State Budget Talks Hit Rough Patch

By: Brent Sailhamer, Director of Government Affairs

Weeks ago, the Pennsylvania House of Representatives began earnest work on a state budget proposal in advance of June 30, which marks the end of the state’s fiscal year. House Bill 218 would spend $120 million less than last year and consolidate four major state agencies – the Departments of Health, Aging, Human Services, and Drug and Alcohol Programs – a proposal that Governor Wolf also called for in his February budget address. But now that the legislature begins to tackle the details of the spending plan, things may not be as easy as they seemed.

The Pennsylvania Constitution requires a balanced budget, meaning that the annual spending plan must be accompanied by a revenue plan. After passing a modest increase in spending last year, legislators utilized a series of tax increases on tobacco, vaping products, digital downloads and other assorted goods and services to balance their plan. This year, House Republican leadership has signaled their intention to utilize alcohol and gaming expansions to provide needed revenue. This week, a House committee approved bills to divest the Commonwealth from its liquor sales business and to allow grocery stores to obtain permits for wine sales. The House has also taken steps to expand gaming options to include internet gaming and gambling at airports.

But this week the Senate seemed unsure about the plan. “We shouldn’t drive gaming, liquor, and tobacco sales, which are very addictive products, based on budgetary needs,” said Senate Majority Leader Jake Corman. In addition to the uncertainty between the chambers, Governor Wolf has also indicated his opposition to any expansion effort that would infringe on the state’s liquor sales system.

With just a little more than 60 days to go until the state’s financial deadline, there seems to be plenty of work to do as legislators continue to find ways to provide for annual spending and ongoing, increasing pension obligations.