Pennsylvania uncertainty continues

On Monday another day passed with the question of how Pennsylvania is to fund its $1.3 billion budget deficit still unresolved as the Legislature went into recess and Gov. Tom Wolf continued to perpetuate the unusual situation of an unsigned yet unvetoed budget facing a midnight Tuesday deadline, when it is set to lapse into law without a funding package.

The governor claims that it is the Legislature’s responsibility to back the budget bill with a sustainable funding bill.

The crisis has resulted in the possibility of legal challenges and a downgrade to the state’s credit rating as the political debate continues.

Bi-partisan negotiators still working on the funding proposals told local media that the next 24-hours would be critical. The proposals’ main stalling points appear to be taxation on tobacco and cigarettes and the expanded online and slots gambling provisions, with which the House is happy but the Senate remains opposed.

“The next 24 hours will tell the tale of whether we are going to have an agreement or whether all sides retreat back to their own corners,” House Republican Majority Leader Dave Reed said after an hours-long meeting with Wolf and legislative leaders Monday.

Neither Reed nor other leaders would discuss what progress, if any, negotiators have made.

Gov. Wolf’s decision to neither sign nor veto the bill raises unprecedented questions, as the state constitution demands a balanced annual budget. There is also the threat of a downgraded credit rating for the state, a possibility flagged by rating agency S&P following Monday’s lack of progress.

Some of observers have pointed to a 1932 Pennsylvania Supreme Court decision as being relevant. In that issue, the court directed the state to plug a deficit by evenly cutting spending across all agencies until the expenses matched available revenues. Legally mandated expenses would be exempted from cuts in such an order.

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