Lawmakers Sobering To Huge Budget Deficit
HARRISBURG, Pa. (AP) – With three weeks of budget hearings behind them, Pennsylvania’s big Republican legislative majorities now have months of budget-making ahead of them and, perhaps more than ever, a willingness to increase taxes to deal with the state’s persistent post-recession deficit.
For now, top Republicans are saying what they said last year – a tax increase is a last resort – before they approved a tax package anchored by an additional $1 per-pack excise tax on cigarettes. But, this year, many rank-and-file Republicans seem more resigned to a reality that the deficit – nearly $3 billion through next summer, according to the state’s nonpartisan Independent Fiscal Office – cannot be swept away easily.
“Our solution is always to cut spending, but we know we’re at a pretty bare point right now,”said Rep. Jeff Pyle, R-Armstrong. “So we know we have to come up with some revenue.”
Last month, Gov. Tom Wolf, a Democrat, delivered his third budget plan to lawmakers, and made some bets that he could squeeze savings out of state government. It was also his first plan not to propose an increase in income or sales tax rates, a move that encouraged some Republicans.
It sought a smaller increase in spending – $1 billion, or 3.2 percent more, including $230 million needed to plug holes on the current year’s books. His administration is closing a prison, eyeing the closure of community health centers, looking for better deals from pharmaceutical companies, proposing a reduction in school busing aid and eliminating a grant for the University of Pennsylvania’s veterinary school.
Wolf wants municipalities without police departments to start paying for budget-busting state police coverage. He wants to trim a growing pallet of specialty tax credits. He wants to shift grant programs onto a bond. And Wolf wants to use the huge Pennsylvania Farm Show Complex in Harrisburg to secure a $200 million upfront loan.
Wolf’s $1 billion tax package would end Pennsylvania’s status as the only major natural-gas production state not to tax it, a tax that Republicans have rejected for nearly a decade. The package also would close what the administration characterizes as tax loopholes for out-of-state corporations, custom software sales, insurance policies and commercial storage.
During three weeks of Appropriations Committee hearings, every element of Wolf’s budget plan drew criticism from one Republican quarter or another.
“Something’s important to everybody, that’s how I look at it,”said Rep. James Santora, R-Delaware.
A paramount task for Republicans and Wolf is to avoid another nearly 10-month stalemate that marked their first budget go-round, forcing layoffs, service cuts and borrowing by school districts, counties and social services providers. While Wolf and Republicans are trying to soften those fears with a gentler tone, the state’s underlying fiscal imbalance is perhaps as bad as it has been since the recession ended.
Republicans will scour for political victories.
They will press to shift public employee pensions toward a 401(k)-style benefit. They will press Wolf to give private companies more of a role in wholesaling and selling wine and liquor in Pennsylvania. And they will push to open up more avenues for taxpayer-funded alternatives to traditional public schools.
“I think Republicans are very frustrated that we’re not able to do more reforms,”said Rep. Tedd Nesbit, R-Mercer. “We have large majorities.”
They also will look to reduce Wolf’s spending target, even if it is relatively austere. The trick may be doing it without cutting programs. That may mean pressuring agencies to keep shrinking the size of the state’s workforce, and particularly unfilled positions.
With Republican-controlled Washington, DC, eyeing big reductions in Medicaid spending, Republicans are also hoping to talk Wolf into introducing cost-control measures in the state’s roughly $30 billion Medicaid program. That could include premiums, co-pays or more.
“We’re looking at all those things,”said House Appropriations Committee Chairman Stan Saylor, R-York.
Until budget talks get serious, Republicans will hope that anemic state tax collections pick up. They will try for legislation to expand casino-style gambling in Pennsylvania in hopes of reaping new taxes and fees. But some also acknowledge that, ultimately, it may be difficult to find better money-raising ideas than Wolf’s.
“Honestly,”Pyle said of Wolf’s proposal to tax custom software sales and commercial storage, “I think people are more open to that than you would think.”