Budget Overview
Last month, Governor Wolf allowed the $6 billion GOP-crafted supplemental budget bill (HB 1801) to become law without his signature. At the time, Wolf insisted the spending plan remained out of balance and said he cannot put his name on a plan that spends more dollars than exist. This action set the final state spending for the current budget year at slightly more than $30 billion with $200 million new dollars for public schools. It also allowed critical dollars to flow to schools and other services, while pushing this year’s revenue discussions to the 2016-17 fiscal year, which starts July 1. Wolf warned that the next fiscal year, which already has a $2 billion deficit, will now begin with an extra $300 million deficit.

And just as there was a certain sense of relief, the Governor vetoed the Fiscal Code bill (HB 1327), which is important companion legislation to the state budget. The Fiscal Code is the roadmap for how state budget dollars are spent, ranging from the distribution of education dollars to the allocation of payments to Pennsylvania’s County Fairs.

As recently as last week, legislative votes on a revised fiscal code bill (HB1589) emerged with veto-proof majorities (2/3 approval). It was an ominous sign for Democrat Gov. Tom Wolf. Democrat lawmakers are beginning to see that their unswerving loyalty to Wolf last year brought them little more than a nine-month budget impasse, school districts running out of money and human services agencies stretched to the max. If Wolf persists, he could become the first governor in recent history to have a veto overridden. It’s more significant potentially as a message to Wolf on the 2016-17 budget. Work on it will get under way in earnest after the April 26 primary. After last year’s fiasco, lawmakers of both parties are hopeful for a timely, if not early, budget.

Film Tax Credit
As we are all painfully aware, allocation to the Film Tax Credit program requires annual approval as part of the budget. As such, budget delays, especially for significant periods of time, directly impacts the approval of film tax credit applications. And unfortunately, decisions are sometimes made to shoot elsewhere because of the budget uncertainty.

So PaFIA’s efforts are two-fold: increasing the $60 million annual allocation to the program AND advocating for a timely budget so delays won’t negatively impact the program. The obvious question – what does “increasing the annual allocation” mean? PaFIA’s position is simple, the greater the number allocated to the film tax credit, the more jobs  created and additional investment into our communities. At the very least, PaFIA believes that moving the program BACK to $75 million (the original allocation under Rendell). A 50% increase (to $90 million) or beyond will allow for the industry to grow, bring more projects, and not require the state to pick winners and losers because of a limited pool of credits that the Department of Community & Economic Development can approve.

So, What’s Next?
The Pennsylvania primary is Tuesday, April 26. The House of Representatives will return to session on Monday, May 2. The Senate of Pennsylvania will return to session on Monday, May 9. 2016/2017 budget negotiations will “heat up” as the month goes on, bringing us to June, which is historically the busiest month of the year with the budget. With a budget deadline of June 30th, the Governor, Senate, and House will all try to resolve past differences and have a budget approved by the end of June. With 2016 being an election year, legislators will TRY and give voters a reason to re-elect incumbents. BUT, with that being said, a vote to increase any taxes (income or sales) or to create new taxes, is a very risky political move and could have serious consequences to those trying to REMAIN in office.

Oh the joys of an election year.

Jim Davis
PaFIA Lobbyist