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Can Work Groups Solve the State’s Budget Mess?

In early March, Governor Wolf proposed his ambitious vision for Pennsylvania, with promises of increased education funding, property tax reductions, and a variety of income, sales and shale gas tax hikes to support his plans. Supporters called his proposal bold, and opponents called the plan dead on arrival. All agreed that the proposal was historic in one way or another, and all agreed that the state was facing a budget deficit of at least $1.8 billion.

For weeks, Wolf’s cabinet pushed the message of a holistic budget that had to be taken as an entire package and not pulled into separate pieces. During the House and Senate budget hearings last month, Wolf’s administration and legislative Democrats insisted the budget had “to be considered as a whole.” And Republicans turned that into a “take it or leave it, all or nothing” budget.

Republicans pointed to the confusing interrelationships, and the separate pieces as each being onerous or deceptive in and of themselves. Following the Governor’s budget address, the House and Senate spent five weeks with hearings about the programs of state agencies.

Last week, Wolf and Republican leadership met formally for the first time to begin the budget negotiation process. Participants in that meeting agreed to form staff working groups to focus on various issues and pieces of the budget that could result in getting a final package passed.

Budget working groups of lawmakers on both sides of the aisle along with members of the Wolf Administration are now being set up in hopes that a deal can be negotiated to move the state forward. House Democrats said this week that they saw room to modify the Governor’s proposals.

Nevertheless, there was no full agreement on what bipartisan work groups would be established. Wolf’s Chief of State Katie McGinty said the Administration wanted to center discussions on the Governor’s budget priorities – education funding, severance taxes on natural gas drilling, and reducing property taxes. Legislative leaders like House Majority Leader Dave Reed of Indiana County have said they expect work groups to consider pension reform, liquor privatization, and property tax reform.

Democratic legislative leaders were not invited to be part of the meeting. Wolf said last week he doesn’t expect an on-time budget, and hinted of a potential stand off, lasting through the summer and fall, but Republicans say they will pass a balanced budget before the state’s fiscal year ends at midnight June 30. Wolf’s spokespeople said a final budget that addresses the governor’s priorities is more important than timing.

At this point, there are not likely any Republican votes for the Governor’s budget as a whole, and Democratic leaders are not willing to suggest their caucuses would be close to unanimous in support of that plan.

This week, Senate Majority Leader Jake Corman said he expected a pension bill to be introduced in the coming weeks. House Republicans have already passed a liquor privatization bill, and this week too – perhaps significantly – Senate President Pro Tempore Joe Scarnati said he will co-sponsor legislation to privatize the state’s liquor system.

After this week’s round of budget meetings, both Republican leaders told ERG that they felt positive about the discussions. Several Cabinet Secretaries involved told ERG that there appears to be willingness on both sides to get the major issues resolved and avoid Washington-like gridlock.

If actions are examples, a House Republican property tax plan that was scheduled for a vote on Tuesday was delayed until May to give time to further discussions with Wolf and his staff before moving forward.

And in the Senate, Committees unanimously approved three cabinet picks for consideration by the full Senate in early May. These include Leslie Richards for Secretary of Transportation; Pedro Rivera as Secretary of Education and Ted Dallas, Wolf’s pick for Secretary of Human Services. Other cabinet confirmation hearings have been set for agencies, including Agriculture, DCNR and DEP.