HARRISBURG – A new week in Harrisburg, a new budget deadline.
Gov. Wolf on Tuesday said he believes he can stave off any major harm from the state’s unfinished budget until Oct. 1.
In an interview with Pittsburgh radio station KQV-AM (1410), the Democratic governor said that if legislators can find a compromise on a revenue bill and approve it by that time, “I can make this work.”
As recently as last week, Wolf was warning of dire consequences should the GOP-controlled legislature not swiftly fund the $32 billion spending plan it passed nearly three months ago. He has also been cautioning that the state faces a credit downgrade if a deal is not reached quickly.
But during the interview Tuesday, Wolf sounded a more optimistic tone. He said that he spoke on the phone Monday with representatives from the credit rating agency Standard & Poor’s and that he came away with the sense that the state could push off that day of reckoning until next month.
“They’re willing to let us work through this process,” Wolf said. “I think they like the sense of optimism that we’re all expressing and believe that’s a good sign that we will land in a place that works out. In the meantime, I can make things work financially.”
S&P declined to comment.
The governor didn’t provide much detail about how he would “make things work” but said payments would be made in a timely fashion and there wouldn’t be cuts or delays in state services if legislators come to an agreement by the new Oct. 1 deadline.
That statement is a bit of a departure from statements Wolf and other state officials have made in the past. Over the summer, state Treasurer Joe Torsella said the state could run out of money by the end of August, but he helped the state buy some time by giving the administration a short-term loan.
Wolf then signaled that come September 15, the state would have to make painful cuts to the budget, and that funding for roads, schools, and other essential services could be on the chopping block.
That did not materialize. Instead, on Friday of last week, the governor announced that he was delaying hefty payments, at least by a week, that are due to insurance companies providing benefits to Medicaid recipients, because the state did not have enough money in its main bank account to pay them. It quickly became clear that services to recipients would not suffer from that decision.
And treasury officials said this week they expect those payments to resume later this week.
Despite the deadline for a doomsday scenario inching ever forward, the state’s spending authority is hobbled. Pennsylvania is grappling with a $2.2 billion deficit, and without a revenue package to cure that, the governor will be forced to freeze funding or make cuts.
And October is a big month for big-ticket bills coming due. For instance, at the end of October, the state makes a hefty payment to school districts. If there isn’t enough revenue flowing into state coffers, Wolf could decide to delay those payments.
Pennsylvania School Boards Association spokesman Steve Robinson said some districts — the ones that struggle to raise revenue locally and rely heavily on state funding — would feel the pinch.
“The lack of a revenue package to pay for spending remains a concern for districts who rely on the timely distribution of state funds to pay staff, pensions, operational costs and other expenses,” Robinson said.