Revenue Deal Still Eludes Lawmakers

From PA Chamber of Business & Industry

History repeated itself last week when Gov. Tom Wolf let H.B. 218, the nearly $32 billion General Appropriations bill for the 2017-18 Fiscal Year, become law without his signature. The bill was sent to him on the Constitutional budget deadline of June 30, albeit without the corresponding legislation that raises additional necessary revenue and specifically appropriates the spending. Last year, the governor let the budget become law without signing it; however, lawmakers were able to reach consensus over the following two days on how revenues would be generated to pay for the plan. This year, the House and Senate worked in vain throughout the weekend and into the early part of last week, only to return to their districts on Tuesday afternoon when it became clear that a final revenue agreement remained elusive. On Sunday, in fact, the governor reportedly rejected a $2.2 billion new revenue plan that legislative leaders sent to him on the grounds that it didn’t contain enough recurring revenue.

Rank-and-file members were told they could be called back to vote on bills within six hours’ notice. While the House remains on that schedule, the Senate will reconvene today at 1 p.m. Lawmakers are shying away from using the word “stalemate” to describe the current situation, but continued disagreements between the General Assembly and administration on how to cover a $1.5 billion shortfall from the Fiscal Year that just ended and $700 million in new revenue for the current year make it seem that a resolution could still be weeks away.

Borrowing from the state’s share of the nationwide Tobacco Settlement Fund still appears to be a part of the equation, along with a gaming expansion bill (that likely won’t include video gaming terminals, but could still be far-reaching) and potentially expanding the sale of wine and spirits to include beer distributors. While personal income tax and sales tax increases seem to remain off the table, there is now a resurgent call among some lawmakers to implement a severance tax on the natural gas industry. Gov. Wolf proposed a 6.5 percent severance tax in his February budget proposal. A story in Pennlive highlighted a letter to House Speaker Mike Turzai, R-Allegheny, from a group of 12 Republican lawmakers and three Democrats who have authored shale tax legislation and are in favor of a “fair, reasonable and responsible” proposal. The PA Chamber continues to lead a multi-industry coalition in the fight against another tax on the natural gas industry, due to the negative impact it would have in terms of job growth and economic potential for one of Pennsylvania’s most critical industries.