Pa. House OKs cigarette tax for schools

HARRISBURG - After four days of back-room negotiations, heated public meetings, and political floor maneuvers, the legislative logjam finally broke on critical pieces of the state budget late Wednesday, setting the stage for an overhaul of the state pension system and a cigarette tax to fund Philadelphia schools.

"This is one of the most critical votes in the history of the Philadelphia School District," said Mayor Nutter, who worked the Capitol halls for days and stayed to see the House vote, 119-80, to pass the cigarette tax.

A Senate vote on the tax could come next week, and Gov. Corbett is expected to sign the bill. The $2-per pack levy is expected to generate $45 million for city schools this year.

"We have worked for over a year, above the partisan politics, to put the students of Philadelphia first," said Corbett, who last weekend had tried to leverage the tax to get changes he wants to the state pension system.

Progress also appeared on that front. Before recessing for the summer, House Republicans pushed a pension overhaul bill in position for a floor debate, but not until the fall.

Not clear was when, or if, Corbett would sign the $29.1 billion general appropriation plan legislators sent to him Monday.

Hours earlier Wednesday, the governor had called reporters to a brief Capitol news conference, where he said he was still reviewing the budget and reiterated his insistence that the state needs to tackle its ballooning pension costs.

At the same time, he refused to say if he was willing to veto the budget, call a special session to work on pension system changes, or strike certain spending items from the budget the legislature sent to him.

"I am not linking anything right now, except to say that every option is on the table," Corbett said.

The law does not mandate that a budget be in place by July 1, and the governor's office issued a statement Tuesday promising that state government and services "will continue uninterrupted."

But a prolonged stalemate could jeopardize the state's ability to pay its bills and employees and add to Corbett's reelection woes in his tough fight against Democratic challenger Tom Wolf this fall. A new poll Wednesday showed Wolf had a 22-point lead among registered voters.

In his comments to reporters, Corbett tried to cast the pension burden in a local light. He said that nearly all of the 164 school districts that had asked the Department of Education this spring for permission to raise taxes above the state cap cited ballooning pension payments as a key reason.

"Across the state, the costs of pensions for school districts is going through the roof," he said, noting the rising tax bills in places such as the Morrisville School District in Bucks County and Springfield School District in Delaware County.

But in Philadelphia, the situation has been more dire, which made the cigarette tax victory more important.

On Monday, the School Reform Commission had passed a spending plan with a $93 million question mark that narrowly averted 1,300 layoffs and class sizes swelling to 40 and beyond.

The cigarette tax is expected to yield about $45 million this year, which means the district will still have a gap in its budget.

"We're still going to need to make some very difficult decisions unless we find other types of savings to close the projected gap," spokesman Fernando Gallard said.

Still, district officials were plainly relieved.

"I am so grateful we have gotten to this point," said SRC Chairman Bill Green. He said that Rep. John Taylor (R., Phila.), the governor, and others had fought hard for this.

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Inquirer staff writer Kristen A. Graham contributed to this article.