As PA's Budget Negotiations Pause, Here's The Lay Of The Land

Jul 28, 2017

HARRISBURG (WSKG) -- The state Senate has taken a step toward finishing Pennsylvania's unbalanced budget, which was supposed to be done nearly a month ago.

Credit Maguis & David / flickr

The revenue proposal the chamber passed Thursday relies on a hodgepodge of new taxes, plus borrowing to fill a two-point-two billion dollar funding gap.

However, it's likely setting up a battle between the Republican majorities in the House and Senate. With the ball now back in the House's court, it's unclear what it'll do with it.

Senators turned the new proposal around quickly.

They introduced a package of code bills--which dictate how budget money is distributed--on Wednesday afternoon. Included was a revenue plan packed with controversial new taxes, and hikes to existing taxes.

The bundle made it through committee by Wednesday night, and just 14 hours later, senators moved it into the full chamber.

The GOP-led revenue proposal passed by a slim margin--26 to 24--with support and opposition coming from both sides of the aisle.

Governor Tom Wolf has indicated he supports it.

In his remarks to members, Senate Majority Leader Jake Corman was blunt: no one wanted to be voting for tax increases.

"Well Mr. President," Corman said on the floor, "unfortunately we're basically out of options. I know some would like us to continue to cut, but we do have an obligation to educate our young people."

It's a sharp about-face for a chamber that has fought Governor Tom Wolf's tax increase attempts for years. In 2015, the conflict reached its apex in a nine-month budget standoff, and has simmered ever since.

The biggest tax component in the proposal reinstates a levy on gas utility bills, which basically works out to a $5.70 increase for every $100 users spend on natural gas.

Taxes are also hiked for phone service and electricity consumption.

All told, those levies--known as "gross receipts taxes"--are projected to net the state $405 million.

Another $100 million would come from a new severance tax on natural gas drillers--a major priority that has eluded Governor Tom Wolf and other Democrats for years--practically since the Marcellus Shale boom began more than a decade ago.

Senate Democratic Appropriations Chair Vince Hughes said without that tax, his party members likely would have voted no.

"Earlier drafts did not have a Marcellus Shale tax in it," he said Thursday. "It is the pressure of this caucus, largely, where we finally broke through. And quite frankly, that breakthrough didn't occur until about 48 hours ago."

Another $43.5 million are expected from expanding the commonwealth's powers to collect taxes on online purchases. The plan also assumes $200 million will come from a gambling expansion that hasn't passed yet.

That still leaves a significant gap--most of which would be filled by borrowing one-point-three billion dollars against the state Tobacco Settlement Fund.

But for all the Senate's compromises, the House GOP's reaction has been lukewarm at best.

"The Senate sent over its vision of how to finish this budget. It was not agreed to, nor shared prior to the committee meetings, and the House now will be taking time to review what is in these bills," said House Republican Spokesman Steve Miskin.

Miskin's comments reflected a memo that caucus leaders sent out soon after receiving the Senate proposal.

It declared they "certainly have no intention to rubberstamp these bills."

Various House GOP factions have already released their own revenue proposals, and all have steered clear of tax increases--instead attempting to balance the shortfall on gaming and liquor expansions, fund transfers, and borrowing.

But none have been successful so far.

After his own, quickly-aborted attempt to rally support for a conservative-backed revenue package last weekend, House Speaker Mike Turzai indicated it was the Senate's turn to make a move.

"Let them send a tax package over," he said. We're not doing that. We've already done votes on revenue."

Now that they have, Senator Jake Corman said the House can essentially accept it, or think up a new alternative.

"I mean look," he said. "This is all we can do. This is all we can do. We've passed the spending plan, we passed the codes that go along with it, and we've now passed the revenue. There's no Plan C. We've done our job."

His Democratic counterpart, Senate Minority Leader Jay Costa, said he remains optimistic the House will agree to the package without making too many changes.

However, Miskin said even though the governor and Senate are now on the same page, that doesn't mean the House can't dig its heels in.

"If being off on an island means we're there protecting taxpayers and looking out for our constituents, then ok," he said. "I think everybody is, in their own vision, trying to do that."

The House doesn't have any session days scheduled to vote on the revenue plan in the near future.