 Good afternoon and welcome to the Pennsylvania Press Club. I'm John Bair of the Philadelphia Daily News and your host for today's luncheon. Joining me at the head table are Warren Udack from Udack & Company and John Pippi from the Pennsylvania Coal Association. Thank you both for your support and thank you for being here. The 2015 Pennsylvania Press Club Luncheon Series could not be possible without the support of those organizations listed on our sponsor banner. Today's luncheon is being taped and will be carried throughout Pennsylvania to the television audience of the Pennsylvania Cable Network. Our speaker today is Governor Tom Wolf. In the interest of time and because we have so many questions, I'm going to give you the tabloid version, Ivy League Peace Corps University of London Ph.D. from MIT. Then a cabinet maker, a cabinet official, an unknown candidate, Democratic nominee elected governor drives a jeep. Wants Pennsylvania to have jobs that pay, schools that teach and government that works and he's here to tell us how that's going. Please welcome Governor Tom Wolf. Thank you so much John for that really nice introduction, that was very nice. It's really good to be here and thank you all for coming out. It's a wonderful week as you know this is Thanksgiving week and so I want to wish all of you a very happy Thanksgiving. Thank you for being here and happy Thanksgiving. This is a great week and a great time to be with family, that's what I intend to do, to eat well and to counter blessings and to say thanks for them. Of course I can't help but say that one of the blessings we cannot yet count on is a budget for Pennsylvania. We've been out without one for this entire fiscal year and that fiscal year began on July 1st. Just five months ago. Since then many of the organizations that rely on the state for crucial funding have continued to wait for payment. Counties, schools, non-profits have all done their best to make ends meet by dipping into reserves if they had them. Cutting services are more often both. Many of our fellow citizens have had to do without services and things they desperately need. Clearly we must end this nonsense and that's what I want to talk about today. I want to encourage all of my colleagues here in Harrisburg to do the people's business. Let's get back to work. To finish the job and reach agreement on a real budget based on the framework we announced just a few weeks ago publicly. To a certain extent our prolonged budget deficit, budget debate is a natural, a natural function of divided government. We have a democracy here. No one can get everything she or he wants in such a government. Compromise is essential. It's of the essence. And many of us have tried to do just that. Compromise. I made my initial proposals in March where I called for a number of things I believe were necessary for moving Pennsylvania forward. I called for a truly, a truly balanced budget. I called for an end to the smoke and mirrors of the budgets of the past and end to budgets that only pretended to balance but didn't really balance. I called for a real increase in funding for our schools and for our children, for basic education, for early childhood education, for special education, for head start. I called for a shale tax that would be used to provide funding for our schools, again, and our children. I called for a massive drop in the corporate net income tax rate from its obscenely high rate of 9.99% to 4.99%. I called for real property tax relief, $3.8 billion worth, that would help working citizens and seniors who are at risk of losing their homes because of the never ending rise of school taxes in their local communities. And these taxes, this property tax relief, would also help municipalities whose citizens are stuck with local school tax bills that are just too high. And I called for an increase in recurring revenues to do all of this honestly. I thought it was a reasonable, practical budget proposal. I thought it would get a fair hearing. I was wrong. The budget proposal I got in response from the Republicans on June 30th had none, none of the things I believe Pennsylvania needed. For a start, it did not balance. The math didn't work. It had more of the same smoke and mirrors that had led rating agencies to downgrade our debt five times in four years, three times just last year alone. There was no real investment in education, just a modest increase, and there was no mention of a shale tax, there was no property tax relief, and no recognition that we had to move away from the bad budgeting habits of the past and actually try to pay for the public goods our fellow citizens continue to want, again, without recurring revenue. Remember, the legislature actually went through this exercise with the need for recurring revenue in 2013 with Act 89. And they did come up with recurring revenue of more than $2 billion to fix our bridges and to fix our roads. So I tried again. A few weeks ago, I thought we had come to a meeting of the minds, finally, after months. Republican leaders Reid and Corman stood with me at that time to announce, to many of you, a framework for a budget deal that would address many of the issues I just outlined. That framework included a number of things, both liked along with a number of things that we didn't like. It brought us much closer to a budget that was truly in balance. It proposed a historic increase in education funding, including $350 million for basic education. It proposed historic property tax relief. It proposed real pension reform. It proposed real liquor reform. And it proposed paying for this with an increase in a broad-based tax, the sales tax, rather than an increase in the personal income tax, or some combination of the two which might have been better. But that's a compromise. Also, the framework did not include a shale tax. It was a compromise. Since then, we have been working with these same Republican leaders to work out the details of this framework. Unfortunately, that work looks like it's in peril, deep peril. The Republicans have been unable to muster the votes they need to transform this agreed-upon framework into a real budget. Instead, they passed a liquor privatization bill that is identical to the one I vetoed in June. I'm not sure why. And the Senate Republicans made clear their intention or their effort to pass Senate Bill 76, a bill I oppose, and that was not part of our framework agreement. All of these are distractions. All of these things are prolonging the process. None of them seem to be getting us any closer to the budget we need. Then late last week, Republicans told me, leaders told me that they didn't have the votes to deliver on the property tax relief, the key component of that framework. In other words, the framework was not going to become a budget. I deeply regret this. We had within our grasp a budget framework that would have been transformational for Pennsylvania. It would have done much of what so many Pennsylvanians want their government to do, show fiscal responsibility, invest in our children, invest in our schools, produce real local property tax relief, put our public pension system on a firm financial foundation, bring our liquor system into the 21st century. I want to encourage my fellow public servants here in Harrisburg to do what we said we were going to do. We said we would deliver a budget by Thanksgiving. Three days, we have to get to that deadline. That's the way it is. It's time we deliver and the Republicans need to find their votes on the bipartisan agreement we made. Please, please, let's get this done and get this to my desk quickly. This would still leave work to be done next year. No question about it. It is a compromise. The framework does, as far as I'm concerned, leave gaps. We are still the only major gas producing state in the country without a tax on gas drillers. We need a severance tax. We need property tax relief. Both will be part of my next budget proposal. I would have preferred that the recurring revenue come from the personal income tax rather than the sales tax. I didn't get that. I would have wanted rent relief for families. I didn't get that. But if we can at least implement a budget based on the framework we announced publicly a few weeks back, Pennsylvania will be in a much better place. On the balanced budget, let's keep overall spending to $30.75 billion. We agreed on that. And reduce one-time fixes from the $2 billion that Moody's and Fitch and Standard and Poor's said was in the 2014-15 budget, reduce that to $700 million. It's not eliminating the smoke and mirrors altogether, but it's making a big down payment with the goal of eliminating one-time fixes by the 16-17 budget. On education, let's raise our investment in basic education by that $350 million figure. Let's increase special education by $50 million. Let's increase early childhood education by $50 million and head start by an additional $10 million and increase funding for higher education for the first time in many, many years. The funds for basic education would be distributed fairly according to a negotiated formula. On public pensions, the public pension system should be changed for new employees moving forward. This is a compromise. It would be a side-by-side plan, defined benefit, defined contribution with a 401k-defined contribution plan. Both would start at $1 of compensation. This plan would reduce the Commonwealth's unfunded liability by $10 billion or more over the next 30 years. On liquor reform, the liquor system would be reformed by leasing out, this is according to the framework. This is not something I'm making up right here. The liquor system would be reformed by leasing out the system with the appropriate safeguards for current employees and others to whom contracts have been led to a qualified private manager. The private manager would be hired after an objective bidding process. This is what you do in the private sector, by the way. The bidding process would be carried out with the assistance of a qualified consultant. Again, what you do in the private sector. The system would be freed of the business restrictions that currently reduce customer convenience and profitability. All I want is to restart the bipartisan framework we all agreed to. Let's get that stalled process moving forward again. I urge Republican leaders to gather the votes they need to get this budget work done quickly. As I see it, they have three logical choices. One, they can run a budget that adheres to our framework with a level of support we need to assure the passage. That would be great. Second, they can block such a budget and continue our wasteful impasse. Or third, they can present me with any full year spending plan that can pass by next Friday. Democracy requires compromise. I get that. And I have compromised time and time again. I've compromised on liquor, on pensions, on property taxes, on rent relief, on the shale tax. But the same democracy that requires us to compromise also gives us the power to hold our elected leaders accountable. If Republicans continue to perpetuate the irresponsible and unworkable status quo, then it will be the voter's turn to hold them accountable. The ball is now in the Republican's court. I am calling for a renewed effort because Pennsylvania needs a budget now. I'm encouraging Republican leaders to get back to work to get the votes for the various proposals we have already agreed to. We cannot allow ourselves to get stuck trying to work out the details of a framework we all agreed to. I believe there are enough decent members of the General Assembly in both parties, Republicans and Democrats, who want to move beyond this terrible, nonsensical budget impasse. And who want a practical budget that does the things our fellow Pennsylvanians tell us they want in a budget. That's what I'm proposing to do. Nothing more, nothing less. Let's pass a budget that works and let's do it soon. I look forward to the Republican response. Thank you very much.