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Revenue puzzle remains in pieces

Budget law deadline here

HARRISBURG— It looks increasingly unlikely that Democratic Gov. Tom Wolf will have funding legislation on his desk before he must decide on a nearly $32 billion spending bill.

At midnight today, the spending bill becomes law without Wolf’s signature. Before then, Wolf can sign it, veto it or strike out some of the spending.

There was no agreement late Sunday night, the ninth day of a budget stalemate between Wolf and leaders of the House and Senate Republican majorities.

Senate Majority Leader Jake Corman says the sides are about $200 million apart on a roughly $2.2 billion revenue package to patch up state government’s tattered finances.

It’ll lean heavily on borrowing, but Wolf is seeking more in tax increases to avoid a credit downgrade.

Negotiators in Pennsylvania’s budget stalemate signaled that they were having difficulty reaching agreement in closed-door talks Sunday.

With the Legislature led by anti-tax Republican majorities, those discussions have centered on another big expansion of gambling in the nation’s No. 2 commercial casino state and borrowing roughly $1.5 billion against future revenues from Pennsylvania’s share of a landmark 1998 multistate settlement with tobacco companies.

Friction on Sunday revolved around Wolf’s insistence that lawmakers produce $700 million to $800 million in reliable revenue, such as tax increases, to help the state avoid another downgrade to its battered credit rating.

Senate Majority Leader Jake Corman, R-Centre, said the sides were a couple hundred million dollars apart on Sunday night and that a menu of tax increases could include cable TV, movies, bank profits, telephone service and electric service. Republicans put forward an $800 million package that Corman said would involve about $200 million in one-time cash.

“The governor has chosen he wants more recurring revenues, I understand that,” Corman said. “But we think we put a responsible package on the table that would allow us to balance the budget.”

Wolf also has pushed to slap a production tax on drilling in the Marcellus Shale, the natural gas reservoir that made Pennsylvania the nation’s No. 2 natural gas state.

House Majority Leader Dave Reed, R-Indiana, suggested to reporters that Wolf should start thinking about which parts of the spending bill to veto because Republicans were not willing to meet his demands.

“The administration has consistently said they need more revenue than some of the options that we provided and we, basically, at least from a House perspective, reached the extent of what we’re willing to offer,” Reed told reporters Sunday afternoon.

Pennsylvania has struggled with an entrenched post-recession deficit, and credit downgrades in 2012 through 2014 have left it with among the nation’s lowest credit ratings. The $1 billion-plus shortfall in the just-finished fiscal year was state government’s biggest since the recession.

The House and the Senate planned to return today after each held a voting session Sunday, largely as a sidelight to the private budget discussions.

Signing the entire appropriations bill or letting it become law on its own would be unconstitutional without the funding to underwrite it, Reed said.

“I don’t think the responsible thing to do would be just to let that budget become law,” Reed said.

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