Deadline Looms to Defuse Pennsylvania's Budget Time Bomb

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Months after passing a partial budget that avoided some hard decisions, Pennsylvania's Legislature and governor face a deadline at the end of November to finish the job and plug a multibillion-dollar deficit.

The partially funded budget that Democratic Gov. Tom Wolf signed in May was incomplete by design. It was approved amid uncertainty about the scale of federal coronavirus support and about the pandemic's effect on state revenues and costs.

Five months later, the $25.8 billion deal that funded many governmental functions and programs is expiring on Nov. 30, which is also the last day of the two-year legislative session.

There is little more certainty now about where funding for the budget gap, estimated to be more than $5 billion, will come from.

The General Assembly meets for three days next week before lawmakers head home for the campaign's final stretch, and there is no expectation they will finish their work on the budget before Election Day.

That means the governor and lawmakers will have to iron out a deal during a lame-duck session between Nov. 3 and Nov. 30 on what will be a painful budget, while also contending with legislative retirements and possible leadership battles. Lawmakers will leave at the end of November and likely would not return until the new session begins early next year.

Putting off the talks until early January would have negative repercussions, said Senate Majority Leader Jake Corman, R-Centre.

“There is a down side — things won’t be funded,” Corman said. “We need to get to an agreement and get it done. We all know when the deadline is.”

Wolf spokeswoman Lyndsay Kensinger said the administration has been cutting costs where it can and limiting hiring, and hopes to reach an agreement with the Legislature.

“It is critical for us to finalize the budget in November to avoid furloughs and any stoppage of critical payments to providers and grantees,” Kensinger said in an emailed statement calling for a “level-funded budget.”

The House Appropriations chairman, Republican Rep. Stan Saylor of York County, said there are multiple proposals circulating.

"Nobody has said, ‘OK, this is what we’re doing.’ But it's all being worked out," he said.

Sen. Vince Hughes, D-Philadelphia, said borrowing could help balance the budget but that he's waiting to see what additional aid the federal government may provide and for the results of the election.

“If Dec. 1 comes and there’s no state budget, then things start to collapse,” Hughes said, warning of layoffs and cuts in services. “It just gets to be a very, very ugly situation.”

The partial budget did provided a full year of funding for many public school programs, colleges and universities, debt payments and pension costs.

Another factor is about a billion dollars in unspent federal coronavirus relief. Earlier this year, the legislature decided those funds will go out as grants to 60 of the state’s 67 counties unless lawmakers act otherwise before the end of November. Those grants would leave out Philadelphia, its four suburban counties, Lancaster County and Allegheny County, which all previously received direct funding.

Rep. Matt Bradford of Montgomery County, the ranking Democrat on the Appropriations Committee, said hard-hit hospitals, restaurants and the broader hospitality sector are clamoring for the unspent federal aid, including in the counties that already received some funding.

“I'm concerned that we’re now going to reprogram that money to balance the budget because we weren't able to balance the budget in June," Bradford said. House Democrats unanimously opposed the partial budget in May.

For now, budget negotiators are watching to see if state revenues suddenly rebound, and hoping they can get a quick deal when talks resume in earnest next month.

New taxes do not appear to be part of a potential solution.

“There's absolutely no appetite for increased broad-based taxes at all within our caucus,” said House Republican spokesman Jason Gottesman. “That's a non-starter.”

Copyright AP - Associated Press
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