Pa. faces 'a difficult budget year'

HARRISBURG - Pennsylvania legislators return to the Capitol this week to start the new year with plenty of old business — and a fresh dose of political pressure — awaiting them.

There is no shortage of big-ticket issues. Lawmakers are likely to consider bills regulating and taxing online gambling, and measures to reduce or even eliminate property taxes, and again try to change the retirement benefits for future state and public school workers.

And, as it has for successive years, the commonwealth's billion-dollar budget woes will drive the agenda.

"This is going to be a difficult budget year," said Senate Minority Leader Jay Costa (D., Allegheny). "I think we all know that."

With majorities that will grow even larger with Tuesday's swearing-in ceremonies, Republican legislative leaders, some of whom have hinted at running for governor, will be an even greater force for Gov. Wolf to reckon with.

For the Democratic governor, it's his last full year to make an impact before asking voters to reward him with a second term.

Lawmakers' return Tuesday will be brief. Votes on legislation aren't expected right away, and after swearing-in day, they won't reconvene in the Capitol until Jan. 23.

Waiting for them will be how to tackle a hefty shortfall in the state budget for the current fiscal year. And two weeks later, on Feb. 7, Wolf is scheduled to deliver his third budget address, setting the stage for months of talks.

Back in July, legislators said they would fund the budget with revenue from an expansion of gambling. But nearly half a year later, they haven't agreed about how that would occur.

At the same time, state revenue from taxes and other streams have come in short of what was projected. The state's nonpartisan Independent Fiscal Office has said the shortfall could grow to $1.7 billion in the fiscal year starting July 1 if current policies were to remain in place.

Costa said he planned to propose legislation to allow a "modest expansion" of gambling to generate the $100 million in revenue that had been budgeted for the current year.

House Majority Leader Dave Reed (R., Indiana) said he expected to focus on efforts to change the retirement systems for state and public-school workers, after the House and Senate last session passed different versions of pension reform, but couldn't reach a compromise plan before the legislative session ended.

"We've had discussions with the administration and all parties involved," Reed said, "to see what might finally get this issue over the goal line."

The House Republican leader reiterated his interest in considering changes to how the state government delivers services, by evaluating program performance and possibly merging agencies. He said he believed the coming budget could be balanced without raising the sales or personal income taxes.

House Minority Leader Frank Dermody (D., Allegheny) expressed skepticism that it was a good idea to balance the next budget without generating additional money.

"Can it be done without revenue? Yeah, but then you have to figure out where we're going to cut," he said. Dermody said he would like to focus on delivering adequate funding for education and raising the minimum wage.

The 2017 session will open Tuesday with the expected swearing-in of 202 of the 203 House members and the half of the 50-member Senate that was up for election to the chamber's four-year terms. Rep. Leslie Acosta, the Philadelphia Democrat who secretly pleaded guilty to federal corruption charges, won reelection but has said she would resign Tuesday.

In the Senate, the GOP will hold 34 seats, a gain of three, compared with the 16 held by Democrats. Republicans in the House will boast a majority of 121 members of the 203 seats, up from a 119-84 divide last session and the largest Republican majority in more than a half-century.

"It's going to move the Senate more to the right," Costa said, predicting that the chamber could pass legislation further limiting abortions and hindering organized labor. Reed said House Republicans were interested in including all parties in discussions.

An undercurrent throughout the year will be posturing by potential challengers to Wolf.

State Sen. Scott Wagner, a York County Republican, has become the only official to openly declare his intent to run for governor.

Other prominent Republicans are more circumspect. House Speaker Mike Turzai (R., Allegheny) has said that his supporters have suggested a run and that he has not ruled it out. Reed has also said that he was considering it. Senate Majority Leader Jake Corman (R., Centre) has said he has not ruled out a run for governor, but was not focused on the possibility.

klangley@post-gazette.com

717-787-2141

@karen_langley

Correction: A previous version of this story misstated the number of Republican-held seats in the state House of Representatives.