Pennsylvania lawmakers unveil two-part budget plan

Pennsylvania lawmakers unveiled a two-part budget strategy this week as uncertainty over the state’s tax revenues grows.

With filing deadlines extended until July 15, the extent of the budget deficit – which Gov. Tom Wolf’s administration projects could exceed $4 billion – will not be known, making it difficult for the Legislature to deliver a yearlong spending plan by June 30.

“Recognizing that state revenues are being drastically impacted by the COVID-19 crisis and shutdown response, legislative leaders are moving forward with a temporary budget,” said Mike Straub, spokesperson for House Majority Leader Bryan Cutler, R-Lancaster, in an email to reporters on Tuesday. “The plan is to fund the state for the next five months and then come back to the table to finish a separate budget for the final seven months of the fiscal year.”

Wolf’s economic shutdown, imposed statewide on March 23, exacerbated the uncertainty – even as pandemic restrictions are being lifted in most regions. More than 1.8 million residents have applied for jobless benefits over the last 10 weeks, while revenue collections dropped 50 percent in the month of April alone.

Revenue Secretary Dan Hassell said delayed filing deadlines undercut the monthly estimates by $1.7 billion – a figure he says will rebound when payments come into the department next fiscal year. About $395 million of the shortfall, however, is due to reduced economic activity.

The news generated some wary reactions Tuesday. The Commonwealth Foundation, a free market think tank based in Harrisburg, said the stop-gap measure pushes key decisions about cutting spending or raising revenue until after the November elections.

“The longer we delay in addressing the budget deficit, the greater the likelihood of having to raise taxes on families who cannot afford another financial burden,” said Nathan Benefield, the foundation’s vice president.

The $25 billion five month measure freezes spending at its current levels while lawmakers wait for delayed tax revenues to roll in – as well as any forthcoming federal aid that Congress may negotiate in the next coronavirus relief bill, anticipated in June. The legislature will also pass bills that appropriate about half of Pennsylvania’s $3.9 billion cut of CARES Act funding. Both chambers will vote on the plan's supporting bills this week, Straub said.

Wolf told reporters Tuesday that whatever the budget conclusion may be, it will "consider the unusual circumstances we find ourselves in."

"The hope is we are moving with the General Assembly in a fairly good order to get to a budget," he said. "All of us struggling to know what exactly the financial situation is going to look like over the next year, we are going to do, I know, some unusual things."