Year-end slowdown

Republican policy priorities delayed until 2012

Lobbyists, government officials and members of the media congregate outside a doorway to the chamber of the House of Representatives, in session on Dec. 19 at the state Capitol in Harrisburg. Photo/Amy Spangler

An action-packed summer that culminated with the passage of a business-friendly state budget was thought to be the precursor to a fall frenzy of legislative victories for the Republican-controlled General Assembly.

But key policy priorities either fell short of passage or saw significant changes late in the fall term that wrapped up this week. Some initiatives failed to get off the ground, while compromises are expected in 2012 on other issues.

A lengthy legislative and congressional redistricting process might have been one reason for what many, especially the Democratic minority, saw as a lack of movement by Republican leadership heading into a presidential election year.

All state House members and half of the senators are on the 2012 ballot.

A compromise over an impact fee on the state’s booming natural gas drilling industry in the Marcellus Shale and liquor store privatization still are left undone.

The latest attempt at school choice also failed and debate over transportation funding appears to be far from the finish line.

But, the state budget was done on time this year, along with property tax and tort reforms, some business tax reductions, a ban on texting while driving and a measure to toughen the state’s sex offender law.

A difference in philosophy and political leadership style at the head of the GOP table might be part of the problem on the larger issues, said Terry Madonna, director of the Center for Politics and Public Affairs at Franklin & Marshall College in Lancaster.

“In terms of big policy-agenda items, it’s still a work in progress,” Madonna said. “You do have another year, but I’m not a big optimist they will do much in an election year.”

On Dec. 14, the House rejected an education-reform package that would have expanded the state’s Education Improvement Tax Credit program and charter schools. Republican leadership failed to generate enough support for a vote on a five-year pilot project on taxpayer-paid school vouchers, a centerpiece of Gov. Tom Corbett’s education platform.

The governor is not giving up on a school choice bill, press secretary Kevin Harley said.

“The governor is looking for the House Majority Leader to live up to the commitment he made, which was school choice and reform,” Harley said, referring to Allegheny County Rep. Mike Turzai. “(Turzai) said he had the votes to pass it. The governor is waiting for that.”

Turzai also saw his privatization bill of state-owned wine and liquor stores altered by colleagues in such a way that it’s no longer a true privatization proposal (see related story).

The House Liquor Control Committee on Dec. 13 passed a hybrid version of the privatization bill to keep open the state stores while allowing retail beer distributors and other retailers to apply for licenses to sell wine.

Corbett, who doesn’t believe the state should be selling wine and spirits, is not likely to support the new liquor bill, unless significant changes are made, Harley said.

“What passed the committee is not privatization,” he said. “(The governor) supports advancing the progress, but not the specifics of that legislation.”

And then there is transportation funding and an impact fee on the natural gas. By and large, funding the commonwealth’s aging transportation infrastructure has been the top priority for business leaders and the majority of state lawmakers.

However, the governor has not weighed in on which recommendations of the Transportation Funding Advisory Commission’s report he will support. As a result, there has been little movement in the General Assembly.

In August, the commission recommended a five-year plan that included uncapping the gas and oil company franchise tax, increasing fees, moving state police budget over to the general fund and modernization programs at the state Department of Transportation.

Republican Sen. Jake Corman of Centre County in October came out in support of most of the commission’s recommendations, which are worth about $2.5 billion annually.

The House and Senate have been vetting their own versions of a bill that would allow public-private partnerships for the funding, management and maintenance of highways, bridges and other transportation infrastructure.

Public-private partnerships, or P3s, would be one method to help the state pay for the $3.5 billion that’s necessary annually for the complete repair and maintain all of its roads, bridges and mass transit systems, business leaders, lawmakers and the administration have said.

“There is not enough revenue as cars get more and more efficient,” said Gene Barr, president and CEO of the Pennsylvania Chamber of Business and Industry, advocating support for an increase in the fuel tax. “We are not keeping up with the needs of our infrastructure.”

On the Shale issue, a pending House-Senate conference committee expects to reach a compromise bill over impact fees. The major sticking point between the House and Senate is whether the fee should be county-optional as opposed to a state-administered fee. The governor has said he supports the county option.

Those elected to the legislature over the past five years are much more ideological and driven by a sense of changing Harrisburg, Madonna said about why the Republican majorities have stalled recently.

“Gov. Corbett and Republican leaders either have the wrong priorities or no priorities at all,” said Bill Patton, a spokesman for House Minority Leader Frank Dermody. “The governor talked about things he wants to get done, like transportation funding, and then he seemed to lose interest and focus. (Republican leaders) have nothing to show the people of Pennsylvania, and still no accomplishments that will produce a better climate for jobs.”

By contrast, Barr and other business leaders have labeled 2011 a successful first year for Corbett and the Republican leadership.

“I wouldn’t say I’m disappointed,” Barr said. “It’s been a pretty good year trying to get the business climate straightened out. We got an on-time budget without raising taxes and filled a $4 billion hole.”

Changing the business climate in Pennsylvania is a huge undertaking and one that will take time, Barr said. Addressing the corporate tax structure and additional legal reforms need to be high on the priority list moving forward, he said.

Tackling the commonwealth’s multibillion dollar unemployment compensation debt with the federal government and upcoming pension obligations also figure to be factors in upcoming legislative debates.

“This legislature has accomplished quite a bit,” said Stephen Miskin, Turzai’s spokesman, citing controlled spending in the budget, no new or increased taxes and lawsuit abuse reform.

Corbett this summer signed the Fair Share Act, which prevents companies from paying unfair shares of monetary awards in civil lawsuits because they are deemed to have the most money.

“This legislation is critical to improving the state’s legal climate, which has direct bearing on the economic climate,” the governor said in June. “It affects the cost of goods and services. It affects the cost and availability of health care. It will encourage companies to move here, grow here and stay here.”

The 2011-12 budget lowered some business taxes, including the reinstatement of a capital stock and franchise tax phase-out.

By any measure, 2011 has been a successful first year for a governor, Harley said, also noting the record 
$4.2 billion deficit Corbett inherited.

“The big thing is continuing on with what the governor started, which is grow the economy” he said about 2012. “The No. 1 thing is job creation. (Corbett) believes the way that is done is by creating an environment that allows the private sector to create jobs and create careers for people.”

As part of the budget process, Corbett also got a minor property tax reform bill passed. That bill requires any school district looking to raise property taxes above the rate of inflation to get voter approval.

Education reform and ironing out Marcellus Shale issues have been atop the governor’s priority list, Harley said. Over the next few months, he said, he expects transportation funding also will be high among Corbett’s talking points.

“We need to find an alternative to the gas tax as a primary source to funding transportation infrastructure,” Harley said. “That is easier said than done.”

The governor doesn’t want to increase fees or taxes when the economy still is recovering from the recession, he said. Corbett wants to work with the legislature and private sector on a long-term solution, Harley said.

“The P3s are a big solution to address our transportation needs,” he added, referring to public-private 

Reforming the state’s 50-year-old prevailing wage law also is expected to remain part of the transportation debate, with several proposals floating around in the General Assembly.

In early 2012 and as part of his budget address, Corbett is expected to lay out some of his ideas on transportation and other areas, including corporate net income taxes, Harley said.

“It may be again a difficult budget year,” he said.

General fund revenue for 2011-12 was about $345 million, or about 3.6 percent, below budget estimate at the end of November, according to the Department of Revenue.

Budget Secretary Charles Zogby on Tuesday projected a $500 million deficit, citing the continuing weakness in the national economy.

Back in session

The state House and Senate are on winter break until January.

House members are back on Jan. 3 for a non-voting day, according to the 2011-12 session calendar. The next voting day on their calendar is Jan. 17.

The Senate also will reconvene Jan. 3.

Gov. Tom Corbett is scheduled to give his budget address for the 2012-13 budget on Feb. 7, press secretary Kevin Harley said.

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