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Politics & Government

Senators Return To Capitol, But Budget Deal Remains Elusive

The state Capitol building in Harrisburg as seen on June 20, 2017.

Pennsylvania senators returned to the Capitol on Monday but with no agreements in sight on the 17th day of a stalemate on elements of the state government's threadbare budget that, by all projections, will lack the tax collections to sustain it for an entire year.

Democratic Gov. Tom Wolf last week let a nearly $32 billion budget bill become law without his signature, even though budget negotiators say it is about $1.5 billion out of balance. Held up in the Legislature are measures to deliver approximately $600 million to Penn State, Pitt, Temple, Lincoln and Penn.

Here is a look at the differences between the various parties in the negotiations:



The governor says he wants a tax package big enough to avoid a downgrade to Pennsylvania's bruised credit rating. That, according to negotiators, amounted to roughly $700 million to $800 million in annual recurring revenue.

Wolf initially floated in February a $1 billion tax package that has been ignored by leaders of the House and Senate's Republican majorities. That package included imposing a new tax on Marcellus Shale natural gas production, restructuring the corporate net income tax to ensure out-of-state businesses pay it and expanding the sales tax to a few more services, including commercial storage and custom computer services.

Wolf also wanted to impose a fee on hundreds of municipalities that receive state police coverage.

Now, negotiators say tax increases under discussion include basic cable service, movie tickets, bank profits, telephone service and electric service.



Senate Republican leaders are backing a revenue plan based largely on borrowing, with smaller parts of it relying on an expansion of casino-style gambling through the state's licensed casinos and a tax package that is more modest than Wolf's proposal, according to negotiators.

Senate Republicans have had differences with Wolf and House Republican leaders. Gambling legislation brokered by Senate Republicans would hinge on Pennsylvania's casinos being able to bid on a satellite casino license allowing up to 700 slot machines and 100 table games at a new facility and paying licensing fees to operate casino-style gambling on websites and mobile applications.



Even though a huge majority of House Republicans voted for the nearly $32 billion spending bill, House GOP leaders have not guaranteed that the caucus will back a plan to fully fund it. Wolf can simply restrict program spending to make sure it balances, they say. House GOP leaders have been unwilling to be as flexible as Senate GOP leaders on Wolf's tax proposal, and they have countered with other provisions they want in a final budget agreement.

Two ideas advanced by the House GOP have been opposed by Wolf, a Senate GOP majority and most Democratic lawmakers. Those ideas involved allowing up to 40,000 slot machine-style video gambling terminals at thousands of bars and truck stops and privatizing more of the state's retail and wholesale wine and liquor system.

More recently, the House GOP advanced legislation that would seek savings in Medicaid benefits and require the Wolf administration to seek federal approval to impose tougher limitations on Medicaid benefits. Wolf opposes the bill, and it lacks Senate support.



Democrats, while a minority in the House and the Senate, are backing Wolf. Because of resistance from conservative Republicans, Democrats will be necessary to pass the major components required to fund the budget and have demands of any tax package they will support.

For instance, Democrats have pressed Republican majority leaders to allow a vote on a Marcellus Shale production tax, and House Democratic leaders say an increase in the personal income tax makes sense to solve the state's long-term deficit.

Meanwhile, some House Republican moderates are more in line with Democrats than their GOP leadership.