Wolf to GOP: State’s fi­nances will soon be ‘much more dire’

Gov­er­nor urges law­mak­ers to quickly fill bud­get short­fall

The Reporter (Lansdale, PA) - - NEWS - By Mark Scol­foro

Demo­cratic Gov. Tom Wolf warned House Repub­li­can lead­ers Tuesday that fail­ing to fully fund the state bud­get will put Penn­syl­va­nia in “a much more dire fi­nan­cial sit­u­a­tion” in the coming weeks.

Wolf’s let­ter to Speaker Mike Turzai, Ma­jor­ity Leader Dave Reed and six other House GOP lead­ers urged them to act quickly to fill the bud­get’s $2.2 bil­lion rev­enue gap.

Wolf an­nounced he au­tho­rized what he called “a very short-term” loan this week from the state’s Mo­tor Li­cense Fund but ex­pects that a lack of ac­tion will af­fect state pro­grams and cause out­side agen­cies to down­grade Penn­syl­va­nia’s credit rat­ing, in­creas­ing bor­row­ing costs.

“There has been ro­bust debate about how to meet this chal­lenge,” said Wolf, who is ex­pected to seek a sec­ond term next year. “Time is not on our side, and now is the time to put states­man­ship be­fore any­thing else. There is too much at stake.”

A spokesman for House Repub­li­cans said Wolf’s re­lease of the let­ter “speaks vol­umes” about his in­ten­tions to work with the cau­cus.

“His con­tin­u­ing to spend when the rev­enues aren’t there is what put us in the sit­u­a­tion to be­gin with,” said House GOP spokesman Steve Miskin.

Law­mak­ers ap­proved a $32 bil­lion bud­get on June 30, and Wolf let it go into ef­fect with­out his sig­na­ture.

A bi­par­ti­san bill to close the deficit by bor­row­ing money and rais­ing new taxes passed the GOP-ma­jor­ity Se­nate last month, but the Repub­li­can-led House has not acted.

Wolf said the loan from the Mo­tor Li­cense Fund will pro­vide for a ma­jor pay­ment to pub­lic schools that is due later this week. But he noted that the state trea­surer has said he won’t al­low fur­ther short-term bor­row­ing with­out a bal­anced bud­get.

House Repub­li­can lead­ers have had lit­tle con­tact with Wolf, Democrats or Se­nate lead­ers over the past cou­ple months, in­stead al­low­ing rank-and-file mem­bers to float sug­gested solutions to the rev­enue short­fall.

The House is due to re­turn to ses­sion Sept. 11.

Trea­surer Joe Torsella, a Demo­crat, said Tuesday the fund trans­fer was not a so­lu­tion but just a way to buy time for law­mak­ers.

“The Leg­is­la­ture has the abil­ity to pass a rev­enue pack­age to pay for the spend­ing they’ve already passed,” Torsella said. “Now they have a small win­dow of time be­fore the gen­eral fund reaches a crit­i­cal point. I join with oth­ers across the com­mon­wealth in ask­ing the Leg­is­la­ture to re­spon­si­bly ad­dress this prob­lem.”

The Se­nate-passed plan would raise $1.3 bil­lion by bor­row­ing against to­bacco set­tle­ment money; $100 mil­lion from a new ex­trac­tion tax on Mar­cel­lus Shale gas drilling; $400 mil­lion from con­sumers’ util­ity bills, pri­mar­ily nat­u­ral gas ser­vice; and $200 mil­lion in li­cense fees for ex­panded gam­bling.

About $600 mil­lion in an­nual pay­ments to Penn State, Temple, Pitt and Lin­coln uni­ver­si­ties and the Univer­sity of Penn­syl­va­nia’s vet­eri­nary school are in limbo as a re­sult of the fund­ing stalemate.

The ad­min­is­tra­tion said the state Trans­porta­tion Depart­ment will make $459 mil­lion in ad­vance pay­ments of Mo­tor Li­cense Fund rev­enue to the gen­eral fund for state po­lice costs. An ad­di­tional $241 mil­lion will be loaned from the Mo­tor Li­cense Fund to the gen­eral fund, re­paid with in­ter­est by March 1. The ad­min­is­tra­tion said it had au­thor­ity to make the loan with­out leg­isla­tive ap­proval.

Torsella said the trans­fer will keep the state’s gen­eral fund from go­ing into the red un­til Sept. 15, when it will “fall as much as $900 mil­lion in the neg­a­tive.” He said the state “can­not spend be­low zero, and would thus be un­able to issue pay­ments to meet the com­mon­wealth’s needs at that time.”

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