Legislators poised to send Gov. Wolf $31.9 billion spending plan

After a late-night vote in the Senate Appropriations Committee Thursday, members of the General Assembly could send Gov. Tom Wolf a $31.99 billion FY 2017-2018 budget as soon as today.

The Senate is expected to advance the plan to the House sometime Friday morning; then, the House is expected to send the bill to the governor at some point later in the day.

That being said, a lot remains up in the air, including how they plan on paying for the spend number.

The budget, approved by the Senate Appropriations Committee and supported by most Senate Democrats, is around $100 million higher than a spending plan sent over to them by the House in April crafted and supported by Republicans in that chamber.

Unlike the original House plan, the spending document approved Thursday night that will likely be the subject of votes in both the Senate and House on Friday is roughly $600 million more than the current fiscal year’s spend and, different from the House version, provides $100 million more in basic education spending, restores a $50 million school transportation subsidy and encourages the Wolf administration to make niche cuts to Medicaid spending.

The legislation – with associated non-preferred spending items – restores funding to the University of Pennsylvania Veterinary School, provides for the merger of the Department of Corrections and Board of Probation and Parole, and provides a process to study the merger of four human-services-related state agencies while providing a mechanism to account for their potential merger in the coming fiscal year.

“(This budget) invests in some very important initiatives notwithstanding our tremendous fiscal challenges and things that are important to the people of the commonwealth,” Senate Appropriations Committee Majority Chairman Pat Browne (R-Lehigh) told reporters following Thursday night’s vote.

“It turns the tables on an escalation in corrections spending that we’ve seen over my entire career to a more important and effective platform for dealing with corrections; (it provides) significant increases in education; investment for our citizens with disabilities; getting people placement off waiting lists that they’ve been waiting for for a long time.

“It’s something that looks to deal with some of our more important macro challenges and looks forward to a very substantial process to look at a more substantial merger and also the process of merging the Department of Corrections and Probation and Parole.”

According to Senate Minority Leader Jay Costa (D-Allegheny), the restoration of the governor’s requested $100 million increase to basic education was a key component to getting his caucus’s support for the legislation.

“I think it’s the appropriate level at this point in time,” he said.

“I think, working with our colleagues, that some of the priorities that we’ve set back in February with the governor – investments in education, particularly early learning programs and special education, opioid and heroin addiction – all of these things have been addressed in this – we were able to maintain a number of line-items similar to where they were last year and, quite frankly, gains have been made in areas dramatically cut by House Republicans.”

Despite some earlier public protestations by House Majority Leader Dave Reed (R-Indiana), it appears that the House Republican Caucus is also signed on to the plan.

A brief conversation with a member of the House Democratic Caucus’s leadership team Thursday night meted out that the caucus has not signed off completely on the spending plan, potentially setting up a long debate in the House on Friday.

With all that taken into account, question marks still remain about the future of Pennsylvania’s budget for the current and coming fiscal year, especially as the spending plan remains unbalanced; supporting revenue is an issue likely to be taken up by the Legislature immediately following the July 4^th holiday.

One question mark sits over what the governor might do with the spending plan when it reaches his desk since some legal requirements dictate his responsibility to bring the plan into balance should it remain so at the 10-day limit for him to act on the legislation.

In a statement before the compromise plan was adopted in committee, Gov. Wolf expressed his support for the spending plan.

“This plan is a bipartisan compromise that invests more in our schools, protects seniors, creates jobs and builds on our fight to end the heroin epidemic. It maintains my commitment to reform state government and cut bureaucracy to work more efficiently, deliver better services and generate savings,” he said.

“I look forward to both chambers passing this bill and coming together to complete the process with a long-term, responsible solution to our budget challenges.”

However, asked Thursday after a non-budget related bill signing if he’s thought about his plans should the budget languish as unbalanced, the governor was coy as to his intentions.

“I continue to think about all kinds of things,” he said. “I think, as I’ve said, we’re working toward a good, constructive budget. My priorities are a balanced budget focused on education and focused on efficiency. I’ve been looking for all three of those things and I have been since I presented my budget back in February. I think we’ve been working constructively and civilly to those ends.”

When a similar situation presented itself last year, Gov. Wolf allowed the spending plan to lapse into law without his signature.

A second question mark goes to those supporting revenues where, as of Thursday, an agreement still seemed a ways off.

According to Browne, those responsible for negotiating a revenue plan will continue to work over the weekend and holiday to come to a consensus.

“What is definite this evening is that we’ve moved forward on a spend number in the General Appropriations Act and a commitment to establishing a revenue package from various sources in order to pay for it,” he said. “People that are working on the revenue package will be here until it’s finished.”

Despite saying earlier in the week that greater Democratic inclusion in the budget discussions could lead to additional Senate Democratic votes for a controversial video gaming terminal component of a House-passed gaming expansion measure, Costa stated Thursday afternoon that there is still very little support in his caucus for the plan.

“There’s no linkage between what we may or may not do on the budget and a vote for VGTs,” he said. “As I’ve said for weeks, there’s very little support for VGTs in the Senate Democratic Caucus. That has not changed – it won’t change because of the budget outcome.”

The governor was also reluctant to give greater insight into his opinion on the VGT component Thursday, saying he remains in negotiations regarding the revenue package.

According to Senate Republicans, the VGT issue is not dead in that chamber, leaving the potential for gaming expansion to fill a substantial hole in the coming fiscal year’s deficit should one of the various VGT legalization plans come to fruition.

That being said, the governor’s recent willingness to potentially accept as much as $1.5 billion in borrowing securitized by future payments into the Tobacco Settlement Fund did help smooth out some concern in the Legislature.

Saying just over a week ago that the borrowing wasn’t the “optimal solution,” Costa seemed a little more comfortable with the concept himself Thursday.

“Borrowing is always an option you look at sometimes, especially when you’ve limited your ability to generate the revenue you need,” he said referencing pledges not to raise broad-based taxes. “Borrowing is an appropriate device when it’s done properly: very narrow, very limited in scope, and when you maintain discipline with how we view the out years. Those conversations are continuing to take place, but if we are able to do something like what we were able to do when we borrowed the $4 billion for the unemployment compensation debt that we had to the federal government, if it’s done properly and done right, it can be a benefit to the commonwealth as a whole.”

Meanwhile, as lawmakers look to the current and coming years, revenue concepts are also being considered that could potentially ensure that the budget for FY 2018-2019 isn’t in the same troublesome league as recent spending plans.

“We are looking at balancing ’17-’18 and ’18-’19 as well,” Reed said. “Not that you can necessarily get it perfect – it’s tough to project a year out, a year ahead of time – but we are being mindful of all three of those years at one time.”

What happens after Friday is still anyone’s guess, but sources indicate that it appears voting session is unlikely to be held again until immediately after the July 4^th holiday.

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