Government & Politics
10:55 am
Thu June 26, 2014

House Sends Budget To Senate As Tax Talks Continue

The state House passed a $29.1 billion spending plan Wednesday, five days before the July 30 budget deadline. The measure now heads to the Senate, which looks likely to make big changes to the revenue sources assumed in the plan, if not the final spend figure.

House Republicans heralded the proposal as a reflection of their priorities: holding the line on spending, without raising taxes, and passed before July.

"There's a series of transfers, lapses, and other revenue exercises to make sure that this budget is in balance," said Rep. Bill Adolph (R-Delaware), chairman of the House Appropriations Committee.

The measure relies on hundreds of millions of dollars in one-time revenue sources - pulling money from outside funds or using dollars allocated but not spent last year. A number of tax credits would be temporarily suspended under the bill.

Democrats called the move irresponsible.

"This will result in a structural deficit in the following year that dwarfs the budget hole we are currently facing," said Rep. Joe Markosek (D-Allegheny), ranking Democrat on the House Appropriations Committee. "When these revenues are gone, what are we going to do the following year?"

Much of the boost in schools funding proposed by Gov. Tom Corbett in February would be scrapped under the House's budget, which scales back the education spending increase to $70 million, a 1.3 percent hike over the past year's education state funding.

The proposal also assumes an injection of $380 million from liquor privatization, something that both Democrats and Republicans have characterized as a fool's errand.

"We simply don't have the votes for a liquor reform bill that would involve selling parts or all of the system," said Republican Senate Majority Leader Dominic Pileggi (R-Chester). "So that revenue, if it's based on that, is something that we would have to find a replacement for, to support the spending that the House has planned in their bill."

The spending plan is still a couple big steps away from the governor's desk. With questions abounding about how to find $380 million without liquor privatization, Democrats insisted they looked forward to voting for the "real" budget at a later time.

"This will be a procedural vote," said Rep. Bryan Barbin (D-Cambria) on the House floor during the debate. "All the Republicans will vote for the bill. All the Democrats will vote against it."

He wasn't entirely right about that - one Republican ended up voting against the proposal, which otherwise passed along party lines.

Legislative leaders say they're still negotiating how the House's budget will change once in the hands of the Senate, where lawmakers appear more amenable to raising taxes to bridge a $1.4 billion deficit.

Senate legislative staff have for been drafting tax language for months, and Pileggi said GOP members have discussed new and increased levies.

"Not an in-depth caucus," Pileggi said Wednesday. "This week we'll have that conversation."

Sen. Jay Costa (D-Allegheny), the chamber's minority leader, said even the Democrats had been looped in on conversations about a Marcellus Shale extraction tax and a cigarette tax (though the House GOP is ostensibly opposed to both).

"We don't have anything right now," said Costa. "But there's a belief that we're moving in that direction."

Corbett made a brief — and rare — appearance in the Capitol rotunda Wednesday. He said he was passing through on his way from being treated to a water ice by Rep. Mike Vereb (R-Montgomery). As he walked toward an elevator, he begged off when asked about the apparent inevitability of tax increases.

"I can't say that one way or the other," said Corbett. "You know what I've said. I've said we've got to see some movement on cost-drivers before we talk about revenue."

Last week, the governor told lawmakers he would not discuss new revenues (that is, taxes) until action on two other priorities: an overhaul of public pension benefits for future hires, and some kind of liquor privatization.

Senate proposals merely liberalizing the sale of wine and beer appear to be on ice.

"If they were planning to run something on liquor, we would know about it," said Costa, "because they would be required to share information with us."

On the other hand, he added there are cross-party discussions in the Senate on the subject of pensions. The House has struggled to find votes for a pension overhaul for the past few weeks.

Still, Corbett holds out hope lawmakers can pass his priorities and a budget -- before July.

"I'm very optimistic that they are working on it, and we are going to have something done on time," Corbett said. "I think we're going to see a little bit of everything."