PA Senate rejects proposed no-tax budget plan

Ebony Scott
September 22, 2017

The House last week rejected a Senate revenue plan that included tax increases, and on Wednesday, House GOP leaders released a statement saying that state taxes are still being collected and dismissing the downgrade as a decision made by a "small group of unknown people at Standard and Poor's".

Pennsylvania lawmakers are battling on how to balance its $32 billion spending plan almost three months into the 2018 fiscal year, forcing Governor Tom Wolf to delay scheduled bill payments.

S&P's report cites a litany of concerns about Pennsylvania's finances, including a almost decade-old structural deficit, habitually late budgets, and recent failures to make mandatory payments on time.

The credit rating agency Standard and Poor's lowered its rating on Pennsylvania's debt, citing the state's stubborn post-recession deficit and its history of late budgets, as well as Standard and Poor's belief that the pattern could continue. The outlook is stable. But, it said, the state's reliance on one-time cash infusions has put too much stress on its tax collections to pay its bills on time.

The budget bill also seeks a $1 billion lump-sum payment by selling rights to a portion of the state's tobacco settlement fund, which now receives about $350 million per year.

Wolf and lawmakers already counted $100 million in fees toward last year's budget from some sort of future casino gambling expansion. The action caused a lot of dramatic words from state leaders and many calls to settle the budget, but no signs of compromise.

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Wolf has said he wants to get the budget done by October first.

On September 15, Pennsylvania missed $1.167 billion in reimbursement payments for Medicaid, and on September 18, it missed a $581.0-million payment to school districts to cover its share of pension obligations.

The downgrade is the second by Standard and Poor's in three years - the previous one was under Wolf's Republican predecessor - as budget-makers have struggled to pull Pennsylvania out of a long-running deficit. "My budget proposal was balanced, cut more than $2 billion in expenditures and consolidated agencies, while also fixing the deficit".

Miskin said the House agrees there's a fiscal problem, but members still don't support tax increases. "If an agreement has not progressed by next week, I will be forced to take further steps to manage this situation".

House Republicans, however, pushed back on that concept and instead passed a revenue plan that relies heavily on what they call the $1 billion "sale" of a state "asset".

"Unfortunately for the citizens of the state, the sword has fallen today and we will all pay the price for the fundamentally irresponsible and dishonest approach to state budgeting taken by Speaker Turzai and his followers".

Other reports by GizPress

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