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Pennsylvania governor will not rule out budget veto on pension issue

By David DeKok

HARRISBURG Penn. (Reuters) - Pennsylvania Governor Tom Corbett on Wednesday would not rule out a budget veto if state lawmakers fail to enact reforms for the state's underfunded public pension system.

The legislature passed a 2015 budget on June 30, the last day of the fiscal year, but Corbett, who is facing a tough re-election campaign this year, has not yet signed it.

He said at a press conference that he is still reviewing the spending plan. When asked whether he would veto the bill without pension reform legislation, he said that "all options are on the table."

Corbett, a Republican, is among the weakest incumbent governors in the United States, and he has struggled to get most of his major policy initiatives through a legislature controlled by his own party.

Just over a quarter of Pennsylvania voters believe he has performed well enough to deserve re-election, according to a Franklin & Marshall College poll.

On Tuesday, the Pennsylvania House of Representatives sent back to committee a bill that would create a "hybrid" pension plan for new state employees - one that combines elements of a traditional public-sector defined benefit plan and a newer 401(k)-style defined contribution plan.

After Corbett's press conference on Wednesday, however, the committee voted it back to the full House.

Pension reform would help struggling school districts and local governments and spare taxpayers from pension-driven property tax increases, Corbett said.

He said that 165 of the state's 500 public school districts requested tax increases above the statutory limit this year, and that nearly all blamed pension costs.

Corbett has until Friday, July 11, at 11:59 p.m. to sign or veto the budget. If he does neither, it becomes law without his signature.

(Reporting by David DeKok in Harrisburg; Editing by Hilary Russ and Lisa Shumaker)

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