Calling last year’s extended budget impasse an “uncomfortable” situation for both sides, Gov. Tom Wolf said he’s willing to consider more compromise in this year’s budget talks.
That includes public-sector pension reform, which he called a top priority for the administration.
It’s been top of mind for many in the business community for several years, especially as the unfunded liability of the two state-sponsored retirement systems pushes $60 billion.
Whatever reform looks like, the problem could take time to fix as leaders grapple with pension promises made under previous administrations.
“The (pension) costs in the next few years are pretty much locked in,” Wolf said on a conference call Wednesday with Business Journal staff.
The state is mandated to spend $500 million more this year than it did last year on pension obligations.
State pension obligations
The total estimated employer contributions to the state pension systems, including the share paid by local school districts, will grow to more than $5.9 billion in 2016-17, said Jeff Sheridan, a spokesman for the governor. The state pays about 57 percent of local school district pension obligations.
In 2017-18, that total will grow to $6.4 billion.
“The general fund share of state pension obligations is about 42 percent,” Sheridan said. “The $500 million increase for the current fiscal year is exclusively the state general fund portion of our total obligation.”
The increase in 2017-18 will decrease to about $250 million and continue to decline below $200 million annually in subsequent fiscal years, Sheridan said.
State officials need to acknowledge that and pay the bill, Wolf said. He’s willing to consider alternatives that might produce long-term pension savings, he said, but that takes enough votes in the General Assembly.
Pension reform was part of last year’s budget negotiations and included in a Senate proposal backed by the governor. But that effort was thwarted over differences in proposed tax increases.
Broad-based tax increases remain a key part of the governor’s fiscal focus, which includes adding more money for education.
Local budgets could suffer from inaction by the state to address structural deficits and properly fund education, Wolf said, an argument that was made several times during the budget impasse.
Gaps in state funding can lead to cuts in teaching staffs, and school districts can end up paying higher rates on construction loans. That leads to higher property taxes.
Convenience for six pack pickup
On Tuesday, Wolf sent a letter asking the Pennsylvania Liquor Control Board to approve a dozen license applications to “free the six packs” and allow consumers to buy six-packs of beer and other malt beverages from businesses that also sell gasoline.
Wednesday, at its regular meeting, the PLCB granted nine fuel-related license applications, including ones regularly obtained by distributors, restaurants and eating places, such as grocery stores.
“There is no such thing as six-pack convenience store licenses,” said Elizabeth Brassell, a spokeswoman for the PLCB.
The restaurant and eating place licenses, which impacted seven of the nine applicants at Wednesday’s board meeting, allow those businesses to sell two six-packs, or up to 192 ounces of takeout beer, per transaction.
The distributor licenses allow for full case sales, or original containers containing at least 128 ounces, Brassell said.
On the conference call, Wolf said he hopes to have more chances to show he is on the side of the consumer.
“I applaud the Pennsylvania Liquor Control Board for approving these applications and respectfully ask that they approve similar subsequent applications that otherwise meet PLCB standards in order to improve customer service and convenience for Pennsylvania,” he said in a written statement.
Wolf said he will continue to push for modernization of the wine and spirits system. But he said he’s not looking to give it away or privatize it, which many Republicans want to see.
Pennsylvania should run the system more like a business, Wolf said. “People care about convenience.”
Not a swing state
Wolf is solidly in Hillary Clinton’s corner for the upcoming election. He’ll stump for the likely Democratic presidential nominee if asked. Pennsylvania is not a swing state, Wolf said, but one that will go to the Democrats.
A Clinton presidency will be good for Pennsylvania, he said.
“The alternate scenario” — he didn’t mention Donald Trump by name — would not.
Nonetheless, Wolf noted the reasons behind the number of people voting for Trump: disaffected voters, the lack of trust in government, were some of the same reasons behind his successful gubernatorial election in 2014.
With one big difference, Wolf said: “We need to make sure we have addressed the problems in a constructive way.”
This story was clarified to include comments on fuel-related licenses from PLCB spokeswoman Elizabeth Brassell.