House returns, Pa. budget impasse goes on

paCapitol-a
Shown is the Pennsylvania Capitol building in Harrisburg, Pa., Tuesday, May 23, 2017.

HARRISBURG — Pennsylvania’s House of Representatives returned to the Capitol on Monday for its first session in seven weeks, but a divided Republican majority argued over a new budget-balancing plan and provided no sign that a more-than-two-month budget stalemate will end any time soon.

The session gave members of the House’s Republican majority its first chance as a group to discuss a plan aimed at balancing the state’s threadbare budget, although it is opposed by House Democratic leaders and Democratic Gov. Wolf, who called it “nonsense.”

The plan would avoid the borrowing, casino-gambling expansion, and utility service tax increases that underpin a $2.2 billion revenue package the Senate approved in July. That package was meant to keep state agencies, programs, schools, and institutions funded at levels supported overwhelmingly by lawmakers in a $32 billion spending agreement with Wolf, but it is deeply unpopular with House members.

The new House GOP plan leans heavily on siphoning money from off-budget accounts that support public transportation systems and environmental cleanups and improvements. House Republican backers insist the money can be diverted without affecting the programs, but the Wolf administration has contradicted that. Wolf’s administration also has said that a further $400 million in operating reserves counted in the House GOP plan does not exist.

The plan would avoid raising taxes, other than extending Pennsylvania’s 6 percent sales tax to third-party sales in online marketplaces.

A vote could occur as early as Tuesday. But, after three hours of closed-door discussions among House Republicans on Monday, it was unclear whether the House GOP plan has enough support to pass the chamber. Rep. Jeff Pyle (R., Armstrong) called it a “coin flip,” while Rep. Eugene DiGirolamo (R., Bucks) said debate had been “back and forth” between supporters and opponents.

The Republican caucus is badly fractured between its anti-tax conservatives and Southeastern Pennsylvania moderates who want a floor vote on legislation authorizing a Marcellus Shale natural gas production before they join other budget-balancing measures. Some Republicans would be satisfied by paring back approved spending by $2 billion, while some Republicans say an income tax increase is necessary to fix state government’s entrenched post-recession deficit.

House Speaker Mike Turzai (R., Allegheny) told rank-and-file lawmakers that they would remain in Harrisburg until a revenue package passed.

If this latest plan fails, it is also unclear what happens next. Hanging in the balance are another downgrade to Pennsylvania’s battered credit rating and about $600 million in annual aid to four universities — the University of Pittsburgh and Pennsylvania State, Temple, and Lincoln Universities — that give tuition breaks to in-state students.

Since the fiscal year that began July 1, Wolf’s administration has borrowed money from other state funds to keep the state’s main bank account above zero. But with tax collections at a seasonal low flow, Wolf has warned that he will be out of options starting Friday to make payments on time.

Wolf supports the Senate’s plan, which is built on borrowing $1.3 billion against Pennsylvania’s future proceeds from the 1998 multistate settlement with tobacco companies, raising $400 million worth of taxes on consumers’ utility bills, and
mounting another huge expansion of casino-style gambling. It also includes a Marcellus Shale production tax.

If lawmakers do not come up with more money, the state’s largest teachers’ union warned that a cut of nearly $1 billion to public school aid is possible. That would force schools to lay off teachers again, much as they did to survive a nearly $1 billion cut to aid in 2011, Dolores McCracken, president of the Pennsylvania State Education Association, told a liberal group rallying in the state Capitol on Monday.

“Overcrowded classrooms have now become the norm,” McCracken said, “and students are paying the price.”