Wolf says he’s optimistic, insists he’s doing ‘right thing’

Associated Press

HARRISBURG — Democratic Gov. Tom Wolf said Wednesday he was optimistic about getting a good budget agreement and that his administration was acting legally in its handling of an unbalanced budget, the second time in two years.

This year is different than last year, when lawmakers remained in Harrisburg and negotiators hammered out a revenue deal in three days after Wolf let an unbalanced budget bill become law.

Lawmakers this week were sent home to their districts and officials were giving no details Wednesday — the 12th day of a budget stalemate — about the status of negotiations.

In his first public appearance since letting a nearly $32 billion budget bill become law without his signature at midnight Monday, Wolf reiterated to reporters that he was optimistic that a revenue deal would get done.

Wolf consistently refused to discuss details of negotiations around a $2 billion-plus revenue plan said to be necessary to balance the budget, and he brushed aside questions about why he was optimistic and how an unbalanced budget could affect government operations.

His administration acknowledges that there is no case law that suggests letting an unbalanced budget bill become law is legal, but Wolf maintained that he believes it is on solid legal ground.

“I’m not the attorney, but we are taking a close look at what we can do constitutionally and I’m very comfortable that we’re doing the right thing,” Wolf told reporters.

When they resume, talks may not have the same urgency as before Monday, when they collapsed despite negotiators saying the sides were close to an agreement.

House Republican leaders were at odds with Wolf, Democratic lawmakers and Senate Republican leaders over Wolf’s pursuit of a $700 million to $800 million tax package, an amount he deemed to be big enough to avoid a downgrade to Pennsylvania’s bruised credit rating.

House Republicans had been unwilling to offer a tax package even half that size, negotiators said.

The state was put on notice last week by Standard and Poor’s that it faces another credit downgrade if it passes a budget that relies on optimistic assumptions or one-time cash sources.

House Majority Leader Dave Reed, R-Indiana, was the only caucus leader to protest Wolf’s move to let the budget bill become law. Wolf should have used his line-item veto power to strike enough spending from the budget bill to ensure it balanced with the state’s existing tax collections, Reed said.

Asked Tuesday if the budget bill was unconstitutional, Reed said “that’ll be for the courts to decide.” Last year, Reed had not protested.

As of Wednesday, there no word of any lawsuit to block spending under the two-day-old budget law.

Without a revenue agreement, Wolf will need to put money in reserve, Democratic lawmakers said.

“He’s going to have to use budgetary reserves,” House Minority Leader Frank Dermody, D-Allegheny, said Monday. “You can’t spend what you don’t have, what you haven’t raised and what you haven’t provided for in real, recurring revenue that is acceptable.”

Tax increases under discussion included basic cable service, movie tickets, bank profits, telephone service and electric service.

Besides a tax increase of some level and sort, the revenue package that had been under construction in closed-door negotiations was to rely primarily on borrowing and involve another big expansion of casino gambling in the nation’s No. 2 commercial casino state.

The scale of long-term borrowing being eyed to prop up the state’s general operations is unheard of, say current and former state officials.

Hung up on budget negotiations is roughly $140 million in casino revenue that flows annually to counties and municipalities that host casinos. Lawmakers aim to revive a mandate struck down by the state Supreme Court last year.

Also stuck in the Legislature were measures carrying approximately $600 million in aid to Penn State, Pitt, Temple, Lincoln and Penn.