A Busy Day in Harrisburg

Prior to the June 30th end of the state fiscal year, the Pennsylvania Senate passed a $33 billion budget; that is an increase of $1 billion over last year’s budget. Despite claims that the budget underfunds education, this year’s budget increases education spending by nearly $500 million to historically high levels. Unfortunately for students, most of this funding increase will be consumed by increased payments to the pension system.

Governor Wolf was not satisfied with a mere $33 billion in state spending. He vetoed the entire budget.

On that note, the General Assembly passed historic changes to the public employee pension system. Most new teachers and state employees will automatically join a 401k type plan, instead of a defined benefit plan. The changes will reduce future liabilities by $11 billion. While this is certainly a step in the right direction, the pension reform does not address current employees or the state pension system’s combined $53 billion in unfunded liabilities.

Finally, both chambers passed legislation to privatize liquor stores and lease the state’s wholesale operation. Although this legislation is a far cry from an actual free market, it represents a historic change to Pennsylvania’s prohibition era liquor sales system. According to proponents of the plan, the new system will generate $220 million per year in revenue.

There is sure to be developments on all fronts related to the budget throughout the week. We will keep you updated.