Pennsylvania legislators vow no tax increases to cover federal funding cuts

With about five weeks remaining before the deadline to pass a state budget, legislators are in the dark as to how the proposed cutbacks in federal spending will impact Pennsylvania’s fiscal planning.

But one thing is certain: No new taxes, the top Senate leader said Thursday.

“We’re certainly not going to raises taxes” to balance the state budget, state Senate President Pro-Tempore Kim Ward., R-Hempfield, told more than 200 Westmoreland County government, business and community leaders Thursday at the county Chamber of Commerce’s annual State of the State breakfast.

The budget negotiations in Harrisburg are ongoing at a time when Congress is in the midst of debating the Trump administration’s push to lower taxes and compensate for the lost revenue by cutting expenditures. The state budget deadline is June 30. The federal fiscal year doesn’t start until Oct. 1.

“It would be nice to see what they do first. …. It’s going to be challenging,” said Ward, who has represented the 39th Senatorial District since 2008.

Ward said lawmakers don’t want to dip into the $7 billion Rainy Day Fund to balance the budget, because that is needed to maintain the state’s bond rating when borrowing money. The Rainy Day Fund could be drained in a few years if it is used too often.

The House Republicans have passed a reconciliation bill critics say cuts taxes for wealthy Americans while making about $625 billion in Medicaid cuts, which threatens health care coverage for low-income people. In Pennsylvania, Medicaid covers about 2.9 million children and adults. The Republican-controlled Senate will consider that bill.

“We’re not touching people’s Medicaid,” Ward said.

Rather than taking people off the Medicaid rolls, Ward said the Trump administration wants to focus on eliminating waste, abuse and fraud in the system.

They want people who can do a job to go to work and show the government they are working or looking for work, Ward said.

“If they do the wrong thing, they will pay for it,” Ward warned.

The state is in a bind because it could pass a budget by July 1, only to find that the federal government has cut funding to the states for various programs, said state Rep. Eric Davanzo, R-Smithton. If that occurs, it could mean some cuts down the line.

“We don’t have enough money to backfill,” to compensate for the potential loss of federal dollars, Davanzo said. “There’s just a lot of uncertainty.”

The governor’s proposal to generate revenue by legalizing recreational marijuana will not happen this year, Ward said. Having legalized marijuana administered by the Pennsylvania Liquor Control Board stores is a nonstarter.

“We need to do a lot more research into the issue,” she said.

Davanzo said it would not be a windfall for the state because of the costs associated with administering it.