Pa. budget gap balloons to $600M, stirs talk of radical changes

HARRISBURG - Pennsylvania is on pace for a $600 million budget shortfall in coming months, but Gov. Wolf hopes to avoid proposing a hike in sales or income taxes next year, administration officials said Wednesday.

Randy Albright, Wolf's budget secretary, told reporters at a midyear budget briefing that the governor would meet with cabinet members to discuss ways to cut costs.

Meanwhile, Republicans, who hold commanding majorities in both legislative chambers, signaled that they are eyeing radical changes to government, including privatizing services and consolidating state departments.

State officials had banked on new revenue this fiscal year from expanding gambling. But legislators have yet to even devise a plan.

If they don't create one, the projected $600 million gap in this year's $31.5 billion budget will keep growing. The state's nonpartisan Independent Fiscal Office has said the deficit could reach $1.7 billion in the fiscal year that starts in July.

Budget shortfalls and battles have become an almost yearly exercise in Pennsylvania. A historic stalemate between Wolf, who wanted tax increases, and legislative Republicans, who preferred cuts and privatization, last year forced social-services agencies and schools to suspend programs or rely on loans to stay open.

This time, Albright said Wednesday, the administration wants to first exhaust ways to rein in spending before seeking tax increases.

"We have to leave no stone unturned," he told reporters, "look across all agency budgets and try to first figure out the best and most efficient way to deliver the services that are essential to the commonwealth before we come back and ask for any additional revenues to provide for a balanced budget."

Earlier, House Majority Leader Dave Reed (R., Indiana) said his caucus wants to take a hard look at how government delivers services and "reevaluate that delivery service."

Reed did not give specifics, but noted that Pennsylvania has separate departments for health and for human services when the federal government has only one for both. He did not rule out pushing to consolidate services those departments provide.

"Government has basically looked the same in Pennsylvania for the last 40, 50 years," said Reed, later adding: "Absent a restructuring of government, you're going to look at huge personal income-tax or sales-tax increases, and there just isn't support for that in the General Assembly."

Reed made the case for continuing the push to privatize liquor sales and other services, and raised the possibility of routing more government dollars to social-service nonprofits, with stricter auditing of those providers. He also suggested Republicans may propose their own budget next year - upending the long-established tradition of governors unveiling their wish list and using that as a starting point for negotiations.

Wolf is to deliver his annual budget speech to a joint session of the legislature on Feb. 7.

Jeff Sheridan, Wolf's spokesman, noted that the governor has proposed consolidating departments, including merging the Board of Probation and Parole with the Department of Corrections - a proposal that drew pushback from law enforcement agencies and legislators. "The governor will continue looking for ways to improve and streamline government to ensure the budget is balanced," he said.

House Democrats are open to new ideas, spokesman Bill Patton said, but they will closely scrutinize any proposals.

Said Patton: "Either way, our state government has massive responsibilities in areas such as education, health care, environmental protection, and public safety. The cost of these legal obligations must be paid."

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