All the tough talk from the governor and his administration last week gave way to “doing the right thing,” as Gov. Tom Wolf announced he would allow most of the supplemental budget bills sent to him last week to become law, putting an end to a nearly nine-month budget impasse.
However House Bill 1801 will do so without Wolf’s signature because he says the spending plan, in his estimation, “doesn’t add up” and “is not in balance.”
“All these calls to do the right thing, to do the right math here in Harrisburg, have gone unheard, so I cannot in good conscience sign this bill,” said Gov. Wolf on March 23.
“But to allow us to move on and face the budget challenges of 2016-17, I am going to allow HB1801 to become law,” Wolf said. The bill will become law on March 27.
Wolf then ran through the litany of programs and services that will now have enough money to continue to operate for the remainder of the year, all of which he said will not have enough funds available to them next year “if Harrisburg doesn’t change its ways.”
And the threat of a veto override didn’t force him to seek an option different than the one he promised last week, and during the several days since he received the budget bills.
“I think, overwhelmingly, people wanted to do the right thing, and that’s what I’m responding to,” said Wolf.
When pressed on the matter and asked if legislative Democrats said they might override a veto due to concerns about school funding, Wolf answered, “I received pressure to do the right thing.”
According to Wolf and GOP leaders, the $30.031 billion budget finalizes the current 2015-16 Fiscal Year budget.
“We obviously are very happy with the news that the governor has announced that he will let the budget impasse come to an end,” said House Majority Leader Dave Reed, R-Indiana, at a state Capitol news conference on March 23.
“This is certainly long time coming; we’re certainly hopeful the governor sticks by his comments today and allows the budget to become law and we can bring this 15-16 saga to an end,” added Senate Majority Leader Jake Corman, R-Centre.
The supplemental spending bill restores the funding Wolf blue-lined as part of his partial veto of the budget on Dec. 29, including more than $3.147 billion in basic education funding, $939.4 million in state correctional institution funding, and nearly $1.87 billion in Medicaid Capitation funding. Additionally, the supplemental appropriations bill increases public school funding by a total of $200 million compared to the FY2014-15 budget.
However that last figure might not be what ends up getting out to school districts.
Wolf said he intends to fully veto a Fiscal Code bill associated with the GA bill. The Fiscal Code directs how much of the spending in the GA bill is spent.
Components within the Fiscal Code bill affecting the way the administration proceeds with its Clean Power Plan, as well as new oil and gas well regulations, were two of the primary reasons for his veto, Wolf said.
The Fiscal Code bill also contained a new funding formula that would have been used to drive out the $150 million in added basic education funding and a $2.5 billion school construction borrowing plan. That borrowing plan would have delivered construction reimbursements, through the state’s PlanCon program, to school districts throughout the state that have been on a waiting list to receive that money.
Wolf spokesman Jeff Sheridan said the PlanCon borrowing also prompted Wolf’s veto, with Sheridan describing the plan being “prohibitively costly to issue due to inflated debt costs resulting from the lack of any concrete steps in the current budget to address the structural deficit.”
“Obviously the most pressing thing is PlanCon,” said Corman when asked about the impact of a Fiscal Code veto.
The GA bill includes a one-time roughly $289 million reduction in the existing line item for those construction reimbursements, a reduction that would have been offset by the PlanCon borrowing. A veto of the Fiscal Code means no PlanCon borrowing, but the $289 million reimbursement cut remains in place in the GA bill allowed to become law. It also turns out the current budget is out of balance by roughly the same amount ($290 million), according to the Wolf administration, which intends to ensure the one-time cut in the GA bill isn’t covered by the Fiscal Code’s PlanCon borrowing.
So despite what would have amounted to a $200 million increase in education funding for public schools if both the GA and Fiscal Code bills had been enacted, the budget that will be enacted will represent, effectively, an $89 million reduction in funding for public schools.
Still, since Dec. 29, the state’s public schools have been operating with about $3 billion less than they received last year due to Wolf’s line-item veto of basic education funding. The nearly $3 billion infusion of funds was welcomed by the Pennsylvania School Boards Association (PSBA).
“We think the budget effectively becoming law on Sunday, without the governor taking any action on it, is still a good thing,” said PSBA spokesman Steve Robinson. “Schools were in dire need of funding.”
“But we also realize that without a Fiscal Code, there are a lot of things that still need to be addressed, including PlanCon,” added Robinson, who noted also needing attention are pension reform and reimbursing districts for interest incurred due to borrowing during the impasse.
“There’s a lot of work that still needs to be done, but the immediate crisis has been averted and schools will hopefully not have to close doors with the money starting to flow again,” Robinson said.
The state’s largest teachers union also welcomed the money, and in an equally measured manner.
“This isn’t the kind of budget that our schools need or that our students deserve, but it keeps our schools open and ensures that Pennsylvania’s students can finish the school year without the threat of their schools shutting down,” said Pennsylvania State Education Association President Jerry Oleksiak in a statement. “It’s unfortunate that we’re now judging the quality of the investments Pennsylvania makes in its students by celebrating the fact that their schools might not run out of money before June.”
Legislative Republican leaders said they will review their options regarding Wolf’s planned Fiscal Code actions. Reed and Corman said they would be willing to work with the administration to develop any fixes, if needed. Both chambers of the General Assembly aren’t currently scheduled to be in voting session again until Monday, April 4.
“That’s clearly something we’re going to have to take a look at,” Corman said about the PlanCon situation created by a Fiscal Code veto. “We may have to take up a separate piece of legislation immediately to try to deal with that.”