York reps say state budget deal may be near


Details of a possible state spending package emerged Monday, a sign that the monthslong budget impasse may soon come to an end.

York County lawmakers said they are hopeful the deal could be finalized by the end of the month.

"I'm optimistically hopeful," said Rep. Seth Grove, R-Dover Township. "It is looking like (we'll have a budget approved) by Thanksgiving."

Democratic Gov. Tom Wolf and leaders of the Legislature's huge Republican majorities said the momentum of closed-door talks has picked up.

State spending under the deal would rise to about $30.75 billion, up about 6 percent, or $1.7 billion, from last year's approved budget of just over $29 billion.

Details: Both sides — Republicans and Democrats — appear to get some of the things they have long said they wanted included in the deal, but they have had to make concessions.

Wolf wanted $400 million in new education funding, but the compromise is $350 million, an increase of about 6 percent, to $6.1 billion. There is no agreement on how to distribute the new aid to school districts.

The state also plans to shift some money around to meet its pension obligations and would increase the sales tax rate to lower school property taxes.

About $500 million from slot-machine gambling receipts would be put into a restricted account to pay for public school employee pension obligations. That money currently is passed along by school districts to homeowners as property tax cuts.

As for pensions, newly hired school and state government employees would get a diminished traditional pension benefit plus a 401(k)-style plan with a 2 percent contribution. The plan would save the state $12.5 billion in the coming decades, officials say.

"We need to make sure we take care of the core functions of government," said Rep. Kristin Phillips-Hill, R-York Township, adding the budget package also has to be fiscally responsible.

Taxes: To supplement the loss in property tax relief funds, the state sales tax rate would rise from 6 percent to 7.25 percent, a 21 percent increase, to generate $2 billion in new dollars, to be used to expand local school property tax cuts. There is no agreement on how property taxes in each school district would be affected.

But one key tax missing from the equation, and oft touted by Wolf during the campaign and since he took office, is a severance tax on gas drillers in the state.

House Democratic Whip Mike Hanna said Monday that leaders of the Legislature's Republican majorities remain unwilling to support a Marcellus Shale tax.

Under a 2012 law, the industry has paid a drilling impact fee of about $200 million a year.

A final deal would not include a severance tax on Marcellus Shale natural gas production.

Tax increases on cigarettes and on banks are also under discussion.

Framework: York's lawmakers said there are still fine details to be sorted out, but the outlook for a budget remains bright.

"I think there's a general framework that's been agreed to," Grove said of a budget deal. "I think everyone will get a win of some sort."

In the more than four months since the impasse started, nonprofit agencies, school districts and local governments across the state have been sending up signal flares as their reserves dwindled and they turned to creditors to keep afloat.

In October, York County commissioners approved opening a $20 million line of credit so it can maintain services through the end of the year.

"I obviously think the pain is being felt throughout the commonwealth, and that message is resonating," said Rep. Kevin's Schreiber, D-York City. "It seems we are positively moving in the right direction."

The Associated Press contributed to this report.

— Reach Greg Gross at ggross@yorkdispatch.com.