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Budget savings are not all so clear cut

HARRISBURG — Democratic Gov. Tom Wolf promised $2 billion in cuts and savings in his new proposal to fix Pennsylvania state government’s deficit-riddled finances, but his definition of cuts and savings is turning out to be broad.

Wolf’s big promise of austerity was tailored to a Republican-controlled Legislature that has rejected billions of dollars in tax increases Wolf sought the past two years to wipe out Pennsylvania’s post-recession deficit and fix disparities in public schools.

The Wolf administration hasn’t given precise details about every item in its $2 billion tally, but more than half of it arguably is not a cut or savings, strictly speaking.

Many items will need legislative approval, and some will be politically touchy. For instance, it counts perhaps hundreds of millions of dollars in cost avoidances that might have materialized anyway, such as revisions in cost projections for medical care under Medicaid.

It also includes sources of money as varied as, say, a transfer from an off-budget workers’ compensation fund. One cash source may not be politically polarizing: netting nearly $110 million more by drawing down federal Medicaid money to match a higher assessment on insurers that administer the program.

Then there are items that Republican lawmakers may not like.

The administration predicts that it could get a $200 million lump sum by effectively using the huge Pennsylvania Farm Show Complex in Harrisburg to secure a 29-year loan. It says it could reap $95 million in higher income tax receipts if the Legislature raises the minimum wage to $12 an hour, up from $7.25 an hour.

It also projects $63 million by assessing municipalities a $25 per-person fee for receiving free full-time state police coverage that is, quite possibly, unconstitutionally subsidized by state highway improvement funds.

Wolf’s press secretary, J.J. Abbott, said the cuts and savings category includes items that help address the deficit and ease the burden on general tax collections.

The $2 billion basket does not, Abbott said, include some budget-balancing measures of which Wolf has been particularly critical, but that have been approved in recent years by Republican lawmakers.

That has included cutting benefits to the poor or vulnerable, cutting aid to public schools or postponing large payments owed to counties, insurers and school districts.

Overall, Wolf is seeking 3.2 percent more money than approved in this year’s spending plan, including cash to fill a current shortfall. It also counts on $1 billion in tax increases on Marcellus Shale natural gas production, commercial storage, custom software and insurers, and $250 million from an expansion of gambling that the Legislature has yet to approve.

The governor’s $32.3 billion plan is spare in some places.

Nursing homes and homecare workers say they are being asked to go without an increase in their Medicaid reimbursement rate for the third straight year. Some county social services would see no increase after years of scrimping. And higher education institutions would see little to no increase.

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