A look at GOP's budget, pension, school and liquor bills


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The House and Senate Republican majorities in the Pennsylvania Legislature sent four pieces of major legislation to the desk of Gov. Tom Wolf on Tuesday, the final day of the state government's 2014-15 state fiscal year. Wolf vetoed one of the bills on Tuesday night — a budget plan — and is expected to veto the others. Here is a summary of the legislation:

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BUDGET

The Republican budget plan would have authorized nearly $30.2 billion in spending through the state's main bank account. That is an approximately $1.15 billion increase, or 4 percent, mainly for growing pension obligation payments, the rising cost of health care for the poor and a $100 million increase, or nearly 2 percent, in aid for public school instruction and operations. Another $51 million, a 22 percent increase, would have gone to the Legislature's operations. The plan did not increase any broad-based taxes, it cut corporate taxes and assumed that tax collections will grow slowly next year, at less than 1 percent. The budget package covered what Republicans call an approximately $1.3 billion deficit by using well over $1 billion in one-time stopgaps, including this year's surplus tax collections, cash from off-budget programs and payment delays. It also would have counted on $220 million in projected licensing receipts from just-passed legislation to privatize the state-controlled wine and liquor store system.

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PENSION

The Republican plan to make significant changes to public pension benefits for state government and public school employees is estimated by state actuaries to save about $11 billion in payments over approximately 30 years on a pension debt currently estimated at $53 billion. It would not provide any near-term savings to the state's budget or school district budgets. The bill would end the traditional pension benefit for the vast majority of future employees by directing them into a 401(k)-style retirement plan. Elected state officials, including lawmakers, would transfer from the traditional pension benefit program to the 401(k)-style plan upon re-election. The employer match would be 2.6 percent for school employees and 4 percent for state government employees. Future employees also would have to contribute 3 percent of salary into a cash-balance plan that guarantees the employee a return of up to 4 percent. The state keeps extra investment gains from the cash balance contributions. After changes in the House, the plan now differs in two important ways from a version that passed the Senate in May. One change maintains the traditional pension benefit for various employee classes, including state troopers, Capitol Police officers and state corrections officers. The other change killed a provision to require many current employees to contribute more money to maintain the more generous benefit terms they were granted in a 2001 law.

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WINE AND LIQUOR

The latest Republican plan to allow private licensees to take over the state-controlled sale of wine and liquor in Pennsylvania differs in important ways from a plan that passed the House in February. The latest plan would allow approximately 14,000 holders of licenses to sell beer — including retail distributors, restaurants, bars, hotels and grocery stores — to pay a higher license fee to also sell wine or liquor or both. The plan would not otherwise create licenses for new outlets to sell strictly wine and liquor, although if a beer distributor does not choose to sell wine or liquor, that wine and liquor license could be auctioned off. It would order the Pennsylvania Liquor Control Board to close a retail state store — there are approximately 600 statewide — when it finds there is adequate private-sector service in the area. Wholesalers seeking a license to market and ship wine or liquor would have to pay 15 percent of their sales as a license fee for the first 10 years before that percentage drops to 5 percent. Backers say it would deliver about $220 million to the state treasury each year, but it is not clear what it will mean for retail prices.

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SCHOOL FUNDING

Republican legislation to guide public school spending for the 2015-16 school year would address the state's approximately $5.3 billion debt in construction aid to school districts by authorizing the State Public School Building Authority to issue bonds. It also would adopt the school funding formula recommended earlier in June by the Basic Education Funding Commission and make it effective immediately. However, school districts would not receive less than they received in the 2014-15 school year, and the formula would only apply to additional aid above the amount districts were given in 2014-15.

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