October 9, 2015

House Budget Vote: When Is A Loss Not A Loss?

Normally when someone loses in the House by 29 votes, they call it a loss, but that wasn’t the case with Gov. Wolf and House Democrats this week.
Democrats called getting 73 of the 102 votes they needed to pass a tax bill to support their version of a budget making “real progress,” it “exceeded my expectations,” and “this was a show and we did very well.”
Of course it was better than when the House Republicans put Gov. Wolf’s original tax package up for a vote in early June, ironically as an amendment to the same bill used as a vehicle this week-- House Bill 283 (F.Keller-R-Snyder).  In June no one voted for it-- 0 to 193.
House Majority Leader David Reed (R-Indiana) saw Wednesday’s vote differently, “Today, the governor finally saw what we have been telling him for months – there is not enough support to pass his tax package. It is really as simple as that. We put his plan up for a vote, as promised, and as predicted, it failed.”
House Republicans saw it as a vote against a broad-based tax increase of any kind, but back in May Republicans were the ones pushing a broad-based tax increase.
They passed House Bill 504 (Gabler-R-Clearfield) by a vote of 105 to 86 that contained an increase in the Personal Income Tax from 3.07 to 3.7 percent and a Sales Tax increase from 6 to 7 percent to support a $5 billion property tax relief proposal.
The Democratic proposal voted down Wednesday would have increased the Personal Income Tax from 3.07 percent to 3.57 percent, but did not propose any increase in the Sales Tax or change its exemptions.
Therein lies the issue.  Republicans and Democrats are talking past one another, and not really engaging.
Well, it’s now day 104 (as of October 12) of the state budget impasse and the job isn’t getting done.
The vote this week was the third time the House tried to act as a body on a state budget, since the Republicans passed (112 to 77) their own budget in June that was vetoed by Gov. Wolf.
In August, House Republicans failed in 14 attempts to override the Governor’s veto on certain line items by a vote of 115 to 83.
In September, Senate and House Republicans (117 to 83) passed a stopgap budget including what they said were “agreed-to” items that was also vetoed by the Governor.
And now in October Gov. Wolf and House Democrats failed (73 to 127) to get enough votes to pass a budget revenue package that would raise the Personal Income Tax and impose a new severance tax on natural gas producers to help fill a $2.3 billion structural deficit and provide an additional $400 million for basic education.
“We hope the governor and his administration will look at this vote in a realistic manner so we can move forward on negotiating a budget that makes sense for the taxpayers of Pennsylvania,” said House Majority Leader David Reed (R-Indiana).  “It is time to come back to the table and honestly negotiate a reasonable and responsible spending plan to fund our schools and core functions of government.
“Our constituents want to ensure their tax dollars go as far as they can, and that’s why we need real public pension reform. We also need some type of liquor reform to grow revenues and improve customer convenience. And to protect residents from growing local school costs, we need real dollar-for-dollar property tax relief for all taxpayers.”
Gov. Tom Wolf said he saw broad recognition that there is a fiscal problem, and that the structural deficit is real.  He said Republicans now understand this and (the way we handled the budget in the past) has lead to credit downgrades and local tax increases.
Wolf said it also demonstrated broad Democratic support for doing the right thing.  “We showed we don’t need too many Republicans (votes) to get a deal.”
This vote, Wolf said, gives us the chance to increase education funding and get property tax relief done.  “This puts us on the path to a responsible budget.”
House Democratic leaders said the vote Wednesday “adds critical momentum to bipartisan negotiations toward a Pennsylvania budget.”
"While the vote on this specific plan was not successful, the debate showed widespread acknowledgement from both Democrats and Republicans that Pennsylvania's fiscal challenges are serious," Democratic Leader Frank Dermody (D-Allegheny) said.
"It also showed, contrary to claims we've been hearing for months, that Democrats could put up significant votes for the broad-based revenues and natural gas extraction tax which Gov. Wolf has called for and we know Pennsylvania needs."
"In his remarks today, the Republican leader challenged all members of the House to think outside the box as we continue to work toward a budget solution," Democratic Whip Mike Hanna (D-Centre) said. "We will continue to do that in the Democratic Caucus, and we hope Republicans will join us, as well.
"The previous Republican proposal that the governor vetoed in June certainly wasn't 'outside the box.' As a repeat of the last four Corbett budgets, it simply did not provide the recurring, sustainable and predictable revenues necessary for a workable, balanced budget," Hanna said. "We cannot go back there. We need to continue moving forward."
Democratic Appropriations Chairman Joe Markosek (D-Allegheny) stressed that Democrats still believe new revenues must be part of the eventual budget solution.
“The reality of the budget situation is that without new, recurring forms of revenue, the budget gap will continue to grow, property taxes will continue to climb and our schools and human services providers will continue to be underfunded," Rep. Markosek said. “We still have a lot of work to do, but I am optimistic we can pass a responsible state budget.”
Rep. Markosek added this vote proves House Democrats are a player and (House Republicans) can’t ignore us.
What’s Next?
The next opportunity for action is when the Senate returns to voting session October 13, 14 and 15 and the House on October 19, 20 and 21.
“Tomorrow (last Thursday) will mark 100 days without [a budget]. We hope to spend it meeting with the governor in earnest negotiations so we can get badly needed funds to our schools and human service agencies, while keeping state government in operation,” said House Majority Leader David Reed (R-Indiana).
No meetings happened Thursday or Friday, but Republican legislative leaders plan meetings next week with their Democrat counterparts, notably without Gov. Wolf, at least at the beginning they said.
Republicans did mention some other possible sources of new revenue they would be willing to discuss, like liquor privatization and additional gaming opportunities.
Rep. John Payne (R-Dauphin), Majority Chair of the House Gaming Oversight Committee, said Thursday there could be as much as $300 to $500 million in revenue from expanded gaming like online games and fantasy sports.
Some southeast Republicans do see the need for more revenue beyond liquor and gaming.
Rep. Gene DiGirolamo (R-Bucks), who proposed his own Personal Income Tax and natural gas severance tax package in August, invoked the Serenity Prayer during the House debate to draw attention to the need to get more revenue from other sources: “God grant me the serenity to accept the things I cannot change; courage to change the things I can; and wisdom to know the difference.”
We hope someone does; right now no one is looking good.
Here’s a summary of amendment A03468 House Democrats offered to House Bill 283 (F.Keller-R-Snyder).  Click Here for a copy of the amendment.  Click Here for the roll call vote on the amendment.