Legislative sources say that the next move to break Governor Wolf’s budget shutdown, now in its 16th week, will be to give the governor a piece of his original state spending plan: a higher sales tax in exchange for a reduction in local property taxes, while remaining firm on other key items. The plan amounts to a dollar-for-dollar sales tax and property tax exchange. It would come with one major provision; that future local tax increases would have to be approved through referendum.
"We’re still insisting on pension reform and liquor privatization," the source said. "The severance and the personal income tax are still absolutely off the table."
To gather political power behind the plan, Republican leaders are reaching out to their Democratic counterparts weary of standing by a governor who characterizes anything less than a spending plan with monumental broad-based tax increases as gimmickry. His unwillingness to compromise has forced rank-and-file Democrats into indefensible votes against even temporary funding of vital social services.
Speaking at the PMA headquarters at the Monday Morning Briefing, Rep. Seth Grove (R-York) said that he believes more Democrats are ready to come over and that the final budget would be a "General Assembly budget." Nine House Democrats broke ranks with the caucus on recent stopgap votes. "There is no middle ground with this guy," Grove said of the governor. "He’s not dealing in reality."
He’s not dealing transparently either. Grove said as of October 15 the state spent $27.5 billion dollars — federal as well as state dollars — so far this fiscal year, spending with no legislative oversight.
"State employee salaries are covered given the court ruling that said they have to be paid during a budget crisis," Grove said. "But what authorizes him to spend some federal dollars and not others? What spending guidelines are they following? They can increase spending for benefits and other programs and we’ll find out about it when they ask for even more taxes next year."
"How can the executive branch spend tax dollars in the absence of a legislative appropriation?" asked PMA President David N. Taylor. "By spending unilaterally, the Wolf Administration is precipitating a constitutional crisis."
Schools need a budget in place to receive funds, however, and they are beginning to panic. It’s not just the traditional public schools at risk, but hundreds of charter schools that receive funding through their local school districts. Many districts have reduced funding to their local charter schools, while some have stopped it altogether even though state law mandates the payments. Even educational improvement tax credits, dollars that are not general appropriation funds, are being held hostage by the Wolf administration; threatening the success of the program and the affiliated schools/organizations that rely on the private sector investment.
The Associated Press recently reported that employees at Fell Charter Elementary School near Scranton would work without pay starting in November. The school is also considering going to four day a week schedule. Other schools face a similar future in the imminent future.
Executive Director of the Pennsylvania Coalition of Public Charter Schools, Robert Fayfich, says they have no place to turn since they’ve been told by the Department of Education that it would illegal for them to shut down. "This (impasse) has definitely exacerbated the friction between the charter and the public schools," Fayfich said.
The charter schools recently approached the Department of Education for a re-direction of $45 million of the state’s share of gaming receipts that go towards local property tax reduction. Last week the Pennsylvania School Boards Association (PSBA) filed an action in Commonwealth Court to prevent the re-direction. PSBA argues that the school districts have already accounted for that money in their budgets. Near the same time, the Treasurer Timothy Reese complied with a request from Senate Democrats to halt the re-direction of the funds.
The fiscal pressure on the districts is even worse than during the last prolonged budget impasse in 2009, according to Steve Robinson, spokesperson for the PSBA. "In 2009, the pension costs were just beginning to be a problem," Robinson said. "Now the costs are really getting to be a big drain."
None of this ever had to happen. The budget vetoed by the governor at the end of June increased the basic education subsidy and targeted pensions costs with no loss of benefits for current employees. The budget would also have raised additional funds with no taxes by dismantling the Liquor Control Board (LCB) and the entire state monopoly on alcohol sales, which has a late been going through some transparency problems of its own. For more on that, click here.
This past week the Erie School District was denied by the state Treasury for the request of an interest-free loan, the same loan given to House Democrats back in late-July. If this denial doesn’t speak to just how highly politicized this budget impasse has been, nothing will. Here’s to hoping a "General Assembly budget" can be successful, breaking the deadlock once and for all.