UPDATE: Pa. lawmakers plan to use $1.3 billion in COVID-19 aid to prop up state budget

Ed Mahon of Spotlight PA and Cynthia Fernandez of Spotlight PA
Bartender Ray Epley, of Holy Hound Taproom, serves customers at the restaurant/bar in York City, Friday, June 12, 2020. Friday would be day one for York County entering into the green phase of Gov. Wolf's plan to reopen Pennsylvania following nearly three months of restrictions placed to mitigate the spread of the coronavirus. Dawn J. Sagert photo

HARRISBURG — Despite the pleas of restaurant owners, service providers and other industries, Republican leaders in the House have put forth a plan to use all $1.3 billion in remaining coronavirus relief aid to pay for the state budget.

The nearly $35.5 billion plan calls for using the money to fund state-employed public health and safety frontline workers, according to summary materials provided to House Republican members. The funds would go to agencies including the Department of Corrections, Pennsylvania State Police and the Department of Health, a spokesperson for the Republican chair of the House Appropriations Committee told Spotlight PA.

“This is agreed to,” said the spokesperson, Neal Lesher, when asked if the plan had the support of Gov. Tom Wolf and the Senate.

Lyndsay Kensinger, a spokesperson for Wolf, did not directly respond to the question, saying instead, “The administration is working with the General Assembly to complete a balanced budget by the end of November. It is critical for us to finalize the budget by November to avoid furloughs and any stoppage of critical payments to providers and grantees.”

Senate Democrats were involved in the negotiations, said spokesperson Brittany Crampsie. “The budget reflects the time of crisis we currently face,” she said in an email. “We will likely have some support for it, but we do not have a caucus-wide position.”

The House Appropriations Committee on Thursday approved the plan along party lines. The full House was expected to vote on the measure later in the day. If approved, it would then go to the Senate for consideration.

The plan also relies on transferring $531 million from special funds — including $185 million from a worker’s compensation security fund and $100 million from the state’s rainy day fund — to make up lost revenue without increasing taxes or borrowing.

The transfers are needed to make up for an estimated $1.8 billion budget deficit. Lawmakers could vote Thursday on the plan, which reduces spending by 2.2%.

The action comes after outside groups like restaurants, hospitals, social service providers and public utilities for months have urged Pennsylvania lawmakers to use more of the relief funds to support them and prevent small businesses from shuttering.

Guidance from the federal government says states can’t use CARES Act money as a way of filling in lost revenue. But the U.S. Treasury Department does give states broad discretion to use this funding to pick up payroll costs for state employees who spend substantial time responding to the pandemic. That, in turn, frees up revenues to pay for other expenses.

The list includes public safety, public health, health care, human services and similar employees.

More:York City's disaster declaration extended; in-person events canceled

More:Coronavirus pandemic: Here's what York County's data looks like

Nathan Benefield, vice president and chief operating officer of the conservative Commonwealth Foundation, said spending reductions and using money from special funds “are positive developments for taxpayers,” but the plan to use one-time federal CARES Act dollars could set the state up for more fiscal challenges and tax hikes in the future.

“[W]e leave a major budget hole for next year and set up a grim situation for the next budget,” he said, adding that there “was opportunity to do more there.”

Chuck Moran, executive director of the Pennsylvania Licensed Beverage and Tavern Association, said Thursday afternoon he was still waiting to hear if lawmakers would provide any aid to bars and restaurants.

“The industry definitely needs some type of bailout,” Moran said, adding that lawmakers had been considering grant funding for bars and restaurants. “Hopefully, they’ll remember what they had talked about in the past.”

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