**UPDATE** 10:07 p.m.
Gov. Tom Wolf signed the 2016-17 budget revenue package, closing a $1.3 billion funding gap and wrapping up the second budget of his administration. The shortfall was made up through a mix of new taxes, tax increases, and one-time cash infusions.
**UPDATE** 5:34 p.m.
Late this afternoon, the PA Senate and House voted to approve the remaining budget revenue package in order to fund and complete the state’s $31.5 billion budget. Earlier in the day, both chambers reconciled their differences on what had been a $1.3 billion shortfall. The Governor announced he was prepared to sign the legislation into law when it reached his desk.
Original Post: 4:22 p.m.
As many of you know, on Monday, June 11th, 2016 Governor Tom Wolf allowed (without signature) the spending portion of the $31.5 billion state budget to become law at the stroke of midnight. This occurred despite the lack of requisite legislation to pay for it, creating an estimated $1.3 billion shortfall. Essentially, Pennsylvania was granted half of the budget, though it was not officially balanced nor supported with necessary revenue. As of last night, the most echoed questions in the Capitol rotunda were whether the bipartisan comradery which led to passage of this spending plan would hold together in order to pass a revenue bill , or whether Pennsylvania was once again heading full speed into the budgetary cul-de-sac.
Well, as of today, Wednesday the 13th, it appears that state policy makers and the Governor are steering clear of a cul-de-sac and additional credit agency downgrades for the Keystone State. Despite resistance from some corners in the House and Senate, this morning’s first order of business in the legislature was the creation of a House and Senate six-member bipartisan Conference Committee tasked with resolving the differences in the remaining so that a revenue bill can be sent to the Governor to accompany the spending package. This afternoon, the Conference Committee voted 6-0 to an agreed-to revenue package which then was returned to each chamber for debate and a floor vote.
The package being debated at the moment attempts to fill the $1.3 billion budgetary funding gap with approximately 58 percent recurring sources and 42% from one-time transfers and lapses within the budget structure. One of the one-time revenue hits stems from a tax amnesty proposal, expected to rake in $100 million. As for new revenue streams, the legislation includes higher or new taxes in a number of areas, including on cash winnings of the PA Lottery, digital online downloads (i.e. music) and on cigarettes, e-cigarettes, smokeless tobacco. There are no broad based taxes which are part of this agreement. All of this, combined with expected new revenue from expanded liquor sales and gaming, is expected to balance the 2016-17 state budget and bring it to a close.
In the coming days and weeks we will keep our clients apprised of developments as the budget is implemented and we prepare for the fall session when the General Assembly will return for an abbreviated period before the General Election.