It’s been barely a week since our (increasingly unpopular) state legislature inaugurated its new session, and it’s apparent that our (similarly unpopular) governor, Tom Corbett, has a problem.
In the two years since Corbett took office, he and the legislature dominated by his Republican Party have cut $1 billion from public schools and higher education, eviscerated the social safety net for the poor and disabled, passed a voter-ID law geared to suppress urban and nonwhite votes and restricted abortion rights — when those legislators were not busy being prosecuted for corruption or spending taxpayer dollars on lavish per diems.
This year’s debates will center on less-sexy but equally weighty matters: transportation funding and public-employee pensions.
The governor faces the daunting task of finding billions of dollars for needed repairs to the state’s roads, bridges and mass transit (case in point, Philadelphians: SEPTA) and figuring out a politically palatable solution to an estimated $41 billion shortfall in state workers’ pension funds — all while keeping faith with a “no new taxes” pledge that he, like many other Republicans, has made to Washington, D.C., conservative power broker Grover Norquist.
Critics of Corbett say that to tackle those big issues, something has to give. “He owes it to the people of Pennsylvania to say, ‘You know what, we’re going to do what’s best for the state, not what’s best for Grover Norquist,’” says Democratic state Sen. Daylin Leach.
Corbett, whose office did not respond to an interview request, signed that pledge to burnish his conservative credentials during his 2010 primary race against Tea Party favorite Sam Rohrer.
Recently, Corbett assured reporters that he would keep his pledge. But his approach to funding critical bridge, road and mass-transit projects could test that promise. He is reportedly set to announce a transportation plan based on eliminating the $1.25-a-gallon cap on a tax paid by gasoline wholesalers called the Oil Company Franchise Tax. While there is widespread support for tackling transportation repairs, funding them by allowing this tax to rise — if not by actively raising the tax — would appear to violate the spirit of the Norquist pledge. Norquist’s Americans for Tax Reform told reporters as much. Corbett has downplayed that.
That Corbett now apparently finds himself in this uncomfortable position — of parsing the nuances of his pledge to appease all sides — may point to a shift in the climate in Harrisburg.
One indication of that shift: More divisive ideas on transportation — like Republican House Majority Leader Mike Turzai’s proposal to address funding for roads and bridges separately from mass transit, which would pit rural legislators against suburban and urban delegations — now seem like non-starters.
“If the Republicans would agree, they could do anything they want,” says Franklin & Marshall political scientist Terry Madonna. But such agreement will be hard-won. Democrats picked up three Senate seats in November. The Republicans’ narrowed majority will force them to rely more heavily on moderate Republicans from the southeast — the sort of Republicans most likely to oppose ideological crusades and cuts to education and the safety net.
The governor’s political peril is also evident in the public-employee pension funding crisis that has only grown worse over the past two years.
Navigating between conservatives who want to dismantle pensions and unions that will fight to protect members’ retirement security, Corbett has so far avoided the type of controversial, union-busting tactics seen in Wisconsin and Ohio. That has saved him time and political capital — but it has also rankled conservatives itching for such a fight.
“The state doesn’t have a revenue problem; it has a spending problem,” says Jay Ostrich, spokesperson for the conservative Commonwealth Foundation. “This will ultimately require the governor and legislature to show the courage and finally deal with the unaffordable costs associated with unsustainable and underfunded public pensions, skyrocketing health-care costs, fraud, waste and abuse in welfare, and other sacred cows of big-government proponents like public-employee unions.”
Pennsylvania, like many governments, did not pay necessary funds into its pension system during the heady Wall Street boom years when returns were high. As a result, it suffered big-time when the market crashed. Pension critics on the right argue that public employees should have retirement plans more like the less-secure 401(k) defined-contribution funds that are commonplace in the private sector.
“We’re trying to run a 21st-century payout system under a 20th-century payout system,” says Republican House Finance Committee chairman Kerry Benninghoff. “We’ve got a lot of people that still think they should be able to retire at 50. … Everybody’s going to have to give.”
The liberal Pennsylvania Budget and Policy Center, however, points out that it was the state government, and not workers, that failed to pay its designated share. Conservatives are taking advantage of the crisis, they say, to weaken worker benefits.
“The discussion is really [more] about an ideological attack on worker benefits than it is about dealing with a short-term budget problem,” says the center’s executive director Sharon Ward.
A 2010 state law reduced benefits for public employees hired after Dec. 31, 2010. But that did nothing to pay off the outstanding debt to current workers and retirees, and the courts might well block any attempted changes to current employees’ benefits. How and when that debt might be paid remains an open question.
One way it’s not likely to be paid off: through more budget cuts. Corbett delivers his third budget address on Feb. 5. Even Corbett’s budget secretary has acknowledged that wringing out further savings from education and social services would be undesirable. After all, Corbett’s first two years were defined by major cuts to education, health care and programs for the poor and disabled. angering many throughout the state.
One decision still on the line is whether Corbett will accept or reject Obamacare’s expansion of Medicaid, which, though primarily federally funded, might cost Pennsylvania taxpayers down the line. The U.S. Supreme Court ruling upholding most of the Affordable Care Act struck down a provision requiring states to expand Medicaid. But the governor faces strong pressure not only from health-care advocates, but also from hospitals that will depend on government insurance of Pennsylvania’s 613,000 uninsured adults as a cushion against the law’s costs.
State tax revenue is up somewhat in recent months, but not enough to cover pressing spending needs. Pennsylvania continues to lean on casino gambling (including a possible second Philly casino) to generate revenue. Corbett is also pushing privatization — of liquor stores and of the state lottery. Meanwhile, automatic cuts from Congress’ postponed “fiscal cliff” could cost the state an estimated $300 million.
Progressives say that Corbett’s no-new-taxes ideology has left cash on the table, and critics continue to demand the closing of tax loopholes that allow corporations to use Delaware as a tax haven, costing Pennsylvania an estimated $400 million a year or more. In his first year in office, Corbett fought against imposing a severance tax on natural-gas drillers, ultimately settling for an “impact fee” that is one of the lowest in the nation.
Conservative momentum is slowing. But for progressives, the best-case scenario may be defending a status quo that for Philly — a city with spiking poverty, persistent violent crime and desperately underfunded schools — is unacceptable.
