House GOP eyes special state funds to fill budget hole, avoid tax hike

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The plan, unveiled today, relies on more than $2.4 billion in one-time transfers from special and restricted funds that the group says have more than adequate surplus amounts to help with the budget.

The Republican group came together in July to find an alternative to tax hikes and borrowing to finalize the 2017-18 budget. Members examined more than 200 government accounts and have proposed transfers from about 41, including a few accounts that have sat dormant for at least three years.

Tapping into special funds to balance the state budget has been done before, Rep. Dan Moul (R-Adams) said. The group says that transferring the funds will not cost jobs, compromise government services or close any agencies.

“We’re standing up for the taxpayers,” said Rep. Dawn Keefer (R-York/Cumberland).

The GOP team also believes its alternative will ease concerns about a downgrade to Pennsylvania’s credit rating.

Democratic lawmakers and the Wolf administration blasted the plan. 

House Democratic Leader Frank Dermody (D-Allegheny) called the plan another one-time gimmick in solving Pennsylvania’s perennial budget problem.

“At the outset of our review I question the legality of raiding accounts that are restricted by law for special purposes,” he said. “Then there’s the larger question of whether their math is correct. Is this money truly available in the amounts they claim? I’m deeply concerned this plan would lead to destructive cuts in programs and services that Pennsylvanians need to have, such as education, health care and a half billion dollars cut in transportation.”

House Democrats believe new recurring revenue sources will be needed moving forward, including a severance tax on natural-gas drillers.

“Raiding these funds will mean cuts to programs,” said J.J. Abbott, a spokesman for Gov. Tom Wolf. “There is no way around it. Taking funds from 9-1-1 centers and volunteer firefighters means less funding to improve public safety response in local communities. Shifting money from public and multimodal transportation sets back progress in municipalities small and large across Pennsylvania.”

The Republican plan calls for a $357 million transfer from the Public Transportation Trust Fund, for example. If approved, Abbott said mass transit agencies across the commonwealth would ultimately forfeit nearly 40 percent of their operating subsidies in the current fiscal year, likely leading to fare increases, service cuts or even insolvency, particularly for smaller systems that serve more rural areas of the commonwealth.

There is no guarantee this Republican plan will have any more broader support compared with previous budget proposals, Abbott added. “Time is running out. Now is the time for responsible action.”

The full House will likely consider the proposal when it returns to session next week.

A $32 billion state budget cleared the General Assembly in June. Gov. Tom Wolf let it become law without his signature in July, despite the lack of a revenue package to pay for it.

The Senate then passed a revenue bill that included a severance tax on natural-gas drilling, heavy borrowing against future revenue, increased utility taxes and an expansion of casino gambling.

But the House GOP has opposed the Senate plan and no action has been taken.