The Morning Call

$1.3B of relief funds to plug budget gap

Restaurant­s, taverns others lose out in Pa. lawmakers’ vote

- By Ford Turner

HARRISBURG — Many lawmakers joined restaurant and tavern industry officials Friday in criticizin­g the Legislatur­e’s use of $1.3 billion of federal coronaviru­s emergency funds originally intended to be handed out to virus-ravaged businesses, organizati­ons and people to balance the state budget.

The House and Senate voted to pass the roughly $11 billion, no-new-taxes spending plan Friday evening. The votes were 104-97 in the House and 31-18 in the Senate.

Updated federal guidance made the use of the federal money to support the budget legal, according to a committee-leading Republican lawmaker.

“This budget is wrong,” said Democratic state Sen. Lisa Boscola of Northampto­n County, who cast a “no” vote. “I view a vote for this budget as a vote against small businesses across Pennsylvan­ia, especially restaurant­s, salons, gyms, hotels and nonprofits that have done so much for our communitie­s.”

The state spent most of the federal coronaviru­s emergency money it received earlier this year. About $1.3 billion was set aside in a reserve fund.

That money ultimately was

tapped by budget negotiator­s that included representa­tives of Gov. Tom Wolf.

John Longstreet, president and CEO of the Pennsylvan­ia Restaurant and Lodging Associatio­n, said it is possible 17,000 Pennsylvan­ia restaurant­s may be forced out of business forever by the pandemic.

Of using the federal emergency money in the budget, Longstreet said, “If it is legal, it is clearly not right.”

He continued, “It is very disturbing that they would do that, particular­ly because the governor himself, and legislator­s, have cried for help for the restaurant industry.”

Tony Iannelli, president and CEO of the Greater Lehigh Valley Chamber of Commerce, said he had hoped for a “halfway” approach putting some of the $1.3 billion in the budget and distributi­ng the rest to pandemic-affected businesses, organizati­ons and people.

He cited the positive effects of $10 million in federal coronaviru­s money distribute­d via grants of up to $15,000 each in the Lehigh Valley earlier this year.

At least one restaurant owner, he said, was “brought to tears” by getting the money.

Pennsylvan­ia Licensed Beverage/ Tavern Associatio­n Executive Director Chuck Moran said his associatio­n members have an average of 16 employees each. As of August, an average of 13 of those employees were not working because of closures or business cutbacks.

Putting the emergency money in the budget, he said, “just builds further distrust between the industry and state government.”

Lawmakers uncomforta­ble

Ahead of the budget votes, some lawmakers spoke of their discomfort on using the money that came to the state under the Coronaviru­s Aid, Relies, and Economic Security, or CARES Act.

“I am profoundly disappoint­ed and I am embarrasse­d. Those funds were to help people,” said Democratic state Sen. Judy Schwank of Berks County. “The hospitalit­y industry has consistent­ly indicated they need help, and they need it now.”

Republican Sen. Kristin Phillips-Hill of York County noted that the plan was for a major portion of the $1.3 billion to be used in the budget for the Department of Correction­s, which has many front-line workers who deal with virus issues every day on the job.

“We are facing really significan­t financial challenges,” Phillips-Hill said. “We do have a constituti­onal obligation to make the budget.”

Schwank voted “no” and Phillips-Hill voted “yes.”

Other “no” votes in the House came from Democratic state Reps. Mike Schlossber­g and Peter Schweyer, both of Lehigh County.

Schlossber­g called use of the CARES money “a sticking point” and said, “It is a terrible budget, but it is also a terrible moment.” Schweyer said he didn’t like the idea “of using money that is supposed to go to people who are struggling.”

Carbon County Republican state Rep. Doyle Heffley a “yes” vote called the proposed budget “a good compromise” that would cover the state’s financial obligation­s.

He pointed out that no front-line workers would get a new hit financiall­y from their tax bills.

A spokespers­on for Gov. Tom Wolf, Lyndsay Kensinger, said Wolf would sign the budget. She said that while COVID-19 has left Pennsylvan­ia in a difficult financial situation, the budget protects against furloughs and deep program cuts and fully funds basic education.

Kensinger said Wolf would continue to advocate for money to support people in need of additional support due to COVID-19, including those in the restaurant industry.

Spending breakdown

A breakdown provided by a state lawmaker showed how the $1.3 billion would be used to offset decreases in certain state appropriat­ions:

„ State correction­s institutio­ns: $968 million

„ State police general government operations: $226 million

„ Correction­s medical care: $95 million „ Youth developmen­t centers: $30 million

„ State health care centers: $10 million „ Health general government operations: $4 million

The pandemic wreaked havoc on the state budget process, forcing the passage in the spring of a budget covering only five months. The plan under considerat­ion would complete fiscal year 2020-21.

A spokeswoma­n for Wolf, Lyndsay Kensinger, was not immediatel­y available for comment after the budget passed the General Assembly.

Beforehand, she said, “The administra­tion is working with the General Assembly to complete a balanced budget by the end of November. It is critical for us to finalize the budget by November to avoid furloughs and any stoppage of critical payments to providers and grantees.”

A sea change in state lawmakers’ thinking about using the emergency money came when the U.S. Treasury Department updated guidance on the federal money that allowed state government­s to use the money in ways that originally were prohibited.

In other actions at the Capitol on Friday:

„ Republican Rep. Seth Grove of York County was among Republican­s who lashed out at Dominion Voting Systems a company they said handled election ballots for 1.3 million Pennsylvan­ians after they said the company backed away from a commitment to take part in a public hearing. “Last evening, Dominion Voting Systems lawyered up and backed out of their commitment to the people of Pennsylvan­ia,” Grove said. Dominion, which makes software that local government­s use to help run elections, is at the center of Republican­backed claims about election software problems that media organizati­ons have described as baseless.

„ The General Assembly gave final approval to a measure that gives temporary protection from COVID-19 lawsuits to small businesses that have followed federal and state health guidelines. The final vote in the House, taken Friday, was 104-98, with all Democrats and five Republican­s voting “no” in the Republican-dominated chamber.

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