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Pennsylvania to begin new fiscal year without budget, as Shapiro, lawmakers express optimism

The Pennsylvania State House chamber.
Matt Rourke

Work by Pennsylvania lawmakers to complete a new budget was on track to blow into the new fiscal year, with Democratic Gov. Josh Shapiro and top lawmakers still expressing optimism Thursday that closed-door talks are yielding progress, despite the missed deadline.

For Shapiro, it will be his second straight budget that failed to get across the finish line by the constitutional deadline of July 1 in Pennsylvania's politically divided government.

The Republican-controlled Senate recessed Thursday, planning to return to session after the weekend. The Democratic-controlled House planned to hold a voting session Friday before breaking for the weekend, returning Monday, said Beth Rementer, press secretary for House Majority leader Matt Bradford, D-Montgomery.

Shapiro in February floated what he called an “ambitious” $48.3 billion budget plan that relied on about $3 billion in reserve cash to balance it. A dominant feature is a $1.1 billion boost, or 14% more, for public schools, an amount that has drawn GOP objections that it would lead to quickly draining the state's massive surplus.

For their part, Republicans passed their own $3 billion tax-cutting plan, which Democrats said would have a similar effect of wiping out a projected surplus of about $14 billion.

In remarks on the Senate floor, Senate Majority Leader Joe Pittman, R-Indiana, said negotiators were working diligently and that he believed a budget could be finalized next week.

“I am quite confident that we have movement significant enough to allow the pieces of a budget puzzle to come together shortly after the constitutional deadline of June 30,” Pittman said.

Shapiro, at an unrelated event in Philipsburg on Thursday, said talks are productive and ongoing, and he expressed optimism that a deal would come together soon.

“We have had very productive, very honest dialogue and dialogue where every party involved understands that the only way we get this done is to compromise, and that is what we're working toward now," Shapiro said.

Negotiators have shared little about their closed-door talks.

The consequence of failing to get Shapiro’s signature on a new budget bill is losing some of the state's spending authority, particularly on discretionary payments, such as those to vendors, counties, public schools and grant applicants.

The impact of such missed payments generally takes until August to be felt by schools and counties. In a budget stalemate, the state is still legally bound to make debt payments, cover Medicaid costs for millions of Pennsylvanians, issue unemployment compensation payments, keep prisons open and ensure state police are on patrol.

All state employees under a governor's jurisdiction have continued to report to work and be paid as scheduled during budget stalemates in recent years.

For now, the state’s main bank account is flush with roughly $15 billion, and a Treasury Department spokesperson said the agency was working with Shapiro's administration to ensure the state makes its legally required payments should the fiscal year start without a signed budget bill.