PA House to Hold Session on How to Fix State Budget That Includes Online Gambling

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The Pennsylvania House of Representatives prepared to return to Harrisburg for an unusual weekend session amid a three-week stalemate with the Senate and Democratic Gov. Tom Wolf over how to resolve a gaping hole in state government's $32 billion budget plan.

Amid wider disagreements over taxes, gambling and liquor policy, House Republican aides worked Thursday to prepare a no-new-taxes package that would borrow roughly $1.5 billion and raid hundreds of millions of dollars more from off-budget programs.

The forthcoming legislation ordered up by House Speaker Mike Turzai, R-Allegheny, could leave Wolf to decide which off-budget programs to tap, and how much cash to divert from each, up to a certain limit.

Talks with the Senate and Wolf's office were effectively on ice Thursday. House Republicans acknowledged that it was unclear whether their huge, albeit fractured majority can pass any sort of revenue package without help from Democratic lawmakers, who are backing Wolf's bid to secure a $700 million to $800 million tax package.

Wolf has maintained that some sort of tax increase is necessary to avoid another downgrade to a credit rating battered by the state's entrenched post-recession deficit. Another downgrade would make it more expensive for the state to borrow money.

Wolf let a nearly $32 billion budget bill become law last week after it was approved by huge House and Senate majorities. Combined with about $600 million in university aid still hung up in the Legislature, it amounts to a 3 percent spending increase for the fiscal year that began July 1, although it is projected to exceed state government's tax collections by more than $2 billion.

Leaving it unbalanced could force Wolf to freeze some government program spending, potentially squeezing schools and counties that administer social services programs.

In the meantime, moderate Republican lawmakers and Democrats are pressing for a severance tax on Marcellus Shale natural gas production, something that top Republican lawmakers have rejected.

Some rank-and-file Republicans question why an increase in Pennsylvania's 3.07 income tax rate isn't a better answer to the state's fiscal troubles than borrowing cash or hoping for help from another big expansion of casino-style gambling.

"At some point, there's going to have to be more options on the table than what our leaders are currently talking about," said Rep. John Taylor, R-Philadelphia.

Rep. Kate Harper, R-Montgomery, said she expected to oppose any plan that borrows $1.5 billion without imposing a severance tax on production from the Marcellus Shale, the vast reservoir that has made Pennsylvania the nation's No. 2 natural gas state.

"I don't think you should borrow money for operating expenses without exploring a severance tax," Harper said. "It doesn't strike me as a very sensible way to budget."

Sen. Robert M. Tomlinson, R-Bucks, said the income tax is not paid by retirees, and it is deductible on federal taxes, making it better than other ideas — such as taxes on utility bills or cable bills — that top lawmakers have discussed.

"I think the fairest and easier tax to do is the personal income tax," Tomlinson said.

Turzai — who has all-but declared his candidacy to challenge Wolf's bid for a second term in next year's election — upended weeks of negotiations on Tuesday when he abruptly pulled the House GOP from bipartisan discussions over raising taxes to help stitch together the state government's budget.

Turzai will need to stitch together support from enough Republicans, since Democrats will not back Turzai's plan, House Minority Leader Frank Dermody, D-Allegheny, said Thursday.

Turzai's plan "will still result in costing us a credit downgrade from Wall Street and tens of millions of dollars, and a lot more over time, and it doesn't solve the problem," Dermody said.

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