HARRISBURG — The spotlight at the statehouse now shifts to the fiscal 2016-17 budget with Gov. Tom Wolf facing tougher political hurdles to get the new tax revenue he wants to erase a large $2 billion revenue deficit and boost state aid to public schools and other programs.
The $6.6 billion supplemental budget bill written by Republican lawmakers became law without the governor’s signature, ending a nine-month budget impasse that put some public schools and county agricultural extension offices on the brink of closing. The supplemental bill puts the total budget for fiscal 2015-16 at $30 billion. The impasse ended with still unresolved budget-related proposals to overhaul the state liquor stores, cut public pension costs and provide school property tax relief.
This is this second year in a row that the state budget has been determined largely by the Legislature without the governor’s agreement. Former Gov. Tom Corbett was sidelined out of the final negotiations over the fiscal 2014-15 budget and responded with some line-item vetoes of spending. Typically, Harrisburg budget fights revolve over a relatively small portion of money since mandates drive much of the spending.
Wolf warned the budget for 2015-16 is $300 million out of debt and would lead to future downgrades from credit rating agencies. Financial institutions were quick to support his assertions.
PNC Bank said that rating downgrades by at least one notch are possible in the near term.
“We do not expect the budget to come close to solving Pennsylvania’s fiscal pressures, including its structural budget gap which is sizeable and growing,” PNC said.
Two credit agencies — Moody’s and S&P — said the budget doesn’t address the built-in revenue deficit or public pension debt.
GOP lawmakers strongly defended their plan as being balanced and able to boost public school aid by $200 million at no cost to state taxpayers.
Senate Majority Leader Jake Corman, R-34, Bellefonte, and House Majority Leader Dave Reed, R-62, Indiana, expressed relief at the end of the impasse and vowed to start work immediately on the next budget.
Corman said he agrees that Pennsylvania faces a built-in revenue deficit, but pointed out that spending cuts are also a way to address it.
Other GOP lawmakers leveled new criticism at the governor.
Wolf ended the crisis he created when he let the bill become law, Senate President Pro Tempore Joseph Scarnati, R-25, Jefferson County, said.
“As we now look towards completing a budget for 2016-17, we hope to see more leadership and not partisan politics from the governor,” Scarnati said.
The governor could have allowed the GOP budget to be enacted last summer and saved a lot of needless suffering within the education, agricultural and corrections communities, Rep. Jerry Knowles, R-124, said.
The governor proposed a $33.3 billion budget for fiscal 2016-17 with big spending increases for education and $2.7 billion in tax hikes in an election year when all House seats and odd-numbered Senate seats are on the ballot. With many districts dominated by one party, incumbent lawmakers often face their most serious competition in the primary, which is April 26 this year.
“You can’t find an election year when big taxes are raised,” said Terry Madonna, Ph.D, political pollster at Franklin and Marshall College, referring to the state income and sales taxes.
Wolf used his veto power to completely reject an earlier GOP budget bill last June and then shape a partial $24 billion budget last December. However, as the governor contemplated a veto of the supplemental bill last week, the limits of that strategy became apparent.
Sen. John Blake, D-22, Archbald, urged the governor earlier in the week to release emergency money to schools, hospitals and agricultural programs.
Blake said later that he won’t support future budget maneuvers that will put schools in distress again.
Some GOP lawmakers may be more receptive to the governor’s proposals after the primary, said Christopher Borick, Ph.D., a Throop native who is a political science professor at Muhlenberg College.
The governor faces some soul-searching since he didn’t achieve his goals with this budget, Borick said.
“Is the legacy of how this cycle ended a signal of how things will play out next year or an indication the governor may take a different approach?” he asked.