Democrats take on Pa. gov over Medicaid, pensions

HARRISBURG, Pa. (AP) -- Pennsylvania Senate Democrats on Tuesday challenged Gov. Tom Corbett's top budget adviser over the necessity of carrying out the administration's proposed pension fund changes and to explain how it developed an analysis that a Medicaid expansion would cost state taxpayers billions of dollars.

Corbett's budget secretary, Charles Zogby, gamely answered questions for nearly 2 1/2 hours during the Senate's first Appropriations Committee hearing of 2013 as lawmakers begin to pick apart the Republican governor's spending plan.

The Senate's majority Republicans generally were complimentary of Corbett's stewardship of the budget, tending to focus on smaller dollar items. But minority Democrats, who have chafed under two years of cuts to education and public welfare programs as part of Corbett's plan to balance deficits, focused on broad themes and attacked his policies on everything from taxes to health care.

Corbett's ambitious proposal, released in recent weeks for the fiscal year that begins July 1, would increase core state government spending by nearly 3 percent to $28.4 billion, boosting support for public schools by $90 million, cutting business taxes by hundreds of millions of dollars and holding the line on sales and income taxes.

The governor's plans also involve privatizing alcohol sales to generate $1 billion over four years for public schools, raising wholesale gas taxes to generate nearly $2 billion a year for transportation systems and lowering public employee pension costs by hundreds of millions of dollars by cutting future benefits for public employees.

Sen. John Blake, D-Lackawanna, told Zogby that the Corbett administration could do a better job managing the state's money — he said the administration had missed out on $140 million in federal money for the Children's Health Insurance Program — and that it has given lawmakers a "false choice" of either cutting spending or raising taxes if they don't go along with his proposed pension changes.

"I think the governor's playing chicken here, saying, 'You've got to do pension reform under these conditions and that's the only way you're going to balance this budget,'" Blake told Zogby.

Zogby responded that the administration is running out of places to cut spending as it confronts a third year of a sizable increase in pension costs, while Corbett took a pledge not to increase taxes.

"You'd need a 24 percent increase in the (personal income tax) just to accommodate the $2.8 billion in increased pension costs that are coming over the next four years," Zogby said. "Those are the kind of magnitudes we're looking at and I don't know where else you go in the budget to find the revenue to pay for those increases."

Democrats also challenged Zogby to show how the Corbett administration came up with an analysis that a massive Medicaid expansion under President Barack Obama's sweeping health care law would cost state taxpayers billions of dollars over the next eight years.

Democrats, who say they initially asked in a Nov. 21 letter for the administration's analysis, contend that going along with the expansion will be a net tax benefit for the state that would also provide health insurance to hundreds of thousands of uninsured people.

Zogby said he is happy to discuss the number — which is probably inflated because some of the costs Corbett counts would occur anyway under the federal health care law.

Corbett has declined for now to go along with the expansion, which would be largely federally funded. But Zogby said the federal government cannot necessarily be trusted to follow through on its promises of delivering funding to states and that the administration has had a hard time getting its questions about the expansion answered by the federal government.

"I think it's ironic that you stress that you can't get any answers from the Obama administration and we've been asking for numbers since November and we haven't had any response," said Sen. Lawrence Farnese, D-Philadelphia.