- Associated Press - Friday, December 4, 2015

Democratic Gov. Tom Wolf and leaders of the Republican-controlled Pennsylvania Legislature say they expect final budget legislation to emerge for votes in the coming days. Many details of the evolving agreement remain a secret, but here is a look at what Wolf proposed in his first budget plan in March and whether it could end up passing:

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THE BIG PICTURE

Wolf’s original budget proposal had sought a 9 percent increase in spending, to $31.6 billion, plus a $3.2 billion package to reduce school property tax bills and a new $426 million-a-year rent rebate benefit for renting households earning $50,000 or less. Lawmakers are settling on a spending plan of about $30.75 billion, up about 6 percent, but without any package to reduce school property tax bills or expand rent rebates.

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EDUCATION

Wolf originally sought a big bump in education spending: $400 million more for public school operations and instruction, a 7 percent increase, plus $120 million more for early-childhood education programs, $100 million more in special education funding and $160 million more for higher education institutions, including state system universities, state-related universities and community colleges.

Wolf has secured an agreement for nearly all of the money he had sought for public schools - $350 million, a 6 percent increase - and about half the money for early-childhood education, special education and higher education. Wolf also had sought to cut payments to cyber charter schools; it is not clear whether it will pass.

Wolf wanted the new money for public schools to be distributed according to how state education aid was cut in the 2011-12 budget under Wolf’s predecessor when the poorest districts took the brunt of the cuts. Republicans are seeking concessions that would direct some of the new dollars to faster-growing, largely suburban districts.

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STATE TAXES

Nearly every change in tax law that Wolf had sought is being rejected by lawmakers.

Wolf had laid out an ambitious schedule to raise taxes by a net estimate of $4.6 billion in the 2018-19 fiscal year, its first full fiscal year in effect, after counting $4.6 billion in tax cuts or other reductions.

Lawmakers now say the framework for the final budget agreement calls for a cash package of about $600 million-plus from new sources of money, but it is not clear that all of that will be from tax increases or even which taxes would increase.

Lawmakers ruled out higher taxes on the natural gas industry - Wolf says he’ll renew his pursuit of that in his next budget proposal, due in February - and they rejected plans to raise state income or sales taxes to expand rebates to local school property tax payers.

Republicans also opposed Wolf’s plan to slash the corporate net income tax in half because of how he wanted to restructure the way it is collected to close a perceived loophole.

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ECONOMIC DEVELOPMENT

Wolf’s economic development plans have garnered little discussion. Those include more than $1.1 billion in bonds to bolster business development loan programs, energy and energy efficiency programs, and water and sewer system projects.

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PENSIONS

It is not clear that the agreement involves any changes to pension benefits for public school and state government employees that Wolf had proposed to save money: borrowing $3 billion to refinance pension liability and cutting pension investment management fees by $200 million annually.

The deal, as described by Republicans, reflects more of what Senate Republicans wanted: a mandatory 401(k)-style benefit for employees, a smaller traditional pension benefit for future employees and measures to reduce the pension benefits of current employees. Republicans had sought the complete elimination of the traditional pension benefit, but Wolf opposed it. Labor unions are threatening to sue over the proposed changes to current employees.

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LIQUOR

Changes to the state-controlled system of wine and liquor sales are said to be part of a final agreement, but few details were available. Wolf had originally sought to squeeze out more profits from the existing system. House Republicans have advocated for the full privatization of the system by licensing private retail and wholesale businesses to handle the sale of wine and liquor. However, Wolf had opposed the complete shuttering of state wine and liquor stores, but discussed allowing private licensees to begin selling wine.

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