Pa. heads into fiscal year without budget in place
HARRISBURG » Work on a new state budget for Pennsylvania will plow into next week as the state government started the fiscal year Friday with diminished spending authority, details of a new spending plan still largely a secret and questions about whether negotiators can solve lingering disputes.
Leaders of the Republican-controlled House and Senate sent rank-and-file lawmakers home through the holiday weekend, to return Tuesday, prompting frustration from Democrats.
Gov. Tom Wolf, a Democrat, has said little and remained out of sight in the Capitol.
Rep. Russ Diamond, RLebanon, said that just because it is July doesn’t mean that it is any different from June, when budgets are negotiated, “everything is in flux and things can change on a moment’s notice.”
Negotiators had yet to fully brief rank-and-file lawmakers — who must still vote on budget legislation — or publish hundreds of pages of budget-related legislation that typically underpin spending plans.
Talks were bogged down in 11th-hour wrangling over a number of issues, although Republican lawmakers still publicly professed confidence that closed-door negotiations on a roughly $42 billion spending plan were on the right track.
“Everybody is working hard, both sides of the aisle, the governor’s office, everybody’s doing the best they can to get this over the hump and move on,” said House Appropriations Committee Chairman Stan Saylor, R-York. “But I think we’ll have a good product when we’re done.”
Without new spending authority in place, the state is legally barred from making some payments, although a stalemate must typically last several weeks before any effect on services is felt.
“There’s certainly a pathway forward on all these remaining issues,” said Rep. Matt Bradford, D-Montgomery, the ranking Democrat on the House Appropriations Committee. “We need to show some leadership to get this home.”
In a long-term stalemate, the state is legally bound to make debt payments, cover Medicaid costs, issue unemployment compensation payments, keep prisons open, meet weekly payrolls and more.
But, if it becomes necessary, Wolf’s administration could postpone payments to vendors, such as utilities, insurers, suppliers and landlords, and put off paying discretionary items, such as tax credits, grants and discretionary subsidies such as public school aid.
For now, the state’s bank account is flush with billions in extra cash. It is not in danger of running out of money and can make its legally required payments, a Treasury Department spokesperson said.
The state also has $2.2 billion in federal coronavirus relief aid left over from last year to dole out, while federal pandemic aid continues to cover billions of dollars in extra Medicaid costs normally borne by the state.
Rank-and-file Republican lawmakers say they want a budget that keeps a spending increase to the rate of inflation, a benchmark that budgetmakers likely will meet by shifting a couple billion dollars onto last year’s books. Republicans also want to put another $5 billion into reserves.
Negotiations revolve around new aid for public schools and various concessions by Wolf to Republican lawmakers.
New aid for public school instruction, operations and special education is expected to land at around $850 million, or about 10% more. Democrats call it a “historic” amount, although still less than what Wolf requested in his February budget proposal.
Schools are also expected to get another $200 million for security upgrades and counselors or psychiatrists — a response to recent mass shootings and hardships highlighted by the COVID-19 pandemic.
Budgetmakers are not contemplating any sort of broad-based tax cut on sales or income. Rather, Wolf and Republican lawmakers have focused on cutting Pennsylvania’s 9.99% corporate income tax rate, one of the nation’s highest.