Budget Update 10/30/17: Today the Governor approved the Admin, Tax, Fiscal, Gaming and Capital Budget bills:
- HB 118: Amends the Administrative Code implementing the 2017-18 budget & instituting future budget implementation; for administrative organization; providing for alternative judicial administration; and making related repeals.
- HB 271: Amends Titles 3 (Agriculture) and 4 (Amusements), extensively revising gaming provisions, in horse racing; in the area of horse racing; lottery & iLottery; in the area of general provisions; providing for games; & making repeals.
- HB 542: Amends the Tax Reform Code further providing for imposition of tax & for exclusions from tax; repealing provisions; for corporate net income tax; for realty tax transfer tax; for tobacco master settlement payment revenue bonds; & changes.
- HB 674: Amends the Fiscal Code implementing the 2017-18 Commonwealth budget & instituting future budget implementation; repealing provisions; making an editorial change; and making related repeals.
- SB 651: Act providing for the capital budget for fiscal year 2017-2018.
Original post 10/27:
Almost four full months following the passage of the state’s spending plan, the State Senate and the House of Representatives have finally tied up loose ends. Weeks came and went with rumors that a final deal was on the horizon, but Capitol insiders repeatedly had their hopes dashed when deals fell apart and leaders went back to the drawing board.
This past week was different. The House wasn’t even expected to come back to session and the Senate was only expected to position bills for a later time when the House would return. And return they did – sooner than expected – on Tuesday. Within a matter of hours, the final plan became apparent, and we’ve got your details.
The first of the “trailer bills” to reach the finish line, and arguably one of the most important, was the Fiscal Code. This bill directs how the spending plan is to be executed; without it, the legislature loses its ability to ensure money is allocated as intended.
Next up was the School Code bill, which still may not reach the finish line. There are rumors that the Governor will veto this bill for reasons non-germane to the bill. Which brings us to the Tax Code – a bill whose sole purpose is to ensure that there is enough revenue coming into the state’s coffers to pay for the spending plan, which hasn’t been balanced for four months now. The tax code was passed by the Senate on Wednesday night, leaving only two bills on the agenda: the non-preferred appropriations (such as the state-related universities) and a gaming expansion bill which was needed to help fund the remaining spending plan.
There has been much back and forth over the past four months on whether funding the state-related universities was an outdated function of our state government. There has also been the continued failure of gaming expansion. It was apparent that a standoff could occur between the House and the Senate. The House didn’t want to pass the non-preferred appropriations until they knew that the Senate would send a gaming expansion bill to the House. And the Senate didn’t want to budge until the House upheld their end of the bargain.
Historically, the Senate has not been fond of the gaming expansion package. Two years ago, a budget was balanced on the presumption that revenue from iGaming would be passed – it never happened. Earlier this summer, the Senate knew that one-third of its members were diametrically opposed to gaming and one-third had casinos in their districts that would be harmed by an expansion. That dynamic made it difficult to get a majority to vote in favor, so the Senate simply didn’t run the bill.
But the need for the overly optimistic amount of $225 million derived from the expanded gaming was necessary to fund key programs in the spending plan, which would include funding Pitt, Penn State, Temple and Lincoln. Their fates hung in the balance, and the Senate voted in favor of the gaming expansion bill allowing the House, after much debate, to send the bill to the Governor early on Thursday morning.
We leave you with one final thought as we take a budget break before gearing up for the 2018-2019 budget. Since 2018 is an election year, which includes elections for the Governor, half of the Senate and all of the House members running for office, trying to piece together a budget without any broad-based tax increase will be difficult at best. There are those who believe that the imbalance between spending and revenue will probably be above the $750 million figure unless PA sees an upswing in our economy. But we will save that for another day – late in June of 2018.
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