State Budget Talks Collapse As Legislature Heads Home

Kristi Pronovost Merit Shop Spokesman Blog

By: Brent Sailhamer, Director of Government Affairs, ABC Keystone 

After more than three months, Republican lawmakers are still searching for viable solution to the Commonwealth’s unfinished budget, which has started to affect operations and the state’s financial standing.

In late June, the Republican-controlled legislature passed a nearly $33 billion spending plan for the 2017-2018 fiscal year, which Governor Tom Wolf allowed to lapse into law. The missing component, however, was an accompanying revenue plan to pay for that spending. Since June, leaders in the House and Senate have been working to find that elusive solution.

Weeks ago, Standard & Poor downgraded Pennsylvania’s credit rating from AA- to A+, the worst in 34 years, placing Pennsylvania in the lowest five states in the nation for fiscal solvency. The downgrade not only adds millions in interest to Pennsylvania’s borrowing agreements, but prompted legislators to return to Harrisburg this week in an attempt to hammer out a solution. The Senate called on House Republicans to pass the plan they had passed months ago, which included expanded gaming, a severance tax on Marcellus Shale gas drilling operations, and a gross receipts tax on natural gas for consumers. When House Republicans firmly rejected that plan, they devised their own plan of recalling billions in accrued funding in state agencies – money that had been appropriated throughout the years and not spent. But the plan fell flat this week, as southeast Republicans and Democrats claimed that the plan would not provide a long-term strategy for fiscal solvency, but rather implement a one-time fix. In the days that followed, House Republicans floated a flurry of proposals, including a statewide tax on commercial storage and a 5% tax on hotels.

Late Wednesday, the House finally threw in the towel and announced that they would be adjourning, only to return at their next regularly scheduled session date of October 16. The surrender leaves Pennsylvania in serious financial limbo, as the Commonwealth has stopped payments to Medicaid and the Pennsylvania School Employees Retirement System (PSERS). In addition, state Treasurer Joe Torsella announced that he would no longer sign loans to keep government agencies afloat throughout the impasse.