House Republicans spent the week again airing budget proposals privately and behind closed doors, but there is no consensus on an overall revenue plan to respond to the Senate-passed revenue package supported by both Caucuses in the Senate, House Democrats and Gov. Wolf.

The most conservative members of the Caucus led by Rep. Dan Moul (R-Adams) were again advocating for a plan to raid a series of special funds and transfer the money to the General Fund to help fill the $2.2 billion budget deficit.

They really don’t like the idea of borrowing $1.3 billion like the Senate package does to pay for operating and administrative costs.

This same group has also been advocating for reopening negotiations on the spending plan passed with bipartisan agreement in the Senate, House and with Gov. Wolf in late June to bring it more in-line with the $31.52 billion budget passed in April by the House.

Tuesday the group of 17 conservative legislators led by Rep. Moul have scheduled a press conference to unveil their alternative budget plan.

Of course that April budget still had an $800 million to $1.2 billion hole in it (depending who was looking at it) that House Republicans said could be filled with $247.5 million from liquor expansion (which the Senate hasn’t supported), $376 million from gaming expansion, including iGaming, airport slots, tablet gaming and fantasy sports (which the Senate is only interested in in part), $160 million in transfers from special funds (which the Senate has so far opposed, mostly) and $25 million in potential tax credit reductions.

"I think today [Wednesday] is kind of the last segment of hearing the different members' reaction to it [the fund transfer plan]," House Majority Leader Dave Reed, R-Indiana County, said.  "After we get through today, we'll do a vote count, and if we have 102 votes we'll run it."

House Republicans have 121 members in their Caucus.

The one item that seems to be gaining strength is a severance tax on natural gas production. 

The House Environmental Resources and Energy Committee has schedule a meeting for September 11 to consider a severance tax bill-- House Bill 113 (Harper-R-Montgomery)-- that would enact a 3.5 percent natural gas severance tax and leave the existing drilling impact fee in place. 

Proceeds from the proposed severance tax would help fund school employee pension obligations and provide State Police protection to rural areas (sponsor summary).

House Democrats - Freeze Spending

A work-up discussed by House Democrats this week warned if there is no agreement on a revenue plan soon, most of the state’s discretionary spending lines would have to be cut by 12 percent.  And that would be on top of cuts agencies already got in the spending plan adopted in June.

Democrats also said the $650 million in appropriations to Penn State, Pitt, Temple and Lincoln universities as well as increased funding for public schools would also have to be cut.

They are echoing concerns raised by Gov. Wolf last week when he said come September 15 when large payments are due to pay the state’s bills, he may have to institute a freeze on state spending.

He said he didn’t want to “alarm anybody” with announcing the amount he would freeze.

Wolf Shuffles Money Between Accounts

On Tuesday Gov. Wolf announced he had to take out a short-term loan from the state’s Motor License Fund to cover a payment due to public schools and to pay other bills coming due.

Wolf warned in a letter to House Republican leaders that failing to fund the state budget will put the state in “a much more dire financial situation,” risking a credit rating downgrade and increasing borrowing costs.

FY 2017-18 Revenues Ahead Of 2016 Pace

The Department of Revenue Friday reported Pennsylvania collected $2.1 billion in General Fund revenue in August bringing the fiscal year-to-date General Fund collections total to $4.2 billion.

In August of 2016 the state collected $2.02 billion bringing that fiscal year’s collections to $3.99 billion.

IFO - Continued Revenue Weakness

The Independent Fiscal Office told the House State Government Committee Wednesday that while overall revenue projections seem to be holding at $31.19 billion (taking out tax refunds)-- that’s without considering any new revenue package-- there has been slower than anticipated growth in Sales Tax revenue based largely on national trends.

Sales Tax revenues so far are $22 million below expectations.

Based on the Sales Tax weakness and across-the-board revenue weakness over the last year, the IFO said it is already forecasting a deficit of $750 million for FY 2017-18; again without taking into account any new revenues adopted by the General Assembly.

What’s Next?

The House still will not be back in session until September 11, just a few days before  the September 15 fiscal cliff Gov. Wolf has talked about.

House Republican leadership told members Friday “to be prepared to stay until budget-related bills are done.”

The Senate is scheduled to come back September 18.

NewsClips:

Op-Ed: PA Needs To Get Serious About Its Drinking Water Crisis, Jim Sandoe, DEP CAC

DEP Proposes Fee Increases To Shore Up Drinking Water Inspection Program

Cusick: DEP To Increase Fees For Shale Gas Well Permits

O’Neill: Severance Tax On Gas Drilling In PA Only Fair

PA Reverses Proposed Cuts To LIHEAP Heating Aid For Poor

Cuts To EPA Funding Could Hobble Delaware River’s Cleanup, Report

Trump’s EPA Cuts Threaten Water Quality In Delaware Watershed, Report Says

A Call To Save EPA From Trump Administration’s Budget Axe

Op-Ed: Let’s See Funding For Delaware Watershed Protection, Restoration

Thompson: No Solutions Yet, More State Budget Work To Do

Tension Rises Between House GOP, Wolf As State’s General Fund Teeters Near Zero

AP: Wolf Authorizes Loan From Motor Vehicle Fund, State’s Finances Will Soon Be Much More Dire

To Pay Bills, PA Forced To Move Money Between Accounts

House GOP Members Say They Can Balance The Budget Without Borrowing Or Taxes

Commonwealth Foundation Hit List Of Special Funds House GOP May Tap

AP: What Will House Republicans Do?  It’s PA’s $2 Billion Question

Lawmakers To Return To Session In 2 Weeks, Address Budget

Harvey Cleanup Tests Trump Plan To Shrink EPA By 8 Percent

Related Stories:

House GOP PLan To Empty Environmental Funds Means Not Paying 900 Grants Already Awarded

2nd Warning: House Republicans About To Raid Environmental Funds To Balance The Budget

Op-Ed: The Local Economic Impact Of Failing To Fund Clean Water Programs

Local Govt. Associations All Oppose Manganese Rider On Budget Admin Code Bills

Manganese Rider In Budget Bill Shifts Responsibility For Cleaning Up Water From The Discharger To Water Companies, Other Water Users

Op-Ed: Oil & Gas Wastewater Treatment Facilities Seek Loophole In Senate-Passed Admin Code Budget Rider

PA Environmental Council: Budget Deal, A Bad Solution To The Wrong Problem

PRC Urges Senate, House, Gov. Wolf To Oppose Budget Bill Changes That Undercut DEP’s Permitting Authority

30 Environmental Groups Urge House To Vote Against Budget Bills That Would Demolish DEP

Business, Energy Groups Oppose Severance, Energy Taxes, Don’t Expect Permit Reforms To Survive Legal Challenges, Distance Themselves From 3rd Party Permit Reviews

Conservatives For Responsible Stewardship Oppose Budget Bill Environmental Riders

Nothing In Senate $970 Million Revenue Package For The Environment, Code Bills Littered With Environmental Riders

Senate Environmental Permitting Changes Would Emasculate DEP’s Ability To Regulate Air, Water, Mining, Waste, Radiation, Oil & Gas

[Posted: Sept. 1, 2017]

9/4/2017