Budget Hearings Get Underway in Harrisburg

Lawmakers on the House and Senate Appropriations Committees engaged in a somewhat tense exchange with Wolf administration officials last week as the first week of budget hearings kicked off.

In the most widely reported budget hearing, Budget Secretary Randy Albright faced off with Senate Republicans in the first Senate Appropriations budget hearing. Over five and a half hours, Albright defended the governor’s proposed $33.29 billion spending plan and warned of a $2 billion structural deficit going into the 2016-17 fiscal year. Sen. Randy Vulakovich, R-Allegheny, stated plainly that he and many other Senate Republicans had voted on the long-defunct “framework” agreement because there was an understanding that pension reform and liquor reform would be included in a final deal. With those two issues no longer on the table, he told Albright “You’re asking a lot… and you’re going to have to work a lot harder to get that (tax increase) vote out of me.”

Auditor General Eugene DePasquale appeared last week before the House and Senate Appropriations Committees, where he was asked whether he would be willing to audit Gov. Wolf’s expenditures during the first six months of the fiscal year when no spending had been authorized – a fact reported in the Pittsburgh Tribune Review. His office is now said to be reviewing the audit request. DePasquale also discussed school district borrowing during the budget impasse, saying that districts incurred up to $45 million in interest charges. He also warned that the six months of education funding the Governor approved in December will soon run dry; and that schools will need to borrow within a matter of weeks if the 2015-16 budget remains unresolved. Another important topic addressed during the Auditor General’s budget hearings was the Wolf administration’s intention to eliminate the Public Employee Retirement Commission, which analyzes municipal pension budgets. Calling PERC’s work “critical,” DePasquale said that independent analysis of the pension systems is necessary to address the real level of debt and work toward solutions on making the pension systems sustainable.

The House and Senate Appropriations Committees also hosted the Independent Fiscal Office last week. The IFO confirmed that the state faces a nearly $2 billion structural deficit for 2016-17 and there will be a residual shortfall of roughly $300 million this fiscal year; but that revenue estimates for 2015-16 are expected to be about $200 million more than originally anticipated. When asked how not replacing federal stimulus dollars would impact the structural deficit, IFO Director Matthew Knittel told House Appropriations members that the federal stimulus money was meant to be temporary and not meant for long term purposes. “Long term computations would not enter into the deficit projections,” he stated. “If the federal funds were there and then removed then I would think it would appear as though there were a deficit.” PLS also reported that when asked what portion of the increased expenditures in the proposed budget is caused by mandatory increases, Knittel noted that they are made up by pensions, debt and increases in certain programs in the Department of Human Services and the Department of Corrections.

Budget hearings continue this week.