it's getting a little bit tied to the Philadelphia schools issues. There's not 102 Republicans [an overall majority] to vote for that."
Republicans have a 110-93 advantage in the House and a 27-23 edge in the Senate.
