Pennsylvania Begins New Fiscal Year Without Budget

The General Assembly recessed at the end of last week without passing the state budget. The deadline for its completion was June 30 which marks the end of the state’s fiscal year. In recent years, it has become somewhat commonplace for the budget not to be done on time.

Although legislative leaders have indicated good progress is being made, the education funding piece has been the root of biggest differences between Governor Shapiro, Democratic legislative leaders and the Senate Republicans. The Democrats want to spend significantly more than the Republicans to fund local school districts.

The state currently has a $14 billion surplus. The Governor wants to spend much of that this year, and in recurring appropriations in future years. The Republicans oppose this approach, arguing that the demise of federal COVID relief funds will put the Commonwealth in a precarious fiscal position in the next couple years.

Additional challenging issues being negotiated include tuition vouchers (school choice), a large mass transit funding increase, and other matters important to an array of special interests.

One such issue is the PPA initiated bill that would allow oil heat companies to invoice their customers electronically (current law requires delivery tickets to be printed). That bill has cleared committees by unanimous votes in both the House and Senate. The bill (HB 1889) is on the “trade list” of legislation agreed to by the House, Senate and Governor which are generally passed when a budget agreement has been reached.

Another issue under discussion that is very important to many PPA members involves the statutory legalization of skill games, which currently are found in many convenience stores across the state. Commonwealth Court has ruled these games fall outside the reach of the state gaming law because the contests have an element of skill in its design and winning is not purely left to chance. Last week-in a surprise move-the state Supreme Court announced it would hear the Attorney General’s appeal of the lower court ruling. The Supreme Court could ultimately ban the games if a law specifically legalizing them is not on the books. The Skill Game industry has proposed a regulatory and taxation structure in exchange for a law establishing their legality. Govenor Shapiro announced his support of a skill game law in his February budget address as a revenue enhancing measure for the state. But bitter opposition by the state’s casino industry has slowed negotiations that have been taking place as part of the budget process. It is unclear at this point whether an agreement will be reached in the skill game debate.

The House and Senate are scheduled to return to session this Monday and Tuesday in an attempt to finish the budget. However, many observers predict a Fourth of July recess, with the final dealing happening the week following the holiday.