Legislative leaders in Harrisburg say they don’t expect a repeat of last year’s tortured budget process, when an impasse dragged on for 135 days and delayed billions of dollars in state funding to schools, counties and nonprofits.
“I believe there is a shared desire to complete this on time or as close to on time as possible,” Senate Majority Leader Joe Pittman, R-Indiana, said in a phone interview with TribLive.
“I think we’ll have something done by the end of June or the first week of July,” Senate Minority Leader Jay Costa, D-Forest Hills, added during a recent telephone town hall with hundreds of constituents.
Pennsylvania’s mandated deadline to pass a budget for the coming fiscal year is June 30 — just 17 days from now.
The state has missed its deadline in 14 of the past 22 years, including each of the last four. While many impasses were relatively short-lived and did not wreak havoc on state government operations or entities that rely on state funding, last year’s impasse inflicted widespread pain.
Some counties, schools, social service providers and others continued to feel impacts after the impasse ended in November and state funding started flowing again.
“Counties did suffer,” said Kyle Kopko, executive director of the County Commissioners Association of Pennsylvania, noting many had to dip into reserves or take out loans to stay afloat, while others laid off workers or suspended or scaled back programs.
Some of those actions had trickle-down effects, Kopko said. Dipping into reserves reduced the money in those accounts and, in turn, the amount of investment or interest income they could earn. Some loans came with lending fees that the counties wouldn’t have been on the hook for had the impasse not dragged on for as long as it did, and some fees were not reimbursed. Some temporary furloughs became permanent layoffs.
Many organizations contracted to perform health and human services for counties also were adversely affected, as some counties couldn’t afford to pay them during the impasse or opted to suspend or curtail services.
“A lot of the providers are so strapped for cash and have such thin margins. They can’t just go to the bank and say, ‘We’d like $1 million.’ Many are already tapped on their lines of credit,” said Richard Edley, executive director of the Rehabilitation and Community Providers Association, a health and human services trade association based in Harrisburg.
“They really pushed some systems right to the edge last year. They can’t do that every year.”
Westmoreland County borrowed nearly $12 million and furloughed more than 100 workers to stay afloat. Before taking those steps, the county froze hiring and allocations to some social service programs while also placing restrictions on workers collecting overtime pay. A dozen furloughs became permanent layoffs.
“The impact was obviously felt,” said Westmoreland County Commissioners Chairman Sean Kertes, a Republican from Greensburg. “You live and you learn from situations like that. We’re preparing ourselves.”
In April, the county took out an $18.5 million tax and revenue anticipation note for its child welfare agency, which works with — and pays — outside contractors who provide services to children and families.
Officials said at the time that the note would provide the county with upfront cash to pay vendors and address a lag in receiving reimbursement payments from the state. The county previously had borrowed money from itself. Now that money can remain in the county’s coffers, available for other needs and continuing to earn interest. State funding will cover interest owed on the note.
The county could use a similar note should the state have another protracted impasse, Kertes said. He doesn’t believe that will happen — at least not this year.
“After last year, I really believe we’re going to see some resolution sooner. I believe the delegation (of senators and representatives in Harrisburg) is going to work in our best interests,” Kertes said.
Allegheny County spokeswoman Abigail Gardner said the county had to take some “drastic measures” to stay afloat during last year’s impasse, losing out on some investment income while using money from its operating budget to pay for services that later would be reimbursed by the state.
“We are not anticipating as many issues in Harrisburg this year, but if the budget is more than 30 days late, we may have to revert to implementing some of the same measures we took last year, like a hiring freeze, to maintain cashflow,” Gardner said.
Pittman doesn’t believe that will be necessary this year.
“We want to avoid a protracted impasse,” he said. “It’s in no one’s interest to have an impasse like that because it has significant impacts to communities across the state.”
The House passed Gov. Josh Shapiro’s proposed $53.3 billion spending plan in mid-April — the earliest it has initially passed a spending plan in nearly a decade. The plan would require using about $4.6 billion in reserves to balance. That would eat up more than half of the state’s so-called rainy day fund, formally known as the Budget Stabilization Reserve Fund.
The spending plan also relies on collecting revenue from three sources that have been debated in Harrisburg for years but have yet to gain approval. The sources include a projected $766 million from taxing and regulating video skill games, $729 million from legalizing marijuana for recreational use and $80 million from raising the state’s minimum wage to $15 an hour.
Republicans have expressed concern about what they see as exorbitant spending and using so much of the state’s reserves to balance the budget. Some Democratic leaders, such as House Appropriations Chair Jordan Harris of Philadelphia, say they are waiting to hear what Republicans would do instead.
“My chamber has showed what we are willing to do and what we can do,” Harris said. “It wasn’t like these were easy things to do. At some point, (Republicans in the Senate) have to tell us if they want to cut teachers out of classrooms and cut more people on health care.”
The governor’s office and leaders in the House and Senate have been in regular communication, Pittman said.
“We’re having healthy conversations at this point at various levels,” he said, describing the gap between projected spending and incoming revenue as a “big hole” that needs to be addressed. “We are continuing to look for ways to contain the growth of spending at the state level … (and) clean out the couch cushions of bureaucracy.”