Senate advances budget bill, with funding in limbo
HARRISBURG – The Pennsylvania Senate took quick action on the House’s just-passed budget package Wednesday, a day before the state government’s fiscal-year deadline, although divisions remained over how to pay for the nearly $31.6 billion spending plan.
The Republican-controlled Senate voted 47-3 after making minor changes to the plan the House passed a day earlier with bipartisan support.
However, Democratic Gov. Tom Wolf has panned the plan as unbalanced, and it was not clear whether the Senate would support the House’s strategy to raise $1 billion to plug state government’s deficit-plagued finances.
The $1 billion would theoretically come from higher tobacco taxes, brisker wine and liquor sales, more legalized gambling and tax delinquents. The proposal has prompted criticism that it is based on unrealistic projections designed to avoid a wider, election-year tax increase.
Also unclear Wednesday was whether the $1 billion could wipe out the long-term deficit that has damaged Pennsylvania’s credit rating.
Senate Majority Leader Jake Corman, R-Centre, said he expects the question of spending to be settled first before a discussion about finding money.
“We’ll hopefully quickly enter that discussion,” Corman said.
The House has yet to unveil a package of increases on sales of cigarettes and other tobacco products that underpins its $1 billion funding plan. While Wolf on Tuesday criticized the House’s plan as out of balance, he has not said what he would support as an alternative, and the Senate’s Republican majority has not proposed an alternative funding plan.
In an 11th-hour search for cash, Democratic lawmakers have pressed the idea of reinstating a gross receipts tax on natural gas utilities in Pennsylvania. The state’s 2016-17 fiscal year begins Friday.
The spending plan passed by the Senate calls for a 5 percent increase, or $1.5 billion. It squeezes significant concessions from Wolf, who had initially proposed a $33.3 billion budget plan to be financed by a $2.7 billion package of tax increases.
The spending increase was driven primarily by pension obligations, prisons and human services, as well as $200 million in new aid for public school operations and instruction, a 3 percent increase. Wolf initially sought a $350 million increase for public schools.
Sen. Vincent Hughes, D-Philadelphia, called the budget plan “austere,” but noted lawmakers learned lessons from the record-breaking stalemate during Wolf’s first budget that wrapped up in April.
“It represents a divided government,” Hughes said. “It represents and respects each other in this process, and it incrementally moves the people of Pennsylvania forward. … We learn from the fact that this is divided government, and learn from the fact the incremental gains are gains nonetheless.”
The plan takes out nearly $700 million from Wolf’s initial proposal to add $1.1 billion to the Department of Human Services. That prompted social services providers, including counties and The Arc of Pennsylvania, to warn about further squeezing crucial programs, such as children and youth services and emergency services for intellectually disabled adults.
The plan also leaves unanswered the question of how the state will pay for what could be billions of dollars in borrowing for school construction costs in the coming years.
One crucial difference between the House and Senate spending plans was $39 million inserted by the Senate for higher education, a 2.5 percent increase. The House had allocated no new aid for state-subsidized universities and grants for college students.
Still, the state’s finances are dogged by a deficit that the Legislature’s Independent Fiscal Office has projected at $1.8 billion in the 2016-17 fiscal year, and there was no clear resolution Wednesday.
Corman noted that he is not a fan of tax increases on cigarettes, and he called the gambling legislation passed by the House “expansive.” The bill in part would make Pennsylvania the nation’s fourth to legalize internet gambling.
“We’re looking at it,” Corman said. “Obviously we have people who have issues there that they want to get priority, and we’re seeing if we can match the two together.”