Pa. lawmakers regard budget debate with apprehension

HARRISBURG - Elected officials have plenty of words to describe the coming state budget debate, none of them good.

Some call it bleak. Others call it agonizing - or just plain bad.

"Expect a lot of street theater," said one, noting that this is an election year.

On Monday, Gov. Corbett and the legislature head into the thick of budget season. Looming are a July 1 deadline and the fiscal reality that state revenue collections are not matching projected expenditures.

The gap - expected to soar as high as $1.2 billion - appears to be widening, giving rise to the first serious discussion about a Marcellus Shale gas drilling tax since Corbett, long a staunch opponent of such a tax, took office in 2011.

"In some ways, this will be a long month, in some ways an ugly month," said Steve Miskin, a spokesman for House Republican leaders. "Especially in a year when funding is limited, and the wants are increasing."

Since the start of the year, monthly revenue has been below projections, which Corbett and the legislature agree will likely translate to a $1.2 billion deficit for next year.

That could endanger promises by the governor of additional funding for schools statewide - including Philadelphia - made during his February address in which he announced his $29.4 billion spending plan.

"The goal here has to be a balanced, reasonable, and responsible budget," said Jay Pagni, Corbett's spokesman. "The fiscal picture presents a challenge that collectively we must address, but tough decisions will have to be made."

Adding to the pressure in the Capitol - where many lawmakers and the governor are reluctant to spend more on Philadelphia - is the latest crisis in the Philadelphia School District. The debate came to a head last week when the School Reform Commission agreed to reject a budget with deep cuts to city schools.

Overall, the state's deep budget hole and limited interest in sending popular programs to the chopping block in an election year have left lawmakers and the governor scrambling to find new revenue in the most palatable places.

"Our first approach is a spending plan that matches available revenues," said Senate Majority Leader Dominic Pileggi (R., Delaware). "If that product doesn't gain sufficient support, a look at additional revenues might be necessary."

Pileggi said his caucus was looking at 20 to 30 revenue-generating ideas, among them a gas drilling extraction tax that could produce hundreds of millions for schools and other programs.

Sen. Vincent Hughes of Philadelphia, the ranking Democrat on the Senate Appropriations Committee, said his proposal for a 5 percent extraction tax would initially generate $350 million for public education statewide and grow over time.

"There is clearly a need for additional funding," he said, "and taxing drilling in the Marcellus Shale is the best option for finding those dollars. It is also important to note that there is a growing bipartisan consensus that taxing shale is the best way to generate new funding for public education."

Corbett is looking for savings on state and school employee pensions, but the General Assembly has yet to agree on such a plan. The governor also last week issued a controversial executive order to lift a moratorium on gas drilling on existing leased properties in state forests in order to generate $75 million for state coffers.

House Republicans are pushing the Senate to act on a bill it passed last year to sell the state-owned liquor-store system, which could generate $1 billion. Pileggi would say only that the majority had reached no decision on any plan involving liquor sales.

Democrats also want to raise the cigarette tax, tax smokeless tobacco, and freeze business tax cuts.

The commonwealth got good news in one category: Unemployment last month fell to 5.7 percent, the lowest rate since September 2008 and six-tenths of a percentage point below the national rate of 6.3 percent.

But the fact more people are employed is not yet translating to additional tax revenue, legislative leaders said.

Add to that the election-year quandary facing Corbett, all 203 members of the House, and half the 50-member Senate. Few want to be seen as responsible for cuts. Fewer want to invite the label "tax-and-spend lawmaker" in November.

"They face the ultimate dilemma, cutting popular programs in an environment where voters don't want programs cut," said Terry Madonna, pollster and political analyst at Franklin and Marshall College.

"Politically, there is not a lawmaker who wants to have the narrative this summer be cuts to school districts, and for Gov. Corbett that's even more lethal."