Pennsylvania badly needs new revenue, top Senate Dem says

Costa
State Sen. Jay Costa

HARRISBURG — Senate Democratic leader Jay Costa painted a bleak picture of state finances Monday, predicting that lawmakers and the governor will put Band-Aids on the next two budgets instead of fixing problems by enacting steady revenue increases.

Though the June 30 deadline for the next fiscal year’s budget is less than two weeks away, the Republican-controlled General Assembly and Democratic Gov. Wolf have made little visible progress in negotiations.

“A year from now, someone will be standing here and probably repeating the same thing: We’re a billion-and-a-half dollars short, and there’s no willingness to be able to address the problems that we have going forward,” Costa said, speaking at a luncheon of the Pennsylvania Press Club. “We’ll make up ways to figure it out, to get through it, and then June 30 will pass and we’ll have some discussions about whether the revenue stream is appropriate or not.”

The state Independent Fiscal Office projected last week that the current year’s revenue will fall more than $1 billion below the Wolf administration’s estimate at the beginning of the fiscal year, putting budget makers in a hole as they plot the 2017-18 spending plan.

Costa said the state’s problems will get worse if legislators do not approve recurring revenue this year, with increases in broad-based taxes or gambling expansion or the like.

“At some point in time we have to take the significant steps to fix it,” Costa, an Allegheny County Democrat, said. “It looks as if that may not be until 2019, and that’s unfortunate.”

In a non-election year like this, Costa said, the Assembly usually “is reasonable and acts reasonably.” Wolf and many lawmakers will face the voters in 2018, and the likelihood of unpopular decisions typically goes down in election years.

After pushing for increases to the income or sales taxes in his first two years, Wolf said months ago that he would not ask legislators to raise those taxes in the upcoming budget. And the GOP majorities were not eager to do that in any case.

With those options off the table, legislators have struggled for ways to generate additional money. Wolf has proposed a severance tax on natural gas drilling, but Republicans have been largely dismissive of that idea.

Another idea under discussion is expanding legal gambling in the state, but there has been significant hand-wringing about what kinds of new betting should be authorized, and the legislative prospects are unclear.

In his budget proposal, Wolf called for a combination of spending cuts through consolidating departments, the severance tax, a new fee on municipalities that use the state police for local patrols, and an increase in the minimum wage.