HARRISBURG – Members of the state Senate returned to the Capitol Monday to decide whether to accept a House plan that rejected most of a plan approved by the Senate in August.
It’s far from clear how quickly lawmakers will reach a compromise, so those who count on state funding are starting to make plans to cope if state dollars dry up.
The state House last week passed a plan to balance the budget without any tax increases. The plan does this largely by taking out the equivalent of a short-term loan using the proceeds from the state’s share of a settlement with the tobacco industry and tapping money in more than 30 special funds that Republicans say have more money than necessary.
A Senate plan passed in August would have balanced the budget by tapping the tobacco settlement dollars while also adding a new tax on gas drilling and tax increases on heating and other utilities.
Gov. Tom Wolf announced on Friday that because the state’s running out of money, he’s delayed a $1.169 billion payment to managed care providers for Medicaid. The administration also delayed its scheduled $581 million payment as the state’s share of the employer contribution for the Pennsylvania School Employees Retirement System.
Those moves may not be making alarm bells ring yet. But more serious trouble could be right around the corner, said Mark DiRocco, executive director of the Pennsylvania Association of School Administrators.
“No one’s really panicking yet,” DiRocco said. “If they miss the October subsidy payment, people will start to pay attention.”
In a statement released by his office, Wolf said he spoke with leaders in the House and Senate over the weekend about the need to complete the budget.
“We made progress, and with more work, I believe we can reach a compromise in the coming days,” Wolf said. “It will take all sides, including both chambers and my administration, working together and considering all ideas to get this done. And if a compromise is reached, there is a commitment from all involved to put up a vote before Oct. 1st.”
Wolf added that it’s “urgent” that the budget get done to avoid a credit downgrade and “further disruption” to programs.
Officials in a handful of districts are already beginning to fret about whether they would need borrow to pay their bills if the state’s October payment doesn’t arrive on time, DiRocco said.
The 2015 impasse forced school districts across the state to borrow more than $1 billion, according to an analysis completed at the time by Auditor General Eugene DePasquale.
DiRocco said that districts that have burned through their financial cushions through previous tough budget years aren’t going to have much leeway if this year’s budget negotiations break down into a stalemate.
DiRocco said the House plan to tap the reserve funds won’t directly impact schools, unless the state counts on that money and then determines there’s not as much available as predicted.
“That would set everyone up for a disaster next year,” he said.
The County Commissioners Association of Pennsylvania has protested that some of the money identified by Republicans as being surpluses is actually needed to pay the state’s share of local projects already underway, said Doug Hill, executive director of the commissioners’ group.
“It’s not the county’s role to tell the state where to get its money,” Hill said. “But when they head down a path that will affect county programs” the local officials will speak up, he said.
That appears to be the case with some of these fund transfers, particularly with $70 million in recycling fund money, Hill said.
To get recycling grants from the state, local communities must spend their share of the project cost first, he said.
If this transfer occurs, there will be no funding available to reimburse those grants already underway over the last two years, leaving local governments responsible for the entire cost of the project, he said.
That’s not the only concern, though, he said. Like school officials, county leaders count on the state to provide billions of dollars in help to cover the cost of everything from drug and alcohol treatment, to child protection, assistance for the elderly, and mental health counseling.
If the governor is forced to cut back on expected spending in those areas, it will have a dramatic impact, Hill said.
“We’re hopeful that they will sit down and find a resolution,” to avoid that, Hill added.
In a brief interview in a Capitol hallway as she headed to a closed-door meeting with other Senate Republicans, state Sen. Michele Brooks of Jamestown, R-50th District, said she wasn’t sure what she and the other Senators would do in response to the House plan.
“I will say that I wish there had been more planning” to prevent these September budget negotiations, Brooks said. That planning should have included participation from lawmakers in both chambers of the General Assembly and the governor, she said.