Ideas abound on how to balance state budget
HARRISBURG – As Pennsylvania lawmakers prepare to reconvened after a four-week break around the primary election, there was no shortage of ideas for plugging a potential $1 billion-plus shortfall in state revenue.
But it’s impossible to predict which ideas will become part of a solution.
With this year’s budget set to expire June 30, “everything is under discussion,” said Senate Majority Leader Dominic Pileggi, R-Delaware.
As of Friday, Senate GOP officials said May tax collections lagged 2013-14 budget projections by more than $100 million on top of a roughly $500 million shortfall through April. That is tantamount to a potential budget gap of at least $1.2 billion because any shortfall this year would reduce the revenue projection for next year by the same amount.
Republican Gov. Tom Corbett, who is locked in a tough re-election campaign against Democrat Tom Wolf, proposed a 3.7 percent spending increase in his $29.4 billion budget plan for the fiscal year starting July 1. The increase would help pay for a new grant program for public schools, shrink waiting lists for social services, address the rising cost of public-employee pensions and expand health care for the poor, disabled and elderly.
Erasing the shortfall may come down to a combination of spending cuts and new taxes.
While legislative leaders said they would initially consider spending cuts, Pileggi said trying to balance the budget without new revenue would be “politically challenging,” especially in an election year when many lawmakers see increased support for public schools as a top priority.
“There’s very broad support for increased education spending,” he said.
One lucrative but politically charged source of revenue is a severance tax on natural gas extraction – a prospect that Corbett has consistently opposed as an obstacle to job creation but that has support among legislators in both parties. All four candidates for the Democratic gubernatorial nomination advocated such a tax.
Senate Minority Leader Jay Costa advocates a 5 percent severance tax that he said would generate $700 million in the first year for education and environmental protection. He said he was optimistic it could win majority support in the Senate.
“If it ends up on (Corbett’s) desk, I assure you he’s going to sign it. He’s between a rock and a hard place,” said the Allegheny County Democrat.
Corbett’s communications director, Lynn Lawson, said he is willing to consider new information about the implications of imposing a tax but remains opposed at this point.
“Clearly this budget is going to involve some very tough decisions,” she said.
House Majority Leader Mike Turzai said: “I’m certainly not advocating it.”
Turzai, R-Allegheny, suggested that lawmakers revisit a bill the House approved more than a year ago that would privatize the state-controlled sale of wine and liquor by phasing out the state stores, generating a projected $1 billion from wholesale and retail license sales.
“The public wants us out of the business,” he said.
But the Senate never endorsed the House bill. Instead, senators are continuing to refine a competing proposal that would keep the state stores open while allowing the more liberal sale of wine and beer.
“We’re still actively working, trying to find 26 votes,” a majority of the 50 senators, Pileggi said. “We’re close but we’re not there yet.”
The state government’s fiscal woes could jeopardize Corbett’s plan to postpone $170 million of the taxpayers’ share of state pension costs this year to free up money for next year. The postponement is also expected to save local school districts $130 million.
Turzai and Pileggi said that proposal would be considered separately from a pending Corbett-backed pension reform bill.
“We have met our (pension) obligations for the past three years, and many of us want to continue with that responsible approach,” Turzai said.
Lawmakers have very little time to sort it all out.
Jackson is the Capitol correspondent for The Associated Press in Harrisburg. He can be reached at firstname.lastname@example.org.