Pennsylvania House passes fiscal code, keeping progress toward state budget closure on track

Closure of the state budget impasse nudged one step closer Tuesday with House passage of a key fiscal code bill that carries language authorizing $500 million in one-time revenues. Still unresolved? Gambling expansion. Dan Gleiter, The Patriot-News(DAN GLEITER, THE PATRIOT-NEWS)

The Pennsylvania state House has passed a key bill in the deficit-patch being crafted to complete the $32.0 billion 2017-18 state budget.

The so-called fiscal code, often characterized as the operator's manual to the state budget because it sets parameters for disbursement of certain appropriations, passed Tuesday on a 109-75 vote.

House passage came on a bipartisan vote, with 67 Democrats and 42 Republicans voting yes.

The code bill now goes to Gov. Tom Wolf's desk.

Wolf's Press Secretary J.J. Abbott said the governor supports many aspects of the omnibus bill, but needs to review it in its entirety before acting on it.

The bill is considered critical to the budget because it carries at least $500 million in one-time fund transfers that are a big part of the package being cobbled together to close a $2.3 billion state deficit.

That includes language giving the governor the authority to transfer $300 million from various special state accounts into the general fund.

It also requires a state-established insurer of last resort for physicians and hospitals otherwise unable to obtain medical malpractice insurance to kick in an additional $200 million.

If the agency, the Joint Underwriting Authority, refuses, the bill would abolish the authority and transfer its functions to the state Insurance Department.

Tuesday's action sets the stage for a final flurry of further action, starting Wednesday, on a larger revenue bill authorizing a cash advance of up to $1.5 billion against the state's tobacco settlement payments, and a separate expansion of legal gambling.

Closed-door negotiations on the gambling bill were expected to continue into Wednesday morning.

If a consensus can be reached, that measure will almost certainly legalize Internet-based games that would turn online devices across Pennsylvania into betting positions.

Still up in the air as of Tuesday night were whether the House and Senate can reach consensus on additional efforts to create licenses for up to 10 "satellite" casinos around the state, or legalizing slots-style video gaming machines at non-casino sites.

The 45-minute debate on the fiscal code reflected the air of resignation that's settled over the latter stages of the budget stalemate, with several House members urging passage of a bill filled with pieces they don't like, but that, so the arguments went, everyone needs.

"It's real easy to go back home and say you found one sentence or one paragraph that you didn't like in this bill," said Rep. Mike Sturla, R-Lancaster County. "It's a whole lot harder to go home and have accomplished nothing."

Republican leaders agreed.

"If any number of us in the General Assembly were writing this bill to suit us individually, it would be a different bill," said Rep. Stan Saylor, R-Red Lion. "But politics is about compromise, and it means we don't all get what we want: Not the governor; not Democrats; and not Republicans."

Among the more controversial new provisions in the bill, especially for House Republicans, were:

* Language aimed at preserving future state subsidies for Philadelphia's city schools that would have faced cuts under the state formula following a citywide reassessment of properties.

Sen. Vince Hughes, D-Philadelphia, said the provision will save the district $270 million through the next several years.

* The creation of a new state trust fund intended to help provide scholarships and other programming for the children of incarcerated parents. Funds would be raised through a one percent surcharge on major state Department of Corrections contracts.

That provision, in particular, drew the ire of House Judiciary Committee Chairman Ron Marsico, R-Lower Paxton Township, who argued the plan should be balanced with aid for the children of crime victims.

* Authorization of the use of public funding for the repair or replacement of privately-owned water sewer laterals, the connections between the public utilities and individual users.

This provision is aimed at helping to spur replacement of lead pipes in drinking systems. To this point, lateral repairs have been borne by property owners.

Other GOP fiscal conservatives argued the bill doesn't dip deep enough into what they termed a "shadow government" of special accounts in state government that they believe are sitting on more than $1 billion in unneeded reserves.

Most of the new provisions were inserted through Senate amendments, leaving the House in the position of taking them as part of the whole, or risking a major setback to the overall budget process.

Part of that tradeoff, of course, is that the Senate has largely yielded to the House Republican leadership on the final make-up of the revenue package.

Wolf and the Republican-controlled General Assembly have been struggling since July to pass a revenue plan to balance the $32.0 billion general appropriations bill. The $2.3 billion gap includes a $1.5 billion deficit from last year, and money needed to cover new spending in the fiscal year that began July 1.

In the interim, the state has lurched forward with an out-of-balance spending plan, delaying payments, taking out loans against funds held in the Treasury, and suffering the national black eye of a credit downgrade.

Programs and services, however, have largely been unaffected.

In the end, Tuesday, the majority went along to get along. And Pennsylvania was nudged one step closer to having a completed budget.

We'll see Wednesday if the trend lines hold.

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