Pennsylvania lawmakers might decide upon a one-year fix for their budget deficit, a move which might shelve all gambling legislation until 2018. Postponing a budget fix is one of several options for the Republican-led Pennsyvlania legislature.
The current Senate bill would legalize online poker and daily fantasy sports, while expanding certain other types of gambling. The Senate’s proposal would generate $200 million a year from expanded gambling.
The current House bill supports video gambling terminals or VGTs in taverns and other small businesses across the state. House Speaker Mike Turzai’s bill also would legalize online gambling and DFS, but many see the VGT legislation as a non-starter.
Might Postpone Online Gaming Until 2018
Faced with an impasse between the two legislative chambers, it is possible the two sides decide to pass a temporary fix for the remainder of 2017, then postpone the budget showdown until 2018. If that were to happen, lawmakers would make up a $2 billion budget deficit by raiding other agencies and programs.
Such a move carries several risks. The state might not be able to pay some of its bills as early as next month. One report had August 29 as a deadline for several of the state’s debts. The budget impasse already is hurting several Pennsylvania counties and cities, because the local casino tax is not being paid in certain cases.
Budget Deficit of $1.6 Billion
The State Treasurer also noted that Pennsylvania General Fund would have a deficit of $1.6 billion by September, if it fails to pass an recurring budget package by the end of next month. Failing to pay the bills without a recurring payment might cause credit rating institutions to downgrade Pennsyvlania’s credit rating — something which has been threatened before.
A Penn Live editorial criticizes the House approach especially, while favorite the Senate bill, because it taxes the Marcus shale reservoir to make up the deficit. The Penn Live article read, “There are rumors that House members are considering a plan to balance this year’s budget by raiding other funds. This one-year fix is the worst possible idea because it not only pushes the solution to our structural deficit off to another year, but it deepens the problem.”
Scarnati Calls Deadlock “An Embarrassment”
Prominent politicians are beginning to criticize the current deadlock. Senate President Pro Tempore Joe Scarnati, a Republican colleague of Speaker Mike Turzai, called the statemate “an embarrassment“.
Governor Tom Wolf is critical of the House bill, while he has shown support for the Senate legislation. The current events are no surprise to Wolf, as he signed on to a budget bill last year with $100 million in gambling revenues, but that bill failed to gain passage.
Pennsylvania Postponed Solutions from 2014 to 2016
In fact, the Pennsylvania legislature has not passed a proper budget bill each of the past 3 years. Each time, the lawmakers simply pass temporary fixes, leaving the state in a rudderless financial state. One year, the state’s credit rating is likely to suffer, but for now, the legislature continues to risk the wrath of the credit rating agencies.
Penn Live’s Frank Dermody wrote an opinion piece in late July that called for the leaders of the Pennsyvlania legislature to stop using tricks to postpone budget deadlines. Dermody wrote, “These gimmicks already force our state and schools to postpone paying bills owed to vendors. They could put dedicated funds like the Lottery Fund which benefits senior citizens at risk of insolvency. And they endanger the long-term viability of key environmental programs, including the protection of safe drinking water.”
“Now we’re about a week away from another budget deadline. For Republican Party leaders who love to say, ‘We’re not Washington,’ they’ve come up with a very ‘Washington’ way to paper over a large budget deficit. Enough is enough.”
Dermody: “Enough Is Enough”
The politicians Frank Dermody criticizes take a hard line against taxes. They believe, if they say “No” to new taxes, that they’ll eventually force their opponents to cut services. In doing so, the politicians expect their constituents will support them.
For that past three years, that political calculus has worked. Whether it can continue perpetually is a certain “No”, but the question for the time being is whether Mike Turzai and his allies believe they can get by another year without consequences for the state.
Perhaps for one more year, but this would be the last year they dare to do so. 2018 is when a midterm will be approaching when Mike Turzai’s opponents will have the wind at their backs. Pennsylvania lawmakers might get out of 2017 without passing a comprehensive budget bill — and without the omnibus gambling bill — but 2018 is a whole other equation, though.
