Legislature Passes Budget Without Funding

From PA Chamber of Business & Industry

House and Senate lawmakers finalized the state General Appropriations bill (H.B. 218) and sent it to Gov. Tom Wolf’s desk on the constitutional deadline of June 30, just one day before the 2017-18 Fiscal Year began. House Bill 218 spends about two-tenths of one percent more than was spent in 2016-17. Notable components of the deal include a $100 million increase in basic education funding, with $8.8 million extra going to schools under the State System of Higher Education and state-related schools being flat-funded over the prior year; and a funding cut to the Department of Labor and industry of 13.3 percent (with a total spend of $10.5 million). Despite getting the General Appropriations bill completed, lawmakers will reconvene later this week after the 4th of July holiday to pass a number of bills related to the budget – including the Fiscal Code bill that will spell out how money should be appropriated across state departments.

This week (lawmakers are projected to come back on Thursday), conversations will focus on where new revenue to close a $1.5 billion shortfall in the new fiscal year and about $700 million in new money to cover new spending for 2017-18 would come from. Options include gaming expansion, borrowing against future revenue from the Tobacco Settlement Fund or a combination of both. Broad-based tax increases remained off the table, and the idea of placing another tax on the state’s natural gas industry also appeared to be a non-starter. With disagreement between the House and Senate on the gaming bill, borrowing appears to be a likely scenario. Last week, the governor referred to the state’s cash shortfall as “a onetime gap,” adding that he was open to agreeing to a borrowing plan as long as Republicans could determine new recurring revenues from other sources that would help to avoid future deficits. “For that one time, I’m comfortable,” Wolf said, though he declined to give a firm dollar amount.

Governor Wolf has until July 10 to take action on the bill.