$3 Billion Budget Gap Ball Bounces Into GOP Lawmakers' Court

The $3 billion ball is now in the Republicans' court.

Democratic Gov. Tom Wolf has sent his first budget proposal to the Legislature, and it has been roundly panned by Republicans who control both chambers. But, as the majority in the Legislature, Republicans will be under the gun to produce a balanced budget proposal.

That means erasing a $2 billion projected deficit and paying for an additional $1 billion-plus in rising costs. That does not even include supplying more aid to public schools, which Wolf is demanding, or responding to his plan to cut school property taxes.

For now, Republicans have promises and a couple of months to come up with a plan.

"We're not planning to vote for any tax increase, I can tell you that,'' said Senate President Pro Tempore Joe Scarnati, R-Jefferson. "If Republicans and conservatives aren't standing against a massive spending and tax increase, then I'm not sure what separates us from the other party.''

Under four years of sharing power in Harrisburg with Republican Gov. Tom Corbett, Republicans failed to stabilize the state's finances, despite enacting deep cuts in education and social services. Toward the end of Corbett's term, the governor's budget secretary, Charles Zogby, maintained that the Legislature's will to keep cutting was gone.

Lawmakers agreed to enact a major tax increase for road and bridge construction but not to support the state's operating budget. They also did not support proposals to raise state taxes to cut school property taxes. Rather, Corbett and the Republicans made it more difficult for school boards to raise property taxes. In addition, GOP lawmakers did not support borrowing money or postponing payments to ease the sting of rising school employee pension obligations required by a 2010 law.

It is not clear whether the state government's grim fiscal situation - or anything else - has changed the dynamics among Republicans.

"Obviously, it's going to be a difficult budget,'' said House Appropriations Committee Chairman Bill Adolph, R-Delaware. "We all knew that going into this.''

For his part, Wolf is proposing higher taxes on sales, income, natural gas drilling, banks and tobacco products, a package that exceeds $5 billion a year once fully in force. The money would balance the budget and finance more than $4 billion in new education funding, corporate tax cuts, aid to school districts to cut property taxes and rent rebates for low-income renters.

In theory, Wolf is trying to shift more of a burden to higher earners to make Pennsylvania's school funding system fairer and bring relief to lower-income taxpayers.

Pennsylvania, he said, should have a "bold'' budget to give it the "fresh start it needs to get back on track.'' Not counting the plan to cut school property taxes, Wolf's budget would increase state spending on operations by 9 percent, to $31.6 billion, in the fiscal year beginning July 1.

If they do not support a tax increase to balance the budget, Republicans are in the position of having to come up with at least a couple of billion dollars, no easy feat.

Last year, the Corbett administration produced more than $2 billion in stopgaps, including transfers from funds devoted to business development, services for the elderly, improvements to state parks and volunteer fire companies.

The use of stopgaps helped prompt three credit downgrades last year - Pennsylvania is now one of the nation's least credit-worthy states - though Republicans see a silver lining.

"I didn't receive one call from one taxpayer complaining about the use of those one-time resources,'' Adolph said. "The taxpayers back home appreciate that kind of strategy.''

Several weeks of Appropriations Committee hearings start Monday in the House and the Monday after that in the Senate. Should a Democrat introduce Wolf's budget plan in the Senate, Scarnati said Republicans could bring it up for a floor vote, and, he predicted, more than half the Democrats would join every Republican in voting against it.

If and when Republicans write their own budget legislation - perhaps in May or June - they may get help from soaring tax collections. They might include hundreds of millions of dollars in licensing fees from House legislation to privatize the sale of wine and alcohol, even though the bill is opposed by Wolf and Senate support is uncertain.

Where they get the rest of the money to remains to be seen.

"In the words of the Wolf administration,'' Scarnati said, "our plan will be bold and refreshing when we lay it out.''

Copyright AP - Associated Press
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