Pennsylvania must start freezing spending, top senator says

08.22.17 | Bob Price

Democratic Gov. Tom Wolf should start freezing spending on various programs because the deficit-strapped state government soon will not be able to pay every bill on time, Pennsylvania's ranking state senator said Monday.

Since the recession, the state Treasury Department has reliably supplied cash infusions into the state's tattered bank account during low-flow periods of tax collections. But Senate President Pro Tempore Joe Scarnati said it would be irresponsible for the Treasury to loan more money while the state government lacks a balanced budget seven weeks into its fiscal year and unconstitutional for the state to spend it.

"He's got to start putting things in reserve now because you can't pay the bills," Scarnati, R-Jefferson, said. "You can't pay the bills. The checking account's empty. So as money comes in, what bills does he decide to pay?"

Pennsylvania state government is running on a nearly $32 billion budget bill that lawmakers approved June 30, the day before the current fiscal year began, even though it is badly out of balance. Wolf let the bill become law without his signature. Taxes still are being collected, and bills are being paid by the Pennsylvania Treasury, but the Republican-controlled House of Representatives has been unable to pass a plan to fully fund it.

Without a loan or an emergency revenue package, the state could face hard decisions within days or weeks.

On Monday, a couple dozen House Republicans met behind closed doors in the Capitol as they try to develop a response to the Republican-controlled Senate's $2.2 billion budget-balancing package, passed narrowly last month.

Wolf supports the Senate's plan, which revolves around borrowing $1.3 billion against Pennsylvania's future proceeds from the 1998 multistate settlement with tobacco companies, raising $400 million worth of taxes on consumers' utility bills and mounting another huge expansion of casino-style gambling.

However, House Republicans say they want to avoid borrowing cash or raising taxes to balance the budget, and are looking into tapping unused cash sitting in off-budget program accounts. For their part, House Republicans insist they are concerned about the state's finances, too.

"I think everyone in this building is concerned, and we have to come to a conclusion," said Rep. Kristin Hill, R-York. "But we have to come to a conclusion that is respectful of the taxpayers."

Wolf thus far has been silent about his plans to manage the state's expenses if the House does not pass a budget-balancing plan soon, or at all. Scarnati took a shot at the House, where the spending bill passed overwhelmingly.

"And now you don't want to fund it?" Scarnati said. "I find hypocrisy in that."

Failing to fully fund the budget, Scarnati said, would have a dramatic impact on public school funding, social services and programs that serve rural areas.

"It wouldn't be an acceptable alternative to the people of Pennsylvania if they looked at what those cuts really do," Scarnati said.

Treasurer Joe Torsella, a Democrat first elected in November, has said he may not continue loaning bigger sums to the state, questioning whether it is a responsible use of the department's short-term investment cash. Waiting in the wings is the threat of a downgrade to Pennsylvania's already-battered credit rating, thanks to its inability to resolve a post-recession deficit.