House Republicans set to push through $31.52 billion budget this week

Harrisburg – House Republicans Monday unveiled a budget plan they intend to send to the Senate this week with a final spending number ringing in at $31.52 billion, a number more than $800 million below what Gov. Tom Wolf proposed in February and just under $250 million shy of the current year’s spend number.

Republicans on Monday were quick to praise the spending plan for FY 2017-2018, arguing it incorporates 60 percent of the governor’s proposed budget and keeps initiatives like the consolidation of four human services-related state agencies as well as the consolidation of the Department of Corrections and Board of Probation and Parole.

Additionally, they note that the budget will increase basic education spending by $100 million, increases pre-K counts spending by $20 million, increases funding to the Head Start Program by $5 million, provides a $25 million increase to special education, and lowers funding for the General Assembly by 6.5 percent.

The House Republican budget also does not include initiatives of the governor in a lease-leaseback of the Farm Show Complex that was expected to generate $200 million for the coming fiscal year and also does not include a proposal to raise the minimum wage.

“We balance the budget by cutting through a lot of the bureaucratic spending in Harrisburg while focusing on the funding we want to get out to local communities to help take care of core functions of government,” said House Majority Leader Dave Reed (R-Indiana) in briefing the press on the budget.

As the bill moved through the House Appropriations Committee along a 22-15 party-line vote Monday evening, House Democrats– led by Minority Chairman Joe Markosek (D-Allegheny) - stood uniformly in opposition to the spending plan.

“This (spending plan) goes too much in the wrong direction,” he said. “It cuts into the bone that too many of us agreed was already bare.”

While they applauded maintaining the governor’s ask in terms of basic education funding, they chided cuts in increases to early childhood education.

Additionally, they pointed to cuts in child care, mental health services, state agency personnel expenditures without justification, and a cut to state correctional institutions of $95 million without pointing out who or what will be cut.

“It is good we are moving forward in April on the commonwealth’s budget. Expediency, however, should not claim common sense as a victim,” Markosek said. “When do we stop punishing Pennsylvanians for the budgetary policy of the Republican majority?”

While the spending plan is expected to be considered on final passage on the House Floor Tuesday, what will remain to be seen is how the budget will be balanced.

According to an internal Republican caucus document obtained by The PLS Reporter, Republican members are being asked to consider a number of “balancing options” that total $1.669 billion. The currently proposed plan is $790 million in the red, which would need to be filled by a combination of these “balancing options.”

On top of the list is $25 million in potential tax credit reductions, $160 million in special fund balance transfers, and $247.5 million in liquor reform including wine and spirits expanded and enhanced permits as well as a lease and divestiture of the wholesale liquor market.

Additionally, House Republicans could vote on a measure bringing in $376 million from gaming expansion and reform including iGaming, slots at non-primary locations, tablet gaming and slots at airports, removing the amenity requirement from the Category 3 licenses, and allowing fantasy sports.

Finally, in an ad hoc menu of potential options, House Republicans are asking their members to consider that the legalizing of video gaming terminals (VGTs) could bring in $389 million, legalizing games of skill could bring in $103 million, adopting Speaker of the House Mike Turzai’s (R-Allegheny) “Free the Wine” proposal that privatizes the wholesale and retail wine market could bring in an additional $119.4 million, and a redirection of dedicated special fund revenue to the General Fund could provide an additional $250 million to balance the budget.

Gov. Wolf responded to the budget plan by praising the fact that it is getting the process started earlier than usual and embraces his proposals of increased basic education funding and agency consolidations.

However, it was not all sunshine and rainbows from the governor’s office.

"I have concerns with a lack of investment in Naloxone for law enforcement, early childhood education, and programs to help manufacturing and create good-paying jobs. I also believe we should not make broader cuts to human services, particularly those that help working families like child care assistance," he said.

“As our revenue shortfall continues to grow, ensuring we take a balanced approach to closing the deficit will be critically important. I believe the best way to achieve this goal is not only through making cuts and identifying savings, but closing loopholes and making corporations pay their fair share."

He said he looks forward to continuing discussions with all four legislative caucuses on a budget that meets his priorities of addressing the deficit, protecting education and seniors, bolstering the fight against the heroin epidemic, and makes investments in Pennsylvania's economy.

The budget’s advance Monday comes on the heels of more bad revenue news: the commonwealth’s revenue for the month of March – usually one of the highest collection months of the fiscal year – came in over $200 million shy of estimates.

This means the commonwealth is now more than $675 million short on fiscal-year-to-date revenues, which is a deeper hole than the governor’s proposed budget anticipated.

Pennsylvania’s current fiscal year ends June 30, and a new budget is normally due by July 1 in order to have a plan in place for the new fiscal year.

Jason Gottesman is the Harrisburg bureau chief for The PLS Reporter, a non-partisan, online news site devoted to covering Pennsylvania government.