(The Center Square) – Taxes on skill games and recreational marijuana could bring $2 billion into the state’s bank account to help fund Gov. Josh Shapiro’s latest spending plan.
Except that a deal to implement either has yet to be reached, leaving a multi-billion-dollar gap to fill for his fourth and most expensive proposal yet.
It’s a familiar dynamic. One that Shapiro came prepared for in his 90-minute speech delivered to a joint session of the General Assembly on Tuesday.
“This budget doesn’t raise taxes. In fact, it continues to cut taxes,” he said on the House floor. “And it doesn’t require a broad-based tax increase today, tomorrow, or at any point in the next five years.
“Listen, I know some of you try to score political points by saying that it does,” he added, surrounded by a raucous round of applause from Democrats. “But that doesn’t make it true.”
What could make it true – aside from Republicans’ deeper scrutiny of the administration’s accounting – would be a collapse in negotiations that have yet to start. After three straight years of late budgets, including the latest four-month impasse that ended in November, the chance for failure is more likely than not.
“I don’t want to sound like a broken record,” said Sen. Scott Martin, Republican chairman of the Senate Appropriations Committee. “The position that we find ourselves in now is exactly where we said we’d be.”
“It’s no secret whatsoever what our structural deficit is,” he added. “We are spending about $4.5 billion more than what we are taking in.”
The $53.3 billion proposal comes in roughly 5% higher than the state’s current spending plan. It asks for $565 million more for struggling public schools, $300 million for mass transit, $1 billion for a four-year infrastructure fund that could support affordable housing and energy projects, and $100 million to backstop federal government cuts.
But it also requires a $4.5 billion transfer from the state’s emergency savings account, which has been stockpiled with pandemic reserves, to complete Shapiro’s vision. House Democratic leadership framed it as part of a surplus that should go back to taxpayers.
“Budgets are about choices, but it’s also about the actions of the other chamber,” said Majority Leader Rep. Matt Bradford, D-Lansdale. “At some point someone needs to start asking real questions about what the Senate can do and what it can pass.”
And for the upper chamber, agreements to tax skill games and legalize recreational cannabis have stayed out of reach.
For the former, Shapiro wants to collect 52% from skill games, which are similar to slot machines but require more than a lever pull, while Senate Republican proposals range from 16% to 35%.
Recreational cannabis plans are even sketchier. While the governor envisions $730 million in one-time licensing fees and $2 billion in annual taxes, there’s no legislation on the table to make it happen. Last year, House Democrats passed a bill that would sell products through a state-run store, which was unpopular on both sides of the Senate aisle.
House Appropriations Chairman Jordan Harris, D-Philadelphia, said “the people” want action.
“Time is out for excuses. If you don’t like this proposal, fine, show us yours,” he said. “Cause the people don’t want to hear what you don’t like, the people don’t want to hear what you’re not in favor of, they want to hear what you’re going to do.”
Senate President Pro Tempore Kim Ward, R-Greensburg, said a conservative approach to the administration’s proposals over the last three years has kept taxpayers’ wallets intact.
“This is the fourth time, this is our fourth budget from the governor that spends way too much,” she said. “We plan to be as fiscally, fiscally responsible to the people of Pennsylvania that we are able to be.”
