Budget crunch: Pa. faces possible $3 billion shortfall

HARRISBURG —  And so it begins.

It's budget crunch time in the Pennsylvania Capitol, and the state treasurer and auditor general ratcheted up the normal yearly pressure Wednesday with a warning: The state's strapped.

"If this were a household," Treasurer Joseph M. Torsella told reporters, "we would be living on our credit card for eight months out of the year."

In a letter to legislators, he and Auditor General Eugene A. DePasquale projected that state government may have to borrow as much as $3 billion for operating expenses between this July, when the new fiscal year begins, and next April.

That projection, of course, assumes that lawmakers and the administration don't agree on ways to raise state revenues. Expect public grandstanding and backroom deal-making until June 30, the end of the fiscal year.

This week began with the state Senate passing a bill to overhaul public employee pensions. Although technically not part of the budget process, the skyrocketing cost of funding the state's two largest pension funds has for years been a huge drain on the state budget. The House is scheduled to vote on the measure Thursday morning.

On Wednesday, the Republican-controlled House began moving legislation to legalize online gambling, regulate fantasy sports and sports betting, and allow video gaming terminals (VGTs) in bars and other establishments with a liquor license, That issue in particular has been controversial, with a number of lawmakers (including many from Philadelphia) saying VGT legalization would amount to creating hundreds of "mini-casinos."

It is unclear whether the House version will pass muster in the GOP-dominated Senate, which last month passed its own bill to allow online gambling and make a court-ordered fix to how much casinos should pay to their host communities.

Lest anyone forget, the two chambers have had a hard time finding middle ground on this issue. In fact, they had banked — literally — on coming up with a plan a year ago: on paper, the current fiscal year budget relied on getting $100 million from expanded gambling. It didn't happen.

In the $32.3 billion budget plan he proposed this year, Gov. Wolf, a Democrat, counted on getting an additional $150 million from gambling expansion.