Gov. Tom Wolf and Pennsylvania lawmakers on Tuesday remained stalemated over how to fund a $30.2 billion budget for fiscal 2016.

Wolf vetoed the spending plan last week. The fiscal year began July 1; the state is still able to fund essential services without a budget in place.

Wolf, a Democrat, reportedly wants to raise income and sales taxes to 3.7% and 6.6%, respectively, to help offset a long-term deficit that has triggered the wrath of bond-rating agencies, and to backstop a large increase in school funding.

"Until he can move off of that, and have discussions about other revenues and make a reasonable increase and spend, we're going to be here," said Sen. Majority Leader Jake Corman, R- Bellefonte. The Republicans control both legislative branches.

The rating agencies all downgraded Pennsylvania last year, citing budget imbalance and the commonwealth's estimated $53 billion unfunded pension liability. Moody's Investors Service rates Pennsylvania's general obligation bonds Aa3. Fitch Ratings and Standard & Poor's rate them AA-minus.

Wolf warned that the proposed budget would leave Pennsylvania with at least a $3 billion deficit heading into fiscal 2017.

"If the credit agencies don't like our finances right now, they'd really hate it if I actually accepted this budget," said Wolf. "I ran a business and if I took a budget that looked anything like this to my bank, they would have thrown me out of the office."

Wolf vetoed a liquor privatization bill that lawmakers passed. A bill to move new state employees from a traditional defined benefit plan to a 401(k)-style defined contribution plan is still on Wolf's desk.

The Senate expects to reconvene next week, while the House of Representatives is not scheduled to meet again until Aug. 25.



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