Pennsylvania House Panel OKs Budget

Pennsylvania's $28.3 billion budget for fiscal 2014 is headed for floor debate in the House of Representatives after its appropriations committee approved it by a party-line 21-14 vote on Monday.

Debate should start next week. The new fiscal year starts on July 1.

The budget represents an increase of $578 million, or 2.1%, over last year's budget, and $100 million less than what Gov. Tom Corbett requested in February. Corbett is Republican, as are both branches of the state legislature.

According to committee chairman William Adolph, R-Springfield, the budget includes a $100 million increase for basic education. It provides for the hiring of 300 state troopers, and restores funding for programs that deal with diabetes, epilepsy and other health problems.

Senate Democrats on Monday presented an alternative budget, roughly the same at $28.4 billion, which leader Jay Costa of Pittsburgh called "a responsible alternative to the short-sighted and ill-advised spending plans" that Corbett and Republican lawmakers have offered.

Costa described the alternative budget as "drawing clear, right policy lines between priorities and solutions."

Highlights, he said, include $212 million more for education and an extra $125 million for job creation, plus funding to help small cities deal with economic distress.

It also uses funds generated from streamlining the operations of state-run liquor stores, savings from the expansion of Medicaid and a one-year freeze in the phase-out of the capital stock and franchise tax.

Pension overhaul, which Corbett recommended in February, appears to be on the back burner in a session crowded with talk about transportation, and proposals to privatize the liquor and lottery systems.

A Corbett bill before the legislature would not change benefits for current retirees, but seeks to enroll new state workers in a 401(k)-style defined benefit plan.

Pennsylvania's unfunded pension liability stands at about $47 billion. According to budget Secretary Charles Zogby, that liability could soar to more than $65 billion by 2018.

Moody's Investors Service in July 2012 — shortly after the end of last year's session — lowered Pennsylvania's general obligation rating to Aa2 from Aa1, citing "large and growing pension liabilities" that could challenge the return to fiscal balance for the state. The move affected $364 million of debt.

Standard & Poor's rates the bonds AA, while Fitch Ratings assigns an AA-plus rating.

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