What Does PA Budget Impasse Mean For State, County Programs?

The state has been without a budget since the start of the month.

By Marley Parish & Peter Hall | Pennsylvania Capital-Star

The Pennsylvania Capitol in Harrisburg. File photo.

Two weeks into the new fiscal year, Pennsylvania is still without a spending plan, and lawmakers in the divided Legislature — at least as of this week — won’t return to Harrisburg until September.

Budget negotiations between Democratic Gov. Josh Shapiro, the Republican-controlled Senate, and the Democratic-controlled House of Representatives are at an impasse caused by disagreement over a proposal to fund private school tuition vouchers with taxpayer dollars, also known as lifeline scholarships.

After pushback from House Democrats, Shapiro vowed to use his line-item veto power to abandon the voucher program, drawing accusations of betrayal from Senate Republicans, who passed a $45.5 billion budget on June 30. It included the lifeline scholarships — rebranded as student success scholarships — a provision Shapiro supported, GOP leaders maintain.

Senate President Pro Tempore Kim Ward, R-Westmoreland, sharply criticized Shapiro, saying in a statement, Senate Republicans negotiated in good faith and gave Shapiro “all the goodies he wanted” in exchange for his promise that he would deliver on the voucher program.

“The truth is there was a deal regardless of what Gov. Shapiro says publicly, and he knows there was a deal,” Ward said. 

Senate Majority Leader Joe Pittman, R-Indiana, offered a more tempered take on the situation, telling Pittsburgh-based television station KDKA that Republicans feel misled and believed their negotiation with Shapiro was a unified negotiation with the House Democrats. Pittman stepped back from Ward’s accusation, saying, “I’m not going to say he lied to me.”

The state budget allocates millions of taxpayer dollars to fund education, infrastructure, economic development, public safety, and health care. A new spending plan must see approval from the General Assembly and be signed into law by the governor by June 30 each year. 

While this isn’t the first time Pennsylvania has seen an impasse, an extended disagreement could affect state and county-based programs and institutions, including K-12 schools, institutions of higher education, human services programs, economic development efforts, and infrastructure projects.

Here’s what to know about the impasse and what a late budget means for Pennsylvania:

Are vouchers the only holdup?

Although both chambers approved a $45.5 billion budget, the back-and-forth — and Shapiro’s about-face on the voucher program — have resulted in a legislative standstill that has delayed lawmakers from sending the budget to the governor’s desk for approval.

The House and Senate must return to session in Harrisburg for legislative leaders to sign the bills before their respective chambers.

Lawmakers also need to finalize the code bills, which direct how state funds are spent, as part of the budgetary process.

When do lawmakers return to Harrisburg?

Unless lawmakers return to Harrisburg to vote on remaining budget legislation and finalize the spending plan to send it to Shapiro’s desk, the impasse will likely last for the rest of the summer.

Senate President Pro Tempore Kim Ward, R-Westmoreland, has said she doesn’t plan to call the upper chamber back to session until September. Before House lawmakers left Harrisburg on July 7 — their final voting session day until September — House Speaker Joanna McClinton, D-Philadelphia, said she doesn’t expect another voting session “in the near future” but told lawmakers they’d receive a 12-hour notice if recalled.

As of Friday, the Senate returns to session on Sept. 18, and the House convenes on Sept. 26.

This week, legislative leaders doubled down on their positions that the other side caused the budget impasse.

Pittman warned on Tuesday that unless the House returns to Harrisburg for a voting session on additional budget bills, funding for several programs — Level Up, Whole Home Repairs, funding for public defenders, and economic development programs — would be unavailable.

“We still do not have a completed budget product,” Pittman wrote in a letter to House Majority Leader Matt Bradford, D-Montgomery, asking whether the House plans to return to vote on additional legislation. “The Senate sees little value in returning to session and allowing House Bill 611 [the main budget bill] to reach the governor’s desk without addressing the remaining work needed to implement a budget.”

Pittman also asked if the House plans to work with Shapiro “and speak as a unified voice in future discussions,” referencing previous comments about negotiations and disagreement on the voucher program within the Democratic party.

In response, Bradford said that because the Senate had adjourned until September without finalizing the budget and code bills, Senate Republicans were standing in the way of funding schools and county-based human services programs, including substance abuse treatment and foster care.

Has a budget impasse happened before?

Yes, an impasse isn’t uncommon in Pennsylvania.

Last year, then-Gov. Tom Wolf, a Democrat, signed a spending plan approved by the Republican-controlled General Assembly on July 8.

During Wolf’s first year in office, a budget impasse stretched nine months past the June 30 deadline, with Wolf vetoing a spending plan sent to his desk by the GOP-controlled Legislature in 2015. A final budget eventually took effect in March 2016.

What are the consequences of a late budget?

A days-long budget impasse is unlikely to have a significant impact. But an extended stalemate could result in financial stress for local governments, school districts, and nonprofits that receive taxpayer dollars from the spending plan.

Lisa Schaefer, executive director of the County Commissioners Association of Pennsylvania, said county-based governments and programs rely heavily on state funding to operate human services, such as drug and alcohol treatment programs and care for those with disabilities. Without a timely budget, those programs are susceptible to disruptions, she said.

“It’s unfortunately not the first time we have been in this position,” Schaefer told the Capital-Star.

In 2015 — the last major budget impasse — county governments started to feel the impact as early as late July, she said. Counties had to explain to service providers that they had not received their first quarterly payments and had to redirect money from other programs, Schaefer said.

Any lapse in funding will be compounded by the General Assembly’s failure to increase allocations for human services since 2015, leaving county surpluses drained, Schaefer said.

The County Commissioners Association tracks about 50 lines in the state budget that provide funding for services. 

Another area where counties would be adversely affected by a protracted delay is in election integrity grants, which have a mid-August deadline for applications and are due to be paid by Sept. 1, Schaefer said.

Dauphin County Commissioner George Hartwick III said the impasse would have a direct impact on people’s lives, adding that the county Children and Youth Department’s budget is $61 million, largely funded by the state.

“Dauphin County is in strong fiscal health, but we’d be like any county in that we’d eventually need to borrow money to make payments, meaning our taxpayers would be on the hook for interest,” Hartwick told the Capital-Star.

“We’re trying every day to ensure our most vulnerable don’t fall through the cracks,” he said. “Doing so with fewer resources brings those challenges to new extremes. There are real consequences to what the state Legislature is — or isn’t — doing.”

Richard Edley, president of the Rehabilitation & Community Providers Association, which represents health and human service providers, said state Human Services Department officials have not provided information about contingency plans.

Edley said providers work to avoid care interruptions and most individuals and families who rely on services such as intellectual or developmental disability support won’t notice an impact unless the impasse carries on for months. Like county agencies, providers may be forced to turn to lines of credit and incur additional expense to continue operating.

“You don’t want people with lots of complex needs to not have services, but when the services and agencies do everything they do to make sure there’s no interruption of services, it lulls the Legislature into a false sense that everything is going to be OK,” Edley said.

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Pennsylvania Capital-Star

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