As legislators in the state House of Representatives continue struggling over how to close the $2.3 billion deficit in the state budget, most of the proposals in that chamber have focused on ways to avoid or at least lessen the potential prospect of broad-based tax increases.
While a group of self-titled “budget hawks” has been working on a solution that transfers money from non-General Fund pools of money into the commonwealth’s main checking account as a way to solve the issue, others want to close the deficit from the last fiscal year and align the current budget with estimated state revenues for this fiscal year – currently sitting around $31.19 billion – through spending cuts.
One perspective on this approach was recently released by Democratic lawmakers, who found that a 12 percent across-the-board cut would be needed for all discretionary line items to bring the budget into balance and pay off the lingering deficit.
Such cuts, according to the analysis, would mean a $22 million combined cut to the commonwealth’s three executive row offices, including an $11 million cut to the Office of Attorney General, with $5 million of that coming from drug enforcement programs. It would also mean a cut of more than $1 billion to public education, with $719 million coming out of basic education funding; $57 million coming from early childhood education programs; $6 million would come out of public library funding; and Pennsylvania State System of Higher Education funding would be lowered by $54 million.
Human services and environmental programs would be hit by nearly $282 million coming out of human services programs, including $141 million from county child welfare programs and $92 million from mental health services. On the environmental side, $17 million would come out of the Department of Environmental Protection alone, including $11 million earmarked for environmental protection operations.
Additionally, non-preferred appropriations for the commonwealth’s four state-related universities – Pitt, Temple, Penn State, and Lincoln – as well as the Penn Vet School, which are only able to be made after the state’s budget is balanced, would be zeroed out.
According to Rep. Rick Saccone (R-Allegheny), one of the Legislature's more conservative members, the primary focus of the House Republican Caucus is less on straight across-the-board cuts and more on finding ways to plug the budget deficit with non-General Fund money currently sitting in unused special funds.
“If there are other ways to do it from these non-performing funds – that’s money that’s already been collected from the taxpayer and not being used – that would logically be the first place to look before you actually try to cut,” he said. “If you can’t get enough from that, then the next thing would be to cut. So, I think we have to let that all play out.”
While it might not be the first choice, Rep. Saccone noted he is not averse to large-scale cuts and budget policy changes, like moving to a zero-based budgeting model, to get out of the budget deficit cycle once and for always.
“Across-the-board spending cuts is one alternative,” he said. “There’s no reason why we should be spending more every year in a down economy when the taxpayers are really burdened by their taxes. We don’t even account for the money we spend already, so we need to get a handle on that.”
One proposal that currently has 29 co-sponsors and that some hope will gain traction during session days this fall is House Bill 1691, introduced by freshman Rep. Frank Ryan (R-Lebanon). It would require state government to cut its $3.7 billion General Government Operations spending by 10 percent across the board.
According to Ryan, the proposal will save $370 million in government spending but leave the state government with a generous $3.4 billion to run its operations. This would amount to an overall cut of four-tenths of one percent of the commonwealth’s overall $82 billion budget when federal funds are included.
“That’s the important point of this bill: It does not affect any program whatsoever, it affects staffing levels or general spending,” Rep. Ryan said of his legislation.
The proposal, he said, would help offset the need for the Senate-passed gross receipts tax, something he said has been met with distaste from House Republicans.
“This is the best time for us to help the economy of the commonwealth by unleashing the expenses on the state side by not putting a tax increase in,” he said. “It’s helping us from putting a gross receipts tax on Pennsylvanians, many of whom can’t afford to pay it.”
He added that while he is at this time supportive of the budget hawks’ plan to move money out of special funds and into the General Fund as a way to balance the budget, the deep cuts like those outlined in the 12 percent worst-case scenario model might not be the most prudent way to balance the state’s books.
“You cannot cut – I’ve written a book about this – you can’t cut other spending without getting at the cost drivers,” he said. “Sixty percent of the commonwealth lives paycheck to paycheck, and we’re screwing with their lives. We have a responsibility to do what’s right for them and not what’s right for us.”
Democrats are uniformly against any plan that would be balanced on spending cuts alone.
“I think it’s fiscally irresponsible for us to pass something that doesn’t factor in that we have a $2 billion structural deficit and we’re being threatened left and right with credit downgrades,” said Rep. Leanne Krueger-Braneky (D-Delaware), who sits on the House Appropriations Committee. “You can’t cut your way out of a $2 billion structural deficit.”
She said something like a natural gas extraction tax – which she has supported in the past – should be a part of the budget solution.
In the meantime, Krueger-Braneky put the blame for not getting something done in a responsible manner at the feet of House Speaker Mike Turzai (R-Allegheny) and the House Republican Caucus, which, she said, has been less than forthcoming with the details of any plan.
“We’ve yet to see any proposals from House Republican leadership on how to pay for (the budget) in a responsible way,” she said. “I think the responsibility is squarely on the Speaker right now for not putting anything to us for a vote, not calling us back into session. We’ve been on six-hour call for six weeks.”
Gov. Tom Wolf’s office is in complete agreement, noting the governor took urgent action earlier this week to move money from the Motor License Fund to the General Fund to keep the commonwealth afloat until Sept. 15 and make the fiscal year’s first payment to school districts.
“As Gov. Wolf has said, a failure to complete the budget and cover the $2.3 billion deficit would force the Commonwealth to run out of money and jeopardize funding across government,” said press secretary JJ Abbott. “However, no decisions have been made at this time.”
Wolf urged House Republicans to come back to session and complete the budget in a responsible manner with a sense of urgency given the short timeline for when the state’s General Fund will once again fall below zero without additional action.
Currently, the state House of Representatives is set to reconvene on Sept. 11.
Jason Gottesman is the Harrisburg Bureau Chief of The PLS Reporter, a news website dedicated to covering Pennsylvania’s government.