Wolf blasts House GOP, says he’ll borrow to patch deficit

Associated Press

HARRISBURG — Democratic Gov. Tom Wolf said Wednesday he is tired of waiting for Republican lawmakers to produce a plan to wipe out a projected $2.2 billion deficit and will look to borrow against profits from the state-controlled liquor system to help patch it.

Wolf announced the move after efforts all but collapsed in the GOP-controlled House of Representatives in recent days to impose a new tax on Marcellus Shale natural gas production, extend the sales tax on commercial warehousing and nearly double the state hotel tax rate.

In revealing steps to borrow $1.2 billion, Wolf also attacked House Republicans in rare fashion, saying during a press conference in his Capitol offices they had repeatedly failed to deliver a tax package that he deemed large enough to deal with Pennsylvania’s stubborn post-recession deficit.

More: Collapse of Pennsylvania budget talks leaves higher ed aid in limbo

House Republicans and Democrats blamed each other for reneging on agreements to vote for a tax package, while Wolf accused Republicans of playing partisan politics ahead of next year’s election, when Wolf will seek a second term.

More: Opposition grows to warehousing tax amid Pennsylvania budget stalemate

Democratic Gov. Tom Wolf speaks to reporters in his offices in his first public appearance after letting a nearly $32 billion budget bill become law without his signature, despite it's being badly out of balance after revenue talks with lawmakers collapsed, Wednesday, July 12, 2017 in Harrisburg, Pa. (AP Photo/Marc Levy)

“Too many Republicans in the Legislature are more focused on the 2018 elections than on helping Pennsylvania succeed,” Wolf said. “They’d rather see me fail than Pennsylvania succeed. They’d rather protect special interests, they’d rather protect lobbyists and campaign donors than do the right thing. I’m not going to play their games anymore, so I’m drawing a line in the sand.”

More: Wagner urged blocking shale tax to deny Wolf re-election

House Majority Leader Dave Reed, R-Indiana, said Wolf is covering for Democrats’ “inability to get anything done,” while House Speaker Mike Turzai, R-Allegheny, said Wolf is refusing to lead and only capable of blaming others.

More: Pennsylvania takes credit ratings hit amid budget fight

Wolf said his moves will be immediate, coming three months into a stalemate over fully funding a $32 billion budget bill, approved by lawmakers June 30.

Wolf’s announcement seemed to mark an end to months of budget wrangling, along with massive casino-style gambling plans being floated in hopes of squeezing tens of millions of dollars more in casino license fees and gambling losses.

The House and Senate adjourned Wednesday, without plans to return before Oct. 16, and the Pennsylvania Liquor Control Board members said in a statement they had not discussed a proposal to borrow money but would cooperate with the governor’s office to explore it.

Left unclear is the fate of measures carrying nearly $600 million in aid to Penn State, the University of Pittsburgh, Temple and Lincoln universities and the University of Pennsylvania’s veterinary school and authorization for another $52 million for Penn State’s agricultural research and extension programs. Those measures remain stalled in the House, without money to pay for them.

Top Republican lawmakers did not oppose Wolf’s borrowing plan, although Senate Majority Leader Jake Corman, R-Centre, said he is worried about the consequences of ending long-standing state aid to the five schools.

“That will have a profound impact, one way or another, before it’s all said and done,” Corman said.

Wolf otherwise said he will try to trim the state’s workforce and costs to the best of his ability to save money and balance the budget. He said he would protect education funding, senior programs, opioid-addiction programs and economic improvement efforts. But he suggested that spending cuts also will be necessary, saying some items “are going to be harder to do.”

House Republicans have otherwise supported budget-balancing legislation to siphon cash from mass transit and environmental improvement accounts, a plan opposed by Wolf and the Republican-controlled Senate. The Senate in July had approved a roughly $500 million tax package that Wolf supported, but the House rejected it.

Republicans have complained that Wolf did not put money into reserve this year when it was clear the state faced a substantial deficit, although Wolf maintains he has shrunk the state’s workforce by 1,600 people in the past year to save cash.

Last month, Wolf postponed certain large payments to school districts and Medicaid insurers as the state’s deficit-strapped bank account scraped bottom.

Soon after, the Standard and Poor’s credit rating agency lowered its rating on Pennsylvania’s debt for the second time in three years, dropping Pennsylvania into the bottom five states it rates.