Pennsylvania Preps Short-term Budget Amid Virus Uncertainty

New spending plan would not raise taxes

Pennsylvania state government began advancing a temporary, no-new-taxes budget plan Tuesday that maintains current spending levels while budget makers watch to see how badly coronavirus-related shutdowns damage tax collections and whether the federal government sends another aid package to states.

Officials in the House and Senate Republican majorities said that they expected to wrap up votes on a roughly $25.8 billion package this week. The main budget bill squeaked by the House, 103-99, just hours after it was unveiled Tuesday.

Every Democrat and six Republicans opposed it. In the Senate later Tuesday, it passed with bipartisan support in the Appropriations Committee.

The $25.8 billion package would carry full-year money for many public school budget lines, as well as for state-supported universities, debt service and school pension obligations. But much of the rest of the state’s operating budget lines would be funded through Nov. 30, the last day of the two-year legislative session, Senate and House officials said.

Many public schools officials breathed a sigh of relief at the news that they were spared a massive cut in aid amid projections of a multi-billion dollar shortfall, after taking a hit of more than 10% in state aid nine years ago during the recession.

An early deal on a budget also avoids a long, drawn-out budget fight between Wolf and the Republican-controlled Legislature. Such fights have marked two of Wolf's past five budgets.

Still, the state’s finances remain under considerable pressure to keep up with the cost to care for the poor, elderly and disabled, and the Nov. 30 end to many of those budget lines could set up a fight over how to fund them for the rest of the year and beyond.

Wolf, a Democrat, said talks with the Legislature have been constructive, and he backed the need for an unusual, short-term budget plan to compensate for delayed tax deadlines and collapsing revenues.

“I think all of us are struggling to know exactly what the financial situation is going to look like over the course of the whole next fiscal year, so we are going to do, I know, some unusual things,” Wolf said at a video news conference Tuesday.

Among the uncertainties in the coming fiscal year are whether the federal government will contribute more aid, he said.

The spending legislation is expected to be accompanied by a raft of budget-related legislation negotiated behind closed doors and another bill that distributes approximately $2 billion in federal coronavirus emergency aid to nursing homes, agricultural programs, counties and more.

Wolf has warned that his office is projecting a budget deficit of up to $5 billion for the 2019-20 fiscal year ending June 30, although perhaps $2 billion is simply delayed after tax-filing deadlines were shifted from April 15 to July 15 amid the pandemic.

John Callahan, chief advocacy officer for the Pennsylvania School Boards Association, said schools were relieved not to see a cut in aid, given the circumstances. That certainty will help school boards assemble their budgets as they grapple with how to bring students safely back to school buildings in August amid fears of the coronavirus, Callahan said.

Lisa Schaefer, executive director of the County Commissioners Association of Pennsylvania, said counties — which administer billions of dollars in state-mandated social services — feel that it is important that money continue to flow uninterrupted for those services.

However, aid for those services is guaranteed only for five months, and a fall-off in state aid for those services in the last seven months of the fiscal year could force counties to foot a larger share of the bill.

“There are going to be other negotiations for the remainder of this fiscal year, and it will be critical to see how revenues continue to come in,” Schaefer said.

School districts are not necessarily out of the woods yet: casino shutdowns during the pandemic will mean a gap of $300 million in tax revenue from gambling receipts that lowers the bills of school property tax payers, said Rep. Matt Bradford, the ranking Democrat on the House Appropriations Committee.

The state is operating on a $34 billion budget approved last year by lawmakers, although Wolf's administration has said it has clamped down on hiring, vendor contracts and discretionary spending to save cash.

Wolf in February proposed a $36 billion budget for the new fiscal year, with most of the proposed increase in spending for rising costs for health care for the poor and long-term care for the elderly and disabled.

Copyright AP - Associated Press
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