Stop us if you’ve heard this one before, but Pa. budget logjam shows signs of easing
Pennsylvania state budget negotiators are closing in, again, on a possible solution to the unbalanced state budget. Expanded gambling, borrowing take major roles.
By Charles Thompson
Don’t call it a deal yet.
But there is a new proposal coming together in Pennsylvania’s state budget stalemate, and it may become the next serious chance at closing a $2.2 billion gap between revenues and expenditures.
The energy from closed-door talks between Republican legislative and Gov. Tom Wolf this week was deemed positive enough Thursday for state Senate leadership to bring its members back to Harrisburg Monday.
The Senate had previously been scheduled off through Oct. 16.
And House Majority Leader Dave Reed, R-Indiana County, touted “positive and productive” talks in a memo to his 121 GOP members.
“It is our hope to have something to share with you next week as we return to session that would close out last year’s deficit and bring this year’s budget into balance,” Reed wrote.
It was not clear if Gov. Tom Wolf has agreed to the plan, which as of Thursday apparently excludes one of his longtime policy goals, a new tax on natural gas produced from the state’s Marcellus Shale region.
Wolf, for his part, wasn’t about to jinx anything with a public statement, saying only through his press secretary J.J. Abbott that “work progresses and progress is being made.”
All sides at the Capitol have been struggling for three months to complete a revenue package to balance a $32.0 billion spending plan that was passed in late June by the General Assembly and agreed-to by Wolf.
The main stumbling block to date has been over how to fill Wolf’s demand for recurring revenues to offset most if not all of the roughly $700 million in new spending in the 2017-18 budget.
All sides held details of the latest talks close Thursday.
But it appeared from multiple sources briefed on parts of the emerging plan that House Republicans are making headway in their quest to minimize new taxes.
In their place will come another major run at expanding legal gambling in Pennsylvania, and a healthy use of the proposed $630 million in one-time transfers of House GOP-identified surpluses in special state accounts.
Gambling proposals under consideration, sources said, include but may not be limited to:
* Legalization of Internet-based games run by the state’s casino companies, essentially turning all computers, laptops and smartphones into potential gambling devices.
* Creation of licenses for new casinos in second-tier markets across Pennsylvania.
* Legalization of slots-style video gaming terminals at truck stops, but only where county and municipal officials have passed ordinances green-lighting the games.
The backbone of the plan would continue to be some form of cash advance of at least $1 billion against the state’s $350 million-per-year payments from the 1997 multi-state settlement with major tobacco companies.
It also envisions up to $300 million of fund transfers from various special accounts. The plan would give Wolf a major say in determining which funds those dollars are swept from, the sources said.
The biggest new taxes, as of Thursday, appeared to be limited to the lifting of a state sales tax exemption on commercial storage, and an effort to collect more sales tax from the growing on-line marketplace.
Together, they would raise about $100 million in the current fiscal year, the sources said.
Tax proposals at the center of a Senate-passed plan this summer have been, for the moment, passed over, the sources said.
The plan was described as a working proposal at this point, and it is possible it could still change between now and Monday, when presentation to rank-and-file lawmakers and the hard work of winning final floor votes begins.
As it stands, leaders may face major sales jobs on multiple fronts.
Gambling bills are always difficult sells in the General Assembly, if only because various pro-gaming factions often withold their support if they perceive their sector is not being treated fairly.
In this case, members who have pressed to allow VGTs at bars and private clubs may have major objections to being left out of the deal.
Moderate Republicans prepared to vote for – or in the case of the Senate, who did vote for – a severance tax on natural gas extracted from the Marcellus Shale may have to be won over anew to a no severance tax plan.
Democratic Party votes may be needed to pass key elements of the plan, and they may bring their own new demands to the table.
But it appears there will be at least be a plan to present.
The one slightly discordant note sounded Thursday was from the House Democratic caucus.
Democratic leaders said in a memo to their members the latest revenue proposal combines some new recurring revenue with some funding from one-time sources, but they don’t have enough information to take a stand.
The leaders said they hope to have more information by Monday, but for now, “we have not agreed to this proposal.”
To this point, the budget stalemate has had little impact on state services or programs, though the state did have to delay some payments last month and it also received a credit downgrade from S&P Global Ratings.
Wolf has said there could be more disruptions in October if the budget is not balanced, though he has not tipped his hand about specific measures.