The PA Legislature sent a bipartisan, $32 billion spending plan to Gov. Tom Wolf Friday afternoon. It arrived on his desk before the end of the fiscal year — with 8 hours to spare. But it’s not yet a balanced budget. Lawmakers still haven’t agreed on where to get $2.2 billion to fill their revenue gap, and official proposals are scarce. House and Senate members aren’t expected back in Harrisburg until the middle of the week, though leaders said they plan to negotiate through the weekend. But the clock is ticking to get Wolf a balanced plan. He has 10 days to sign the budget — or any bill — once it’s sent to him, and it has to add up when he does so … The spending plan keeps funding flat for most state operations, though it does increase basic education spending and a few other programs. The biggest cut is a nearly 10% spending reduction to Medicaid managed care. A small portion of those savings will probably come from the consolidation of the departments of Health & Human Services. It’s not clear where the rest will come from.
Associated Press, 6/30/2017
The main spending bill in a $32 billion bipartisan budget package is past the PA Legislature on the state fiscal year’s final day, although lawmakers don’t know how it’ll all be funded. The House voted 173-27 on Friday, hours after the Senate voted 43-7. The package was unveiled a day earlier, after being negotiated in secret. Democratic Gov.Tom Wolf supports it, but has yet to say whether he’ll sign it if lawmakers can’t figure out a spending plan. Both chambers recessed until at least Wednesday, and lawmakers say they’ll try next week to find $2 billion-plus to cover the shortfall …
KYW 1060, Philadelphia, 6/30/2017
As expected, on Friday, the last day of the fiscal year, state lawmakers sent Governor Wolf a compromise budget, without a plan to pay for the spending. As a result of that, even though he supports it, it is unclear when the governor may act on the budget bill. The nearly $32 billion budget increases spending less than 1%, but sagging revenues have left the state with a deficit of more than $2 billion …
PA has a budget, sort of. The state House & Senate on Friday sent a $31.9 billion spending plan to Gov. Tom Wolf’s desk before the Saturday start of the 2017-18 fiscal year, even if a revenue package to pay for it remains a work in progress. Lawmakers are expected to address revenues next week. The holdup has to do with disagreement on how to close a $1.5 billion shortfall from 2016-17 and generate hundreds of millions of dollars in revenue for the 2017-18 budget. The spending bill, House Bill 218, passed both chambers with bipartisan support. The vote was 43-7 in the Senate, and 173-27 in the House …
PLS Reporter, 6/29/2017
After a late-night vote in the Senate Appropriations Committee Thursday, members of the General Assembly could send Gov. Tom Wolf a $31.99 billion FY 2017-2018 budget as soon as Friday.
That being said, a lot remains up in the air—including how they plan on paying for the spend number.
The budget, approved by the Senate Appropriations Committee and supported by Senate Democrats, is around a $100 million higher than a spending plan sent over to them by the House in April that was crafted and supported by Republicans in that chamber.
Unlike the House plan, the spending document approved Thursday night that will likely be the subject of votes in both the Senate and House on Friday is roughly $600 million more than the current fiscal year’s spend and, different from the House version, provides $100 million more in basic education spending, restores a $50 million school transportation subsidy, and encourages the Wolf administration to make niche cuts to Medicaid spending.
The legislation—with associated non-preferred spending items—restores funding to the University of Pennsylvania Veterinary School, provides for the merger of the Department of Corrections and Board of Probation and Parole, and provides a process to study the merger of four human-services-related state agencies while providing a mechanism to account for their potential merger in the coming fiscal year.
“[This budget] invests in some very important initiatives notwithstanding our tremendous fiscal challenges and things that are important to the people of the commonwealth,” Senate Appropriations Committee Majority Chairman Pat Browne (R-Lehigh) told reporters following Thursday night’s vote.
“It turns the tables on an escalation in corrections spending that we’ve seen over my entire career to a more important and effective platform for dealing with corrections, [it provides] significant increases in education, investment for our citizens with disabilities, getting people placement off waiting lists that they’ve been waiting for for a long time, and it’s something that looks to deal with some of our more important macro challenges and looks forward to a very substantial process to look at a more substantial merger and also the process of merging the Department of Corrections and Probation and Parole.”
According to Senate Minority Leader Jay Costa (D-Allegheny), the restoration of the governor’s requested $100 million increase to basic education was a key component to getting his caucus’s support for the legislation.
“I think it’s the appropriate level at this point in time,” he said.
“I think we’ve worked, working with our colleagues, that some of the priorities that we’ve set back in February with the governor—investments in education, particularly early learning programs and special education, opioid and heroin addiction—all of these things have been addressed in this and getting through a very difficult fiscal year we were able to maintain a number of line-items similar to where they were last year and, quite frankly, gains have been made in areas dramatically cut by House Republicans.”
Despite some earlier public protestations by House Majority Leader Dave Reed (R-Indiana), it appears that the House Republican Caucus is also signed on to the plan and expects to advance it to Gov. Tom Wolf on Friday.
A brief conversation with a member of the House Democratic Caucus’s leadership team Thursday night meted out that the caucus has not signed off completely on the spending plan, potentially setting up a long debate in the House on Friday.
With all that taken into account, question marks still remain about the future of Pennsylvania’s budget for the current and coming fiscal year—especially as the spending plan remains unbalanced since supporting revenue is an issue likely to be taken up by the legislature immediately following the July 4th holiday.
As to that, one question mark sits over what the governor might do with the spending plan when it reaches his desk since some legal requirements dictate his responsibility to bring the plan into balance should it remain so at the ten-day limit for him to act on the legislation.
In a statement before the compromise plan was adopted in committee, Gov. Wolf expressed his support for the spending plan.
“This plan is a bipartisan compromise that invests more in our schools, protects seniors, creates jobs, and builds on our fight to end the heroin epidemic. It maintains my commitment to reform state government and cut bureaucracy to work more efficiently, deliver better services and generate savings,” he said.
“I look forward to both chambers passing this bill and coming together to complete the process with a long-term, responsible solution to our budget challenges.”
However, asked Thursday after a non-budget related bill signing if he’s thought about his plans should the budget languish as unbalanced, the governor was coy as to his intentions.
“I continue to think about all kinds of things,” he said. “I think, as I’ve said, we’re working toward a good constructive budget. My priorities are a balanced budget focused on education and focused on efficiency. I’ve been looking for all three of those things and I have been since I presented my budget back in February and I think we’ve been working constructively and civilly to those ends.”
When a similar situation presented itself last year, Gov. Wolf allowed the spending plan to lapse into law without his signature.
A second question mark goes to those supporting revenues where, as of Thursday, an agreement still seemed a ways off.
According to Sen. Browne, those responsible for negotiating a revenue plan will continue to negotiate over the weekend and holiday to come to a consensus, but noted he cannot speak to the status of any particular portion of the menu of available revenue options.
“What is definite this evening is that we’ve moved forward on a spend number in the General Appropriations Act and a commitment to establishing a revenue package from various sources in order to pay for it,” he said. “People that are working on the revenue package will be here until it’s finished.”
Despite saying earlier in the week that greater Democratic inclusion in the budget discussions could lead to additional Senate Democratic votes for a controversial video gaming terminal component of a House-passed gaming expansion measure, Sen. Costa stated Thursday afternoon that there is still very little support in his caucus for the plan.
“There’s no linkage between what we may or may not do on the budget and a vote for VGTs,” he said. “As I’ve said for weeks, there’s very little support for VGTs—if any—in the Senate Democratic Caucus and that has not changed that it won’t change because of the budget outcome.”
The governor was also reluctant to give greater insight into his opinion on the VGT component Thursday saying he remains in negotiations regarding the revenue package.
According to Senate Republicans, the VGT issue is not dead in that chamber, leading for the potential or gaming expansion to fill a substantial hole in the coming fiscal year’s deficit should one of the various VGT legalization plans come to fruition.
That being said, the governor’s recent willingness to potentially accept as much as $1.5 billion in borrowing securitized by future payments in to the Tobacco Settlement Fund did help smooth out some concern in the legislature.
Saying just over a week ago that the borrowing wasn’t the “optimal solution,” Sen. Costa seemed a little more comfortable with the concept himself Thursday.
“Borrowing is always an option you look at sometimes, especially when you’ve limited your ability to generate the revenue you need,” he said referencing pledges not to raise broad-based taxes. “Borrowing is an appropriate device when it’s done properly—very narrow, very limited in scope, and when you maintain discipline with how we view the out years—those conversations are continuing to take place, but if we are able to do something we were able to do when we borrowed the $4 billion for the unemployment compensation debt that we had to the federal government, if it’s done properly and done right, it can be a benefit to the commonwealth as a whole.”
According to Rep. Reed, a different area of borrowing that was being floated as an advance to the state’s pension funds, is not on the table as a revenue concept.
Meanwhile, as lawmakers look to the current and coming years, revenue concepts are also being considered that could potentially ensure that the budget for FY 2018-2019 isn’t in the same troublesome league as recent spending plans.
“We are looking at balancing ’17-’18 and ’18-’19 as well,” Rep. Reed said. “Not that you can necessarily get it perfect—it’s tough to project a year out, a year ahead of time—but we are being mindful of all three of those years at one time.”
What happens after Friday is still anyone’s guess, but sources indicate that it appears voting session is unlikely to be held again until immediately after the July 4th holiday.
The issue of gambling expansion remains on the list of unfinished business as lawmakers scramble to pass a nearly $32 billion General Appropriations bill for Fiscal Year 2017-18 by Friday’s deadline.
Legislative leaders said Thursday that discussions on additional gambling as a way to generate new revenue will resume sometime next week.
“That’s next week’s discussion,” said Senate Majority Leader Jake Corman, R-Centre.
Corman has been gauging the level of support among senators to legalize video gaming terminals in bars and taverns, a key component of a House-passed version of a gaming bill vehicle, House Bill 271.
“We are still working on it”, he added.
House Majority Leader Dave Reed, R-Indiana, said gambling is just one of the issues that has to be nailed down.
“I think there have been productive discussions on gaming…look, I think with where we’re at the focus has been on the actual GA bill – the budget bill – and getting that to the governor’s desk,” said Reed.“I think discussions will continue over the next couple days – the next week or so, – to lock down a number of different items: you have the School Code, you’ve got the Welfare Code, the Admin Code, the Fiscal Code. Gaming will likely be one of those topics.”
The code bills and revenue bills, along with the spending bill, are considered part of a complete budget package. The Fiscal Code directs how much of the appropriated money is to be spent, for example. The Public School Code directs how state education subsidies are distributed to school districts.
“Gaming is another one of those areas that is in the mix,” said Senate Minority Leader Jay Costa, D-Allegheny. “How much we generate through gaming revenue remains to be seen.”
Costa pointed out the Senate-passed version of House Bill 271 – which features internet gaming at casinos, airport gaming and fantasy sports betting – would generate $140 million in non-recurring revenue for next year mainly through license fees. In future years, the bill could generate up to $125 million annually from taxes, he added.
There’s one item, though, that doesn’t appear to be up for consideration as a possible way to balance the 2017-18 spending plan: pension borrowing.
Both House and Senate Republicans said the proposal – which some legislative sources in both chambers had previously said had been a subject of conversation for months – is not on the table.