Friday, July 1, 2016

Senate, House Go Home Without Agreement On A $1.2 Billion+ Revenue Package

The Senate and House went home Friday for the July 4th weekend without agreeing on a revenue package to finance the General Fund budget they passed earlier this week.
House Republican Leader David Reed (R-Indiana) said they are ready to vote a $1.25 billion revenue package, as soon as they get agreement from the other Caucuses.  $1.25 billion is what they believe is needed to balance the budget they passed in Senate Bill 1073 (Browne-R-Lehigh),
House Democratic Leader Frank Dermody (D-Allegheny), meanwhile said a $1.36 billion revenue package was needed to balance the $31.52 billion budget now on the Governor’s desk.
Gov. Wolf said he would sign the budget bill as soon as a “sustainable revenue package” was sent to him.
With the House Caucuses apparently at least $110 million apart, there was no word from the Senate on what they thought.  The Senate had already left town earlier in the day on a 4-hour call to return to Harrisburg.
Just to be different, the House is on a 6-hour call to return to Harrisburg.
And there we are.  
We have a General Fund budget, but no way to fund it, yet.
Passing The General Fund Budget
On June 30, the last day of the FY 2015-16 Fiscal Year, the House voted 144 to 54 to concur in the Senate-passed FY 2016-17 General Fund budget bill--  Senate Bill 1073 (Browne-R-Lehigh)-- sending it to Gov. Wolf for his action.
Gov. Wolf said he would sign the bill into law just as soon as a sustainable revenue package is sent to him-- “I want to commend leaders and members in both chambers for passing a bipartisan, compromise budget that invests more money in early childhood, K through 12 and higher education, and also provides vital resources to combat the heroin crisis. I am pleased that working together we took this important step to move the Commonwealth forward.
         "I will sign the General Appropriations bill as soon as there is a sustainable revenue package to pay for it, and I look forward to continuing to work with the legislature to achieve this.”
As noted, the total General Fund budget is $31.52 billion, but only after the Senate moved some spending off the General Fund ledger.
The bill increases higher education line items by 2.5 percent and funding for Community Colleges to $232,111,000 from the $226,450,000 the House had in its version of the budget.
The budget numbers for DEP and DCNR are about the same as the House.  The Senate did increase the Heritage Parks Program line-item to $2.8 million from the $2.25 million the House approved.
The budget bill also includes an increase in DCNR’s in-lieu of tax payments for State Forest land.
Both the Heritage Parks and in-lieu of tax payment authorizing language is now in House Bill 1605 (James-R-Butler) as an amendment to the Fiscal Code.
Click Here for a spreadsheet from Senate Republicans showing differences between FY 2015-16 and FY 2016-17 Senate-passed budget.  Click Here for a Senate Fiscal Note and summary.   Click Here for a narrative summary by the House Democratic Appropriations Committee staff.
How They Did It
Noticeably different this year, was the fact both Senate and House Republicans reached across the aisle to their Democratic colleagues to get an agreement on the General Fund budget bill.
Presumably, they will do the same thing for the upcoming revenue package to pay for it.
The Senate managed a 47 to 3 vote on the budget bill, with Senators John Eichelberger (R-Blair), Scott Hutchinson (R-Venango) and Scott Wagner (R-York) opposing.  
But then again, these Senators have rarely, if ever, voted for any state budget.
After the budget vote, Sen. Wagner said, “I have been able to witness total madness.”
In the House, Republicans had 45 of their 118 members vote against the final budget bill, largely from the conservative bloc of members, but not entirely.  All but 9 Democrats supported the bill.
Rep. Daryl Metcalfe (R-Butler) and Rep. Seth Grove (R-York) lead the conservative opposition.  
House Republican Leadership, however, met the test established by Rep. Metcalfe in passing the budget.  He said no budget should be brought up for a vote where a majority of Republicans did not support it.  The final vote clearly shows a majority did.
No Agreement On Revenue Package
There is not yet any agreement on a revenue package to support the budget in Senate Bill 1073.
The House proposed four sources of revenue to fund its budget proposal--
1. Expanded Gaming: $267 million for expanded gaming in House Bill 2150 (Dunbar-R- Westmoreland) authorizing 6 new types of gaming, including iGaming, slots at airports and off-track betting parlors, although Rep. Dermody said Friday that mix may be changing.  The bill was referred to the Senate Community, Economic and Recreation Development Committee. There are potentially several other legislative vehicles in the Senate as well;
2. Tax Amnesty: $129 million for tax amnesty in House Bill 1888 (Quinn-R- Montgomery), now in the Senate Appropriations Committee;
3. Tobacco Taxes:  $480 million increase in tobacco taxes, including new taxes on chewing, e-cigarettes and other tobacco products (the cigar exemption remains), which the House has not acted on yet; and
4. Liquor Reform: $150 million in revenue from the liquor reforms already signed into law.
There have also been discussions about a gross receipts tax on retail natural gas service, but Rep. Reed (R-Indiana) said there are no votes in his Caucus for a new tax on home heating.
While nothing is for sure, House Bill 1198 (Barrar-R-Delaware), making changes to the Tax Code, was nonconcurred in by the Senate and House in December as part of the FY 2015-16 budget consideration and could be used as a quick vehicle for tax changes as part of a conference committee deliberation.
Remember, there’s also that bipartisan House pension reform bill-- Senate Bill 1071 (Browne-R-Lehigh)-- the Senate non-concurred in on June 23 that could be activated if there is agreement on new language.
Clearly, the budget discussions in 2016, as opposed to last year, are turning out to be much closer to the traditional way Republican Leadership has approached making deals-- by reaching out to Democratic members.
That certainly isn’t making conservative Republican members in the Senate and House happy, but then again, look what happened last year.  Most people don’t want a repeat.
But, there’s a long way to go and hiking taxes to fill a $1.25 billion+ budget hole in an election year will be tricky.
Stay tuned!
Keep Up-To-Date
Crisci Associates will provide updates on budget news as it happens through the weekend through the PA Environment Digest Twitter Feed, Google+ Circle Green Works In PA and the PA Environment Daily Blog.
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