Senate to return to session to work on revenue, budget-related bills

The Pennsylvania Senate will be returning to session Wednesday afternoon through Thursday to work on a $2.2 billion revenue plan and other budget-related bills in an attempt to finalize the FY 2016-2017 and FY 2017-2018 budgets.

While no concrete details of the revenue plan were available Tuesday, it appears that whatever will be considered by senators this week will be a plan agreed upon by four of the five negotiating parties – Gov. Tom Wolf, Senate Republicans, Senate Democrats and House Democrats – House Republicans are notably absent from the agreement on the present package.

As has been described before, the bills to be considered will likely contain as much as $1.5 billion in borrowing securitized by payments from the Tobacco Settlement Fund to balance out the deficit from the most recently concluded fiscal year.

It is also likely to include some gaming expansion that will include so-called “satellite casinos” – also called “Category 4 Locations” – that will be slots-only parlors acting as extensions of existing casinos available to serve currently underserved gaming markets in Pennsylvania that will be buffered by geographic collars in an attempt to protect current gaming operations.

Additionally, some niche tax changes are also likely. While the exact mix is not yet known, previously discussed concepts of including a gross receipts tax on consumer natural gas or electric use and extending the sales tax to basic cable services are likely to top the list of possibilities.

Using past-year lapses and the limited transfer of off-line dedicated revenue back into the General Fund could find their way into the revenue mix as well, with the possibility of some limited liquor sales reform still on the table, especially as it relates to allowing beer distributors to sell liquor in areas where state liquor stores are losing money.

Speaking to a meeting of the Pennsylvania Chamber and Industry and the Pennsylvania Manufacturers Association Monday, Senate Majority Leader Jake Corman (R-Centre) discussed why coming back to session to work on a revenue plan and move along related budget implementation code bills is important, even if the majority caucus in the House has yet to sign off on the plan.

"We wouldn't be here in late July if things were going well," he said. "It's important in a budget that not only do you balance this year, but you look to the future, and how we balance the next year. We want to make sure next year we are in a good position, and onward from there."

He added that not coming to an agreement, which some see as a possibility if something doesn't come to fruition in the next several weeks, would be an irresponsible move on behalf of legislators who voted to support the $31.99 billion spending plan.

"I think that would be disastrous for us financially – we would take a huge hit in our credit rating," he said. "Governing involves difficult decisions. You have to make them and move forward so that the outside world looks at us that we're competent, we're governing and we're predictable."

The Senate’s return was prompted by the failure of the House this past weekend to advance a no-new-revenue plan, crafted mainly by House Speaker Mike Turzai (R-Allegheny), that relied mainly on borrowing, lapses and off-line transfers.

In remarks after sending members home Saturday – potentially until September – Turzai cast into doubt whether those components, along with a non-VGT gaming expansion bill, could pass the House given its current stance on how a revenue plan should come together, which includes gaming expansion with VGTs and expanded liquor privatization. The Senate has no plans to take on those measures wholesale.

“Securitization is not something that the caucus wants to do,” he said.

“Members think the Senate rejected options that were viable and they’re not particularly fond of using securitization or borrowing to fill in a budget hole that the governor created by not creating expenditures for ’16-’17 in reserve,” he said. “They didn’t want to bail out the governor and they don’t want to bail out the Senate, particularly since the Senate hasn’t been open to some of the bills we sent them in the past.”

Prior to leaving Saturday, House Democrats decried the move by Republicans to leave Harrisburg without finishing state budget business and pledged to work with the other negotiating parties to reach a deal on budget revenues.

“House Democrats are ready, willing and able to negotiate a revenue plan that pays for the budget that we overwhelmingly voted for in a bipartisan way,” said House Minority Leader Frank Dermody (D-Allegheny). “The Speaker presented a plan that was unacceptable to his caucus, certainly unacceptable to us, and we need a plan we can work with that uses recurring revenue to solve next year’s problem.”

If the Senate passes the legislation it is expected to take up, it remains unclear when the House might return to session.

While by practical function, the House remains on six-hour call, Speaker Turzai spent the beginning part of the week in Atlanta attending a fundraiser for the Republican State Leadership Committee, where he serves as Chairman of the Republican Legislative Campaign Committee.

Additionally, sources have indicated that many members will be out of state during the typically session-free month of August attending previously planned vacations.

Meanwhile, organizations both within and outside of the Capitol have taken to various social media platforms in a campaign to urge House Republicans back to the negotiating table and to return to session to close out the budget.

Pennsylvania’s $31.99 billion budget became law on July 11, 2017, without Gov. Wolf’s signature.

It has not been fully funded since it passed the General Assembly on June 30, creating a host of legal and funding questions, particularly as they related to Pennsylvania’s state-related universities, which have not had their appropriations enacted.