HARRISBURG — Lawmakers are scheduled to return to Harrisburg for a rare weekend session to try to wrap up the nearly two-week-late Pennsylvania budget.
It’s unclear whether Gov. Josh Shapiro and the legislative leaders negotiating the final deal had finished their work as of Friday afternoon. Spotlight PA observed a handful of top lawmakers and their staff in the Capitol this week as last-minute talks continued behind closed doors.
Pennsylvania statute dictates that members must pass a spending plan by June 30, and according to the state constitution, it must be balanced.
In April, the lower chamber passed a bill to implement Shapiro’s $53.3 billion budget pitch with bipartisan support. It awaits action in the state Senate, which has yet to pass a full spending plan.
Public action temporarily lost steam last week as the GOP-controlled state Senate adjourned its session on the day of the deadline, earlier than planned. Democratic leaders in both chambers accused Senate leaders of “not finishing the job.”
Still, both chambers now feel confident enough that a deal is in reach to plan for the weekend votes.
“Progress [on the budget] has been made to the point where a return to session is warranted,” state Senate Majority Leader Joe Pittman (R., Indiana) wrote in an email, viewed by Spotlight PA, to his caucus Wednesday night.
The state Senate is scheduled to return Friday to hold committee votes at 8 p.m. before holding a full session Saturday afternoon. The state House is slated to return Saturday night for committee votes before both chambers return Sunday at noon.
A spokesperson for Shapiro told Spotlight PA in a text Friday afternoon that the governor would be working out of the Capitol all weekend while the legislature is in session. She said there were not yet details to share regarding a potential budget deal.
Some top lawmakers indicated in recent weeks that in the interest of reaching a deal, several of the most partisan issues members have been grappling with would be excluded from negotiations. These include revenue proposals to regulate and tax marijuana, increases to the state’s minimum wage, and overhauls of the state’s public education funding scheme.
Leaders are staying quiet about whether another priority, regulating and taxing skill games, will be in a final deal. The state Supreme Court recently ruled that the machines are illegal; if lawmakers don’t pass legislation making them legal by October, skill games across the state will be subject to seizure.
Pittman noted in a late June radio interview that there’s no penalty if the legislature doesn’t act on skill games, saying, “From a legal standpoint, we don't have to because us not acting means these machines are illegal.”
Two key items were unresolved as of Thursday, according to three sources close to negotiations not authorized to speak on the record: the fate of the state’s data center sales tax exemption and the elimination in whole or in part of a state tax on electricity utilities.
The former would kill an expensive tax break for an industry that is becoming increasingly unpopular among voters. The latter, lawmakers hope, would help reduce rising utility prices for consumers by up to $200 a year.
But both have drawbacks. The tax exemption for certain data center purchases has powerful allies in the business and labor sectors. In a letter viewed by Spotlight PA, the Allegheny Conference on Community Development and the Pittsburgh Regional Building Trades Council asked legislators to oppose a deal that ended the exemption.
“Repealing the sales and tax exemption will not stop data centers from being built,” the organizations wrote. “It will simply ensure that more of them are built outside Pennsylvania, taking with them the construction jobs, supply-chain opportunities, long-term economic activity, and future tax revenues they generate.”
Repealing the electricity tax, meanwhile, could cost the state up to $1.7 billion in annual tax revenue at a time when it’s struggling to keep up with basic human services spending, let alone expand spending on education and transit.
Policymakers acknowledged throughout negotiations this year that — despite the state raising more than expected in the just-ended fiscal year — pulling from the state’s $8 billion emergency funds to offset rising costs could be inevitable. However, Pennsylvania budgets have also historically used accounting tricks, like shifting costs forward or deliberately underbudgeting for key services, to balance the books.
Counties, schools say they can’t afford another impasse
This is the commonwealth’s fifth straight late budget. They’ve ranged from fashionably late affairs in which policymakers took just a few extra days to iron out the details to multimonth impasses that stretched county, school, and nonprofit finances to their limits.
In recent years, lawmakers in both major parties have framed their fiscal tardiness as the cost of doing business, arguing that a good deal sometimes just takes time to hammer out.
“We would love to have that deal done on June 30,” state Rep. Jordan Harris (D., Philadelphia), who chairs his chamber’s Appropriations Committee, told reporters last year before the legislature blew the deadline. “But if that deal is, you know, a few days after June 30, but it reflects our priorities, I think that is a win for all of Pennsylvania.”
Around the same time, Pittman said, “We have seen this movie before, and on July 1, the sun will come up, and I don't think the good people of Pennsylvania will see any notable difference in their daily lives.”
State lawmakers face few immediate consequences for a delay. Most state-run services, like parks and prisons, remain open when there is no budget, and state workers get paid no matter what — including lawmakers and the governor.
That reality, combined with a divided state legislature that disagrees over fundamental questions like whether state spending should grow, meant lawmakers didn’t pass last year’s budget until November.
But late budgets have real consequences for counties, schools, and a host of nonprofits that rely on state dollars to keep the lights on and pay their workers to teach kids, care for individuals with mental illness, or provide a haven to survivors of domestic violence.
Kyle Kopko, executive director of the County Commissioners Association of Pennsylvania, said counties typically build a fiscal cushion through interest accrued on their bank accounts. But when state payments are delayed due to an impasse, those reserves get spent down, and those interest payments disappear.
That happened last year. Some counties were forced to get loans to cover costs, which means they’re now shouldering debt service costs.
Kopko said one county is already curtailing services (he declined to say which), while others may start limiting purchases and travel within the first two to four weeks of a late budget. And even when a budget passes, it may take weeks for state payments to finally hit county bank accounts.
“The ability to handle a delayed budget decreases each year, particularly when we have this succession of late budgets,” Kopko said.
In the days following this year’s missed deadline, education advocates also pleaded with lawmakers to avoid another extended impasse.
“Delayed state budgets and long impasses only serve to prevent school officials from thoughtfully planning how to use new resources to close opportunity gaps for students,” Aaron Chapin, president of the Pennsylvania State Education Association, said in a statement.
Like counties, many schools were forced to take on loans and cut services last year to continue operating, leaving taxpayers on the hook to pay the interest on that debt.
That level of statewide impact likely won’t be felt again in classrooms unless budget talks drag into the school year.
Kopko told Spotlight PA that 17 of the last 30 state budgets have been late, according to numbers crunched by his organization.
“We have a culture that promotes this type of mentality,” Kopko said. “And it's wrong.”
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