Memorial Day has come and gone, propelling us into the next annual holiday (or so it seems)… the state budget.

As we all know, June is the busiest month of the year in Harrisburg – with feverish negotiations towards a balanced budget. And just like in years past, the state is stuck with a difficult decisions to make:

How much needs to be cut? What gets cut? If we can’t find enough savings in cuts, where do we get new revenue? Increase existing taxes? Establish new taxes?

So here we are, again. The shortfall estimate was $3 billion in early February when Governor  Wolf announced his $32.3 billion budget proposal for 2017/2018, which begins July 1. At the start of deliberations for the commonwealth’s 2016-17 spending plan in early 2016, the deficit figure was being reported as approximately $2 billion. The situation seemed cautiously optimistic after Wolf delivered his budget address. Rather than building his budget plan predominantly on a foundation of new and higher taxes, his plan was to exact $2 billion in government-efficiency savings and only $1 billion worth of new levies.

The new-tax proposals revolved around applying the state’s sales and use tax to several currently exempted products and services; proposing again, as he has every year since becoming governor, a controversial severance tax on natural gas drilling; and assessing local municipalities without police departments for state police protection. He also projected that expanded gambling would bring in $150 million during 2017-18; $100 million of anticipated incoming revenue was included in this year’s budget, but that gambling expansion and money never materialized. The Senate passed an iGaming bill last week, but the Senate and House are by no means unanimous regarding all of what’s being proposed. As noted earlier, the state counted on $100 million in revenues from iGaming in THIS fiscal year. That $100 million lost due to legislative inaction since July 1, 2016 is gone – and as a result, only adds to the deficit.

Beyond that, even if gambling options are expanded, the amount of incoming revenue is by no means assured. Wolf has said in recent days that the Senate’s gambling-expansion plan would fall short of the revenue goal that he seeks.

Additionally, the Governor has proposed consolidating agencies – combining the Departments of Health, Human Services, Aging and Drug & Alcohol into one massive agency. There will be reported savings as a result of the consolidation. Then there’s the unease surrounding the government-efficiency proposals, primarily because of their impact on local-level services.  

With all that said….. continued advocacy in Harrisburg by PaFIA has proven to leaders and members the value of the film tax credit program, citing the ongoing positive economic impacts in communities throughout Pennsylvania. The prospects of the film tax credit program remaining at current levels remains very good. PaFIA will remain actively engaged in the conversations and negotiations as the months move along.

The ultimate question at the macro level will be – as the 2017-2018 budget deliberations progress – will the final product simply get us through the next fiscal year but leave the state with a $4 billion deficit next year? Or will the difficult decisions made THIS year lead us to a better budget debate and discussion NEXT year?