Wolf to GOP: State’s finances will soon be ‘much more dire’

Associated Press

HARRISBURG — Democratic Gov. Tom Wolf warned House Republican leaders Tuesday that failing to fully fund the state budget will put Pennsylvania in “a much more dire financial situation” in the coming weeks.

Wolf’s letter to Speaker Mike Turzai, Majority Leader Dave Reed and six other House GOP leaders urged them to act quickly to fill the budget’s $2.2 billion revenue gap.

Wolf announced he authorized what he called “a very short-term” loan this week from the state’s Motor License Fund but expects that a lack of action will affect state programs and cause outside agencies to downgrade Pennsylvania’s credit rating, increasing borrowing costs.

“There has been robust debate about how to meet this challenge,” said Wolf, who is expected to seek a second term next year. “Time is not on our side, and now is the time to put statesmanship before anything else. There is too much at stake.”

A spokesman for House Republicans said Wolf’s release of the letter “speaks volumes” about his intentions to work with the caucus.

“His continuing to spend when the revenues aren’t there is what put us in the situation to begin with,” said House GOP spokesman Steve Miskin.

Lawmakers approved a $32 billion budget on June 30, and Wolf let it go into effect without his signature. A bipartisan bill to close the deficit by borrowing money and raising new taxes passed the GOP-majority Senate last month, but the Republican-led House has not acted.

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Wolf said the loan from the Motor License Fund will provide for a major payment to public schools that is due later this week. But he noted that the state treasurer has said he won’t allow further short-term borrowing without a balanced budget.

House Republican leaders have had little contact with Wolf, Democrats or Senate leaders over the past couple months, instead allowing rank-and-file members to float suggested solutions to the revenue shortfall. The House is due to return to session Sept. 11.

Treasurer Joe Torsella, a Democrat, said Tuesday the fund transfer was not a solution but just a way to buy time for lawmakers.

“The Legislature has the ability to pass a revenue package to pay for the spending they’ve already passed,” Torsella said. “Now they have a small window of time before the general fund reaches a critical point. I join with others across the commonwealth in asking the Legislature to responsibly address this problem.”

The Senate-passed plan would raise $1.3 billion by borrowing against tobacco settlement money; $100 million from a new extraction tax on Marcellus Shale gas drilling; $400 million from consumers’ utility bills, primarily natural gas service; and $200 million in license fees for expanded gambling.

About $600 million in annual payments to Penn State, Temple, Pitt and Lincoln universities and the University of Pennsylvania’s veterinary school are in limbo as a result of the funding stalemate.

The administration said the state Transportation Department will make $459 million in advance payments of Motor License Fund revenue to the general fund for state police costs. An additional $241 million will be loaned from the Motor License Fund to the general fund, repaid with interest by March 1. The administration said it had authority to make the loan without legislative approval.

Torsella said the transfer will keep the state’s general fund from going into the red until Sept. 15, when it will “fall as much as $900 million in the negative.” He said the state “cannot spend below zero, and would thus be unable to issue payments to meet the commonwealth’s needs at that time.”