Pennsylvania’s long state budget nightmare is over.
Gov. Tom Wolf announced Wednesday that he will let a Republican-backed, $7 billion budget closure package take effect without his signature, effectively bringing a truce to a nine-month fiscal and policy war.
That truce will be short-lived, though.
The governor and state lawmakers will have to have a new budget – one in which the governor is seeking election-year tax increases to balance – in place by July 1 for fiscal 2016-17.
But today’s action averts a number of potential crisis points around the state, from schools that have threatened to close their doors early to Penn State’s planning for the closure of statewide agricultural extension services.
Wolf said he would not sign the bills because he is still not personally convinced they represent honest budgeting. But he said he can manage future shortfalls, should they occur in the last quarter of the fiscal year, by imposing spending freezes in various line items.
Thursday’s announcement was a significant about-face by Wolf, who just last week threatened a full veto of the GOP-authored package that he criticized as continuing a pattern of “smoke and mirrors”budgeting.
Wolf was left with dwindling options in recent days, however, as it was becoming increasingly unclear whether his Democratic allies in the House and Senate would be able to sustain such a veto.
Even public school leaders that Wolf has been working to help have called in recent days for the governor to concentrate on fiscal 2016-17.
Wolf sidestepped questions about the political pressure at his Capitol press conference, saying only that “I think, overwhelmingly, people wanted to do the right thing, and that’s what I’m responding to.”
Gov. Tom Wolf’s refusal to sign budget bill has a fascinating historical precedent
By allowing a state budget to become law without his signature, Gov. Tom Wolf did the political equivalent of washing his hands of what he described as an unbalanced spending plan.
It was also becoming clear that, in late March, there was little practical effect to continuing the fight for new program funds that very likely couldn’t be spent in this fiscal year.
Republicans, meanwhile, have argued that their plan, which would close out the current fiscal year at just over $30 billion, makes sense on a lot of levels.
It contains a $200 million increase in direct aid to public schools, albeit $175 million less than Wolf had wanted; it holds all taxes at current levels; and it increases state aid to Penn State, Pitt and Temple.
The Democratic governor and the Republican-controlled General Assembly have been locked in Washington-style partisan gridlock for this entire budget year, which started July 1.
State government has operated so far on a combination of Treasury waivers permitting the nuts and bolts state operations to continue without a budget, and, more recently, a partial budget that routed some dollars to cash-starved schools and human service providers.
The battle has pivoted primarily on two poles:
* Wolf’s aggressive demands for school funding and other spending increases, much of which the governor argues is simply a matter of accounting fixes needed to put the state’s fiscal house in order. Wolf has said he expects the current course to lead to a $2 billion gap between income and expenses in 2016-17.
* Conservative Republicans’ aversion to anything approaching the large tax increases that would be needed to achieve Wolf’s goals.
Wolf has proposed an increase in the state personal income tax from 3.07 percent to 3.4 percent retroactive to Jan. 1, 2016, as well as extending the state’s 6 percent sales tax to cable television services and a $1-per-pack hike in cigarette taxes.
Wolf was insisting, until today, on something closer to the $30.8 billion spending plan that he had agreed to with legislative leaders in December, before fiscal conservatives in the House effectively killed it.
Wolf has argued that’s the honest number needed to fund a state government that’s been running for too long on one-time transfers and other accounting maneuvers.
But the budget closure plan’s supporters have called the current package as good as lawmakers and Wolf can get at this late point in the fiscal year.
They have also argued it will help 2016-17 negotiations because all sides will start from a base spending number that’s about $700 million lower.
It now looks as if they’ve won this round.
Credit: Penn Live