Corbett Aiming To Hold The Line On Taxes

HARRISBURG – Two years into his tenure, Pennsylvania Gov. Tom Corbett says he’s achieved “90 percent” of his pre-election agenda.

In the face of the crisis in the pension plans for state and public school employees and its $41 billion unfunded liability, he maintains a desire not to raise taxes.

Corbett has been meeting with newspaper groups from around the state over the past few weeks, and he sat down with representatives from Ogden Newspapers Inc. at the Governor’s Residence on Monday.

Ogden representatives included the Mirror’s Steve Carpenter, Ray Eckenrode and Neil Rudel along with editors, publishers and reporters from the Williamsport Sun-Gazette, Lock Haven Express, Lewistown Sentinel and Warren Times Observer.

The thrust of the session was to outline the pension challenge, but the governor also expressed his passion on several other topics, including the privatization of Pennsylvania liquor stores, technology companies holding a key to the state’s future job growth and his desire to see a young visionary become Penn State’s next president.

His interview follows:

Question: How much is the number of school districts in Pennsylvania a public-relations battle?

Corbett: A great deal is a PR and political battle. What’s the strongest union in Pennsylvania? It’s the Pennsylvania State Education Association. I have nothing against superintendents, but how many do you need? We have 500. Think about the redundancy of administrations.

Question: With the federal wind tax credit ending at the end of the year and uncertainty about whether it will be renewed, is there any possible role the state could play in the wind power business?

Corbett: I don’t know what the federal government is going to do. I’m not sure they know. We’re waiting for signals from them on many different levels. Right now, with what we’re trying to do in natural gas, alternative energy is important, and we have a commitment to that. But it would be very difficult to pick up that dropoff from the federal government at this time.

Question: Where does the pension reform rank in your priorities, and how much time are you willing to devote to it?

Corbett: I have to ask you guys why you like rankings. We’ve got pensions, transportation, issues on education, privatization of the LCB that I’d like to see done. I don’t rank them. And part of that is because one of the things I’ve learned in these two years dealing with the Legislature is you don’t quite know which one is going to move and who’s going to be behind each one. Those are four big items. We’ll send you a scorecard. We did a scorecard on the promises I made in the election and what we’ve got done. And we’ve got 90 percent done in two years. That left some things behind. But I don’t prioritize.

Question: Realistically, everybody understands something needs to be done with the pension plan. What kind of opposition do you expect?

Corbett: If it doesn’t pass, this year 62 percent of new revenue (will go to the pension) and that’s going to continue to grow. And that’s going to affect everything else in the budget. But that’s one reason we’ve asked you here. You have to get the message out. This is a big issue. The private sector has already done it. You (newspaper) guys probably did it. The trade unions are looking at the public-sector unions, who are fighting it, and the trade unions are wondering what the holdup is. It is inevitable. If it doesn’t happen under me, it’s going to happen under somebody else because you need to find the revenue, and the best way to find it is to fix that aspect of it.

Question: What qualities do you think Penn State needs in its next president?

Corbett: First off, (from) being on the board now and even before, Penn State’s a great institution, it’s a world-class institution. We have a number of world-class institutions in Pennsylvania. Obviously, they’re a huge economic driver in Pennsylvania. They’re doing great research, but most importantly, they produce great students who do a great deal of work across the country and across the world. Take one sliver, the oil and gas program they have up there. They were producing these people for a long time, and they were going to Houston, Texas. They’re all coming back home. They’re all coming back to southwestern Pennsylvania, the Williamsport area, all over. They are leaders. And I think the next president needs to recognize what a good institution Penn State is. The incidents (involving Jerry Sandusky and the alleged cover-up by the former administration) have nothing to do with the reputation, the quality of people, the quality of research, the quality of work they put out. If I was on the search committee, give me somebody who also understands the business world and has a vision for the future of how we have students, graduate students, doctorate students ready for the work of the 21st century. And I’d be looking for somebody young.

Question: Do you prefer to maintain your presence as a voting member of the (Penn State) board?

Corbett: I haven’t gone to many board meetings. I have somebody there representing me, Jen Branstetter. She doesn’t have the right to vote when I’m not there. We’ve been doing that while we get through this. I’m going to have my input and suggestions on different issues, and I think it’s fine that way.

Question: What about raising the impact fees on shale drilling to help make up the pension deficit?

Corbett: You’ll recall (sentiment) that we have to tax it, (suggestions) that we’re not taxing the companies. Yes, we are. We have the second-highest corporate net income tax in the country. We have sales tax, user tax. They paid well over $1.6 billion since 2007 in various taxes in the commonwealth from the industry. One of a number of reasons is I want to make sure industry came here and established itself here – not just for drilling. They’re moving headquarters to Pennsylvania. They’re not taking it to New York or West Virginia because their taxes are high or Ohio because they started talking about a tax. They’re bringing it here. There are so many jobs that come out of that. An industry like this has a huge impact in the local counties. My goal is almost all of the impact went to the counties. My goal was to keep the money there. We ended up with a ratio of 65 local and the rest going to the state. The first round of the impact raised $204 million. There’s more money doing it this way, and more importantly, it’s now part of the economy. The next wave is now we have to raise the demand for natural gas.

Question: Other than Marcellus, what are the job growth opportunities?

Corbett: High technology. We took a trade mission to Silicon Valley in August. We talked with Google, which has a huge presence in Pittsburgh, and encouraged them to grow. Why (Pittsburgh)? Because of Carnegie Mellon; they want the engineering students there. What’s interesting is their biggest concern about Pittsburgh was bicycle safety. Because they all ride bikes on their campus out there. Pittsburgh is a little challenging, and a little hilly, frankly. But they are growing. Pixar. We’re trying to get Facebook to establish. Electronic Arts – EA Sports. Hopefully we’d like to open an EA Sports in Pittsburgh. Talking about video games, Drexel is big in video games. There’s no reason the kids have to go to California. So we’re in competition with other states. The bio-meds. I just toured Children’s Hospital in Pittsburgh. They’re involved with other countries. Just think of all the pharmaceutical companies. They used to do all their own research. They can’t anymore. So they’re looking to the universities. We have the potential.

Question: Political promises aside, long term, if the state doesn’t do something to reform its pension system, is there any way to avoid a tax increase?

Corbett: That’s hard to answer because it requires a little bit of a crystal ball, and it has so many variables to it. At some point in time, the revenue required for pensions will continue to eat in to whatever you’re required for other services – education, welfare, Medicaid and whoever is sitting in this position will have to make a decision: Do we continue to reduce services in other areas to pay the pension or do we decide on a tax increase? Right now, I’m looking to do everything I can to get that fixed so somebody doesn’t have to make that decision.

Question: What makes you think you can get the LCB privatization done this time?

Corbett: I don’t give up. I don’t back down. And if I don’t get it this year and next year and I get re-elected, I’ll continue to come back at it. Because the people want it. They want the convenience. Everybody agrees we need to privatize. The problem is there are many different forms as to what it would look like. If you look at the Philadelphia Inquirer today: There’s a full-page ad for liquor. In Delaware – Delaware! Why we advertise with the LCB is beyond me – it’s a monopoly. Plus doesn’t it encourage more drinking? And look at the money we lose in state tax. We are in the 21st century – we’re one of two states that do it this way. It’s time to get out of the business.

Question: How do you convince the Legislature?

Corbett: You can’t stop. Members of the House and Senate say their constituents don’t want it. It has to be a groundswell. The leadership, I think, is there. It’s a matter of what it looks like.

Question: Is there any planned expansion of any casinos and games of chance?

Corbett: No. We have one license that’s up right now, in Philadelphia, and I think there’s still one license out there for a “racino” – a race-track oriented one, but that’s it.

Question: Do you continue to oppose video poker in bars?

Corbett: There’s a whole other issue we’d have to talk to the Legislature. Because if I recall correctly, there could be requirements under the original gaming act that we’d have to give some money back to the casinos because we’d be in direct competition with them on the issue of poker.

Question: One more on Penn State: Were you disappointed the see the trial dates (of Tim Curley, Gary Schultz and Graham Spanier) extended, and are you anxious for more closure on that case?

Corbett: With the additional charges, and the charging of Graham Spanier, that was inevitable. I’ll make this observation: Often times I get questions similar to that, how do I feel about it? I’m a lawyer. Here are the facts. I’m going to deal with them. I don’t get emotional about things too much. What I do get emotional about is when people don’t put out the facts – straightforward facts, I don’t have a problem. Often times I see half a fact, not the whole fact. That’s when I start getting emotional.