Gov. Wolf said Thursday on WITF’s SmartTalk it’s up to the House Republicans to sign on to the Senate-passed revenue package endorsed by all the other parties in the budget negotiations-- Senate Republicans and Democrats and House Democrats.
Wolf said he believes adopting the Senate package will allow the state to avoid a credit downgrade. “There are no smoke and mirrors” in this budget.
Specifically, Gov. Wolf said he believes the House will end up supporting the natural gas severance tax, adding 80 percent of the tax will be paid by companies and consumers outside Pennsylvania.
[Note: Conservative members of the House and Senate have already come out opposing the severance tax and all the other new and increased taxes in the Senate revenue package.]
Wolf said he is very concerned, like State Treasurer Joseph Torsella, the state may not be able to pay its bills if the budget revenue package is not passed by the end of August.
On natural gas pipelines, Gov. Wolf said he has spoken to the CEO of the company building the Mariner East 2 Pipeline to express his concerns about the spills and water contamination resulting from construction.
Gov. Wolf repeated his support for the Paris Climate Accord and noted Pennsylvania is actually ahead of its obligations to reduce greenhouse gas emissions to meet that Accord. He said he wants to continue to take actions to address climate change.
During the second half of the program, State Treasurer Joseph Torsella said he now projects about the second week of September the state’s “checking account” will drop into a deficit situation and that deficit will continue for 8 months if no responsible revenue package is adopted soon.
He said the deficit will result in significant new borrowing to fill those gaps. Torsella said again, these kinds of deficits may be beyond the capacity of state to borrow money from other state accounts.
Torsella said the Commonwealth has been warned by the credit rating agencies Pennsylvania needs a balanced and responsible budget. If we do not, it may result in a downgrade.
He said Pennsylvania has one of the worst credit ratings of any state in the nation and that has a cost to state taxpayers.
Torsella noted Auditor General Eugene DePasquale has called credit downgrades a “backdoor tax,” because it raises the cost of borrowing for taxpayers.
He said if no revenue package is passed soon, the first bills that may not get paid are the nonpreferred appropriations for Penn State, Pitt, Temple and Lincoln Universities. The next option is identifying what expenses can be differed.
In response to a question, Torsella said budget and other actions by Congress and the federal government have a major impact on Pennsylvania, and not just cuts in federal appropriations, but also changes in things like tax law.