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Harrisburg is frozen: A giant fight over buying booze is keeping billions of dollars in limbo

It all comes down to booze.

Welcome to budget season, when the weather gets warm and everyone else looks forward to vacation, our lawmakers, the Governor and their staffs are cloistered in Harrisburg, arguing for weeks over back-room deals.

Pennsylvania’s highest-ranking serial procrastinators lawmakers are, at this very moment, figuring out what will happen by the final budget deadline of June 30 (a deadline that’s moderately meaningless anyway). While those talks touch on schools, pensions and taxes, what we’re all really arguing about is liquor and what’s the best way to sell and buy it.

Will anything get done before June 30?

Over the last few days, Democrats and Republicans have stalled in their talks. They can’t even agree on how big the budget will be, because they’re far apart on what to do with selling booze and getting pensions to retired people.

Earlier this week, Gov. Tom Wolf told reporters in Harrisburg that, “They’re holding [budget talks] hostage to liquor.” Wolf was referring to Republicans — specifically, Speaker of the House Mike Turzai, the dude on the right at the top of this story. Turzai is in charge of House Republicans who say Pennsylvania does not belong in the business of selling liquor.

So if it’s booze that’s holding everything up, what’s that all about?

Republicans want to sell off state stores to private entities, which they claim could send an infusion of $1 billion into the state and cut into a $2 billion deficit that lawmakers have stared down since Gov. Tom Corbett was voted out of office. Privatizing the liquor system would also make it a lot easier to, for instance, buy beer and wine at Trader Joe’s.

Democrats say they are also in favor of making it easier for people in Pennsylvania to buy wine and liquor, but not that easy. Why? That sweet, sweet revenue — while selling the liquor system would infuse a bunch of cash at once, it’s a one-time payment. It’s like winning the lottery, or a big inheritance. After that, it goes away.

Corbett tried to get liquor privatization done for four years and failed — and he even had a Republican legislature to work with. The difference now? Wolf, a Democrat, doesn’t favor privatization and has said he would veto it if it were sent to him. (Still a Republican-majority legislature though.)

“Supposedly they’ve been talking quite a bit about liquor and nearing an agreement on an amendment to the House-approved bill,” said Patriot-News opinion page editor John Micek. “Now the governor of course is not a fan of privatization and still favors modernization.”

The House has already passed its liquor privatization bill, and Micek said Senate Democrats are “adorably” putting forth their own liquor bill “that will probably go no place.” But it could provide the framework for a future modernization-type package.

And when it comes to pensions, the picture doesn’t look much rosier. Senate Republicans have long said that if pension reform isn’t part of the next budget, there won’t be a next budget. Over the next year, the burden on taxpayers in terms of paying pensions to retired teachers and state workers is expected to increase by hundreds of millions of dollars.

Wolf wants to use liquor proceeds to fund the pension system. Obviously Republicans have a problem with that, and prefer reform the actual system and how it allots money to recipients. Specifically, they want to switch pension recipients over to a 401(k)-style system.

So how can lawmakers even think about the rest of the budget if they don’t know what will happen with around a billion dollars?

If you ask Republicans, they can’t. Or they’ll kinda walk around it. House Majority Leader Dave Reed told PennLive that Republicans believe privatization would include $200 million a year in recurring revenue that *could* be used for education.

“If the governor’s not interested in that sort of revenue in that regard then, look, we can move in different directions and we can come back and have that discussion later on,” he said, while simultaneously putting Wolf in a pretty uncomfortable spot. After all, the Governor asked for an additional $400 million to go to the state’s cash-strapped schools in this year’s budget.

All these arguments mean something for what happens when this thing reaches bitter end. Here’s what it could mean for a few key issues:

Education

Republicans and Democrats roundly agree that education needs to be better funded in the coming years, but they just need to decide on the magic number. Lucky for many education advocates, the Senate education committee (chaired by a Republican) has already passed a funding formula that would send more money to schools with higher poverty concentrations. But what happens with the rest of the budget might dictate whether or not that formula is used this fall.

Here in Philly, city officials aren’t banking on the state doing anything. Last week, City Council passed school funding bills that increases a number of different taxes in order to send an extra $70 million to the school district so public schools can open their doors this fall.

Liquor

If privatization passes, the state stores will be sold off and it will (slowly) become easier for you to buy booze and wine in this state. If Democrats and Republicans compromise on a modernization bill, they’ll attempt to piecemeal through some bills that keep state stores open for longer hours and allow for direct wine shipment.

Shale tax

A few months back, it seemed like the majority of Harrisburg was cool with levying a tax on the natural gas drilling companies. Wolf wants a 5 percent severance tax to fund schools, and some Republicans had even proposed a 3.5 percent tax. No one agrees anymore, and it doesn’t seem like Republicans in either chamber are interested in the tax on the drilling companies. The GOP says they’re not willing to talk about more revenue until the state figures out how to fund a massive deficit in the pension budget.

Marijuana

Medical marijuana in Pennsylvania is kind of related to the budget, in that talks are happening right around budget time to actually do something about getting a medical marijuana bill passed. The Senate passed a bill that would legalize medical marijuana for certain diseases (for the second year in a row) and sent it to the House, where it was essentially DOA when it was assigned to the Health Committee. There, Rep. Matt Baker and chairman of the committee has refused to move the bill forward.

Rep. Nick Miccarelli, one of Baker’s fellow Republicans, filed what’s called a discharge resolution, which would move the bill out of committee. These don’t always work, but if it would, medical marijuana has one last shot to be passed before the end of this session. Micek said it may well not work this time.

“You have another Republican who is trying to move this along,” he said. “There seems to be fairly decent agreement that this is something worth doing.” He added that lawmakers want to have another vetting of the bill over the summer months.

In the end, it’s tough to say what will happen with the budget in full. The emerging consensus in Harrisburg is that Republicans will pass a number of bills through on party line votes that will be sent to Wolf’s office, and he can make one of three choices with the bill that he will probably hate:

1. He can veto it in its entirety.

2. He can blue line some portion of the budget and bring lawmakers back to negotiate.

3. “Out of sheer perversity,” Micek said, he could sign the budget and then veto either one, or both of, the pension or liquor reform bills. Then he’d probably spend the rest of the summer traveling and telling the public all about how Republicans ruined everything.

When will all this exciting drama happen? Who knows. Republicans will probably try to pass *something* through before midnight on June 30. But even if it takes longer than that, it probably won’t mean a whole lot if it takes an extra week or two. But if budget talks drag long into the summer, we could see anything from furloughs (state employees given unpaid time off) to problems with getting money to schools that start up in September.

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