Budget gap plan hatched by GOP
Higher taxes and borrowing in mix
HARRISBURG — Working late Wednesday to close a $2 billion gap in the state’s $32 billion budget, the Republican-controlled Senate began pushing a plan to tax drilling for natural gas and raise or impose new taxes on telephone, electric and gas services.
The severance and utility taxes would raise about $550 million. Also being considered was a plan that includes $1.3 billion in borrowing and a yet-tobe-determined method to expand gambling.
If the full Senate approves the latest proposal — a floor vote could come Thursday — it would set the stage for a political staring contest with GOP colleagues who hold a commanding majority in the House. In that chamber, Republican leaders have rejected proposals that include new taxes and have firmly said no to any proposal that includes a severance tax.
J.J. Abbott, spokesman for Democratic Gov. Tom Wolf, said the governor “commends” the Senate for its work, but he stopped short of endorsing it.
“Gov. Wolf believes all parties must quickly come together to bring this process to a close,” Mr. Abbott said in a statement.
Steve Miskin, spokesman for the House Republicans, would say only: “We will have to see what they [senators] actually send us.”
The Senate’s plan would impose a new tax on natural gas extracted from the Marcellus Shale — based on volume and expected to rake in $100 million annually — on top of the so-called impact fee drillers currently pay on wells they drill.
The plan would also reinstate a 5.7 percent tax on natural gas bills, with $20 million of the money raised going to the state’s heating assistance program for the poor; increase taxes to 6 percent from the current 5 percent on telephone service, including cellphones; and raise taxes on electric service to 6.5 percent from the current 5.9 percent.
The Senate proposal would also close a loophole that allows some online retailers to avoid imposing and collecting the state’s 6 percent sales tax on goods they sell.
Senators also would seek to siphon $200 million from a state fund that provides insurance for doctors who have difficulty finding medical malpractice insurance elsewhere.
On the borrowing front, Senate Majority Leader Jake Corman, R-Centre, said the senators are looking to borrow $1.3 billion, repaying it by using money that flows annually into a state fund set up after the landmark settlement between tobacco companies and the states.
Mr. Wolf, who is up for reelection next year, has said he would be open to borrowing to help plug a more than $2 billion shortfall in the budget, but he has said any revenue package must include a steady and reliable source of new revenue.
Though there have been calls for a severance tax for nearly a decade, it has been firmly opposed by many Republican legislators who believe such a levy would scare away an industry that has created jobs and invested millions in the state.
But the push for finding new pots of money appears to be reaching a critical point as the state nears the end of its fourth week without a complete budget.
The Legislature passed a nearly $32 billion spending plan June 30 but did not vote on a corresponding plan to pay for it. Mr. Wolf said he was confident lawmakers would resolve the issue quickly and allowed the spending plan to lapse into law without his signature.
But nearly a month later, negotiators are still debating how to cover a $1.5 billion shortfall in the last fiscal year and a $700 million deficit in the fiscal year that began July 1. The state constitution requires a balanced budget.
State Treasurer Joe Torsella, a Democrat, has warned that the state could run out of money by the end of next month unless a responsible — and complete — budget is passed.
Under the GOP’s plan. Pa. consumers would face $405 million in new or higher taxes from a gross receipts tax on their natural gas, electric and telecommunications bills.