Pa. House leader signals budget impasse likely to linger

HARRISBURG — House Majority Leader Dave Reed said Thursday that Republicans have serious concerns about some taxes included in budget bills passed by the Senate, the latest signal that their impasse could linger for at least a few more weeks.

"We respect the fact that they sent it over to us. We respect the fact that this is where the Senate is," Reed, a Republican from Indiana County, told Capitol reporters. "It's not where we are."

The GOP-controlled legislature passed a nearly $32 billion spending plan on June 30 — inching in under a midnight deadline — but has since been unable to agree on a way to pay for it.

Negotiators have struggled with how to plug a $1.5 billion shortfall still lingering from last year's budget and a $700 million deficit projected for the fiscal year that began July 1.

The lack of a revenue package has raised questions about whether the state can continue to spend money — the constitution requires a balanced budget — and if it might experience a costly credit downgrade.

The bills approved by the Senate would balance the budget in part by taxing drilling on natural gas and raising or imposing new taxes on consumers' telephone, electric and gas bills.

"With the way the Senate passed it, you're adding an extra bill on everybody's electric, landline telephones, and heating bills. When you look at the amount of money those three taxes bring in, that could easily be gobbled up with … liquor privatization or VGTs," Reed said, referring to machines known as video-gaming terminals.

Privatizing the state-run liquor sales system and expanding legalized gambling are two options Republicans have floated in a bid to raise more revenue. While some House members have supported legislation to tax natural gas extraction from the Marcellus Shale — on top of the so-called impact fee drillers currently pay per well to local governments — Reed said he thought others would be reluctant to do so without concessions on gaming expansion or liquor privatization.

House Republicans are still working to determine whether they might amend the Senate bills or attempt to advance their own separate bills to balance the budget, said their spokesman, Steve Miskin.

House Democrats believe raising the state's minimum wage or passing a severance tax on gas drilling might be more realistic ways to balance the budget, said their spokesman, Bill Patton.

"Although House Republicans seem to be at a loss for ideas, they have not asked for our feedback in some time, nor have they indicated when the House might return to work on this," he said.

Exactly when the House will return to act on any such bills is unclear. Republicans have a majority in the House and control its schedule. The next session day is scheduled for Sept. 11, but members technically remain "on call."

"Our hope is to resolve this sooner rather than later," Reed said. "I would love to get that done before the end of August. I think a lot of folks would like to get that done before the end of August, but we want to make sure we get it right, not just do it for the sake of doing it."