Lawmakers prepare to vote on $11B budget with no new taxes

Pennsylvania’s Legislature was set to begin voting on a roughly $11 billion no-newtaxes spending package to carry state government through the rest of the fiscal year and fill, for the moment, a multibillion-dollar deficit inflicted by the pandemic.

The legislation emerged from closed-door talks as lawmakers rush to wrap up their two-year session.

The main spending bill passed the House Appropriations Committee on a party-line basis, in part reflecting Democrats’ unhappiness with how federal coronavirus relief aid is being used. House and Senate floor votes on the legislation were possible Friday.

All told, the package authorizes nearly $11 billion in new spending, bringing the current year’s operating budget to $36.5 billion, about 4% above last year’s approved spending. The higher spending is driven primarily by medical care for the poor, elderly and disabled.

Gov. Tom Wolf, a Democrat, earlier this fall asked the Republican-controlled Legislature for another $10 billion in spending to round out the fiscal year, after lawmakers approved a piecemeal, no-new-taxes $25.8 billion budget in May.

At the time, budgetmakers projected a $6 billion deficit, primarily due to the economic effects of the coronavirus. Since then, revenue collections have exceeded expectations, prompting the Wolf administration to raise its full-year revenue projection by $2 billion.

To close the rest of the gap, lawmakers are using more than $3.3 billion in federal pandemic aid approved by Congress and transferring more than $500 million from off-budget state accounts.

Of those accounts, $185 million is coming from a fund financed by premiums on workers’ compensation insurance policies that ensures claims are paid if an insurer is insolvent.

Using the federal aid lowers the reliance on state tax dollars from $36.5 billion to $33.1 billion. Last year’s approved budget was $34 billion, not counting $1 billion in federal coronavirus aid that helped pay for Medicaid costs.

Public schools, universities and many programs and state agencies will have to get by without an increase in funding.

Democrats never floated a plan to increase taxes to help fill the deficit. However, they also oppose using $1.3 billion in leftover aid from last March’s federal Cares Act to help paper over the deficit.

They had sought to push that money out to provide hazard pay to front-line workers and to aid universities, hospitals that serve large Medicaid populations, restaurants, child care centers and other businesses and institutions that are suffering during the pandemic.

Wolf and Democratic lawmakers say they are pushing for a new round of federal aid to help address those needs.