Gov. Tom Wolf on Monday signed several bills aimed at balancing Pennsylvania’s $32 billion fiscal 2018 budget, including authorizations on casino gambling expansion and tobacco debt.

Unanswered for now is whether Wolf will borrow $1.5 billion from the landmark 1998 settlement with tobacco companies or $1.25 billion against profits from the state-run liquor system.

Wolf in early July let the budget become law without his signature, prompting a four-month give-and-take with state lawmakers over a revenue package to cover a projected $2.2 billion deficit.

The bills Wolf signed included the administrative code, the fiscal code, the capital budget and the General Assembly’s revenue package.

Pennsylvania Gov. Tom Wolf
"It’s well past time to pass a tax on shale,” said Pennsylvania Gov. Tom Wolf. Pennsylvania Internet News Service

Pennsylvania’s chronically late budgets have triggered pushback from the bond rating agencies. S&P Global Ratings last month downgraded the commonwealth’s general obligation bonds to A-plus from AA-minus. Moody’s Investors Service and Fitch Ratings rate them Aa3 and AA-minus, respectively.

Democrat Wolf and the Republican-controlled legislature have been at odds since he took office in January 2015. Warring factions within the GOP have also contributed to the dysfunction at the capitol.

Speaking at a Pennsylvania Press Club luncheon in Harrisburg on Monday, Wolf repeated his call for a severance tax on natural gas drilling. Pennsylvania is the only gas-producing state without one.

“It’s well past time to pass a tax on shale,” he said. “This shouldn’t be a Republican issue or a Democratic issue – this just makes sense. But we know that the people fighting against the severance tax have worked behind closed doors to shut down a vote on a severance tax.”

Debt and fixed costs such as pensions have contributed to Pennsylvania’s financial strain.

“It is difficult to reduce taxes when debt and retirement-benefit liabilities are high,” said Stephen Eide, a senior fellow at the Manhattan Institute for Policy Research and author of the paper, “Rust Belt Cities and Their Burden of Legacy Costs.”

Pennsylvania’s problems trickle down to municipalities, according to Eide.

“Any policy designed to revive the Rust Belt must come to terms with the deep fiscal challenges faced by these city governments. Despite steadily weakening tax bases, Rust Belt local officials have continued to increase debt and retirement-benefit burdens. The result is tremendous strain on city budgets.”

Eighteen Pennsylvania communities are in the state-sponsored workout program for distressed communities, known commonly as Act 47. State Auditor General Eugene DePasquale has identified13 local pension systems that are less than 50% funded.

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