State needs to get its revenue act together

What’s not to like about the Pennsylvania Senate’s attempt to balance the state’s out-ofkilter budget? Let us count the ways.

Senate and House leaders in Harrisburg are at loggerheads over how to plug a $2 billion deficit.

Last month the Senate tried to accomplish what the House could not, approving a bill to fill the missing revenue side of the budget. Both houses approved the spending side in time for the June 30 budget deadline.

That’s correct: The state of Pennsylvania is paying its bills with no constitutional authority to raise money to do so.

Gov. Tom Wolf allowed this devil’s bargain to become law without his signature, thinking it would be preferable to a long budget impasse or government shutdown.

The problem isn’t just that the Democratic governor and the Republican-controlled Legislature don’t see eye-toeye on budget fixes. Senate and House leaders, who are calling the shots with no input from minority Democrats, are at loggerheads over how to plug a $2 billion budget deficit.

In the meantime, state Treasurer Joe Torsella has secured a $750 million line of credit to allow the state to keep functioning after the last dollar flows out. That bottoming-out is expected to occur soon.

At least the Senate has a revenue plan, but it nibbles around the edges of a recurring structural budget deficit.

Here’s what the bill would do:

— Enact a severance tax on shale gas drilling, something that has been needed for years. But it would raise only $100 million a year and comes with an irresponsible trade-off — outsourcing the permitting process for new gas wells, a sop to the industry that would bypass the state Department of Environmental Protection.

— Enact a 5.7 percent tax on consumers’ natural gas bills.

— Raise existing consumer taxes on electric and phone service.

— Impose the 6 percent sales tax on online transactions from Amazon, eBay and others.

— Borrow up to $1.3 billion against future payments from a multi-state settlement with tobacco companies.

— Anticipate $200 million from a gambling expansion, authorizing new “satellite” casinos around the state.

That’s not all. Senators voted to give the Legislature the power to borrow money in the event of future budget standoffs or shutdowns — essentially, to ensure lawmakers and their staffs could continue to be paid if the money runs out. Borrow. Tax. Gamble. Some degree of higher taxation is unavoidable, given a $2 billion deficit, but House leaders are already saying some Senate ideas — notably tax increases on gas, phone and electrical service — are unacceptable.

Majority Leader Dave Reed says House Republicans prefer other sources of revenue — privatizing the state liquor system and legalizing video poker in bars and clubs. The Senate says video poker is a nonstarter.

Postponing the agony and borrowing to pay expenses carries a serious price tag for everyone: Rating companies have warned that Pennsylvania is headed for a credit downgrade if it continues to use smoke and mirrors to get through the fiscal year.

That means higher costs to borrow against revenues — you know, the ones the state does not have, or is about to run out of.

Instead of concerning themselves with future budget strife without paydays, legislators should remain in session until they adopt a complete budget, with revenues, as they are constitutionally obligated to do.

Senate and House leaders, who are calling the shots with no input from minority Democrats, are at loggerheads over how to plug a $2 billion deficit.