How Long Can Pennsylvania Run on Reserves?

by | July 14, 2015

By Kate Giammarise

As a budget impasse between Democratic Gov. Tom Wolf and the Republican-controlled Legislature stretches on, everyone in the state Capitol is asking this question: When will the Legislature run out of money?

With a new fiscal year having started July 1, and no signed state budget, the Legislature is operating on its reserves. The money is mainly used to continue paying staff members and expenses such as rent for district offices for senators and representatives.

The reserve funds were slashed last year in Republican Gov. Tom Corbett's final budget. Mr. Corbett, who was known for his icy relationship with the Legislature, line-item vetoed $32.5 million from the Senate's reserve and $20 million from the House's.

The reserve funds -- often derided by critics as "slush funds" -- exist for situations such as this year's: to keep legislative employees working and paid in case of a prolonged budget disagreement.

And there's no budget agreement in sight, given the apparent wide ideological differences between what Mr. Wolf wants in a budget -- a natural gas severance tax and more money for public schools -- and the no-tax-increase budget with a new pension system and liquor privatization that Republican leaders support.

How much money the General Assembly has remaining in its coffers varies by chamber and caucus.

The Senate has roughly $20 million in reserve, according to Drew Crompton, chief counsel for the Senate Republican caucus.

"We can function until sometime early in September," Mr. Crompton said. "That's with some squeezing to get us there," such as not paying certain contractors.

Should a budget impasse continue beyond then, Mr. Crompton said his caucus has every intention of paying staff members, though he declined to say exactly how. A 2009 court decision following a budget standoff that year said that in the case of a late budget, employees who work must still be paid, though that case concerned the executive branch and it's not clear how it would apply to the Legislature.

"I am very confident we can last through September," said Steve Miskin, a spokesman for the House Republican caucus.

Democrats, the minority party in both chambers, would run out of money sooner, though exactly when that would occur isn't certain.

"House Democrats are fine through the summer," said their spokesman, Bill Patton.

The legislative surplus is a frequent target of criticism from reformers, but its defenders say the current standoff highlights why it is needed -- to make sure the Legislature isn't forced to cave to a governor's budget proposals under financial pressure.

"It's in place to ensure the independence of the Legislature," Mr. Miskin said.

Anthony Barbush, chief clerk of the House, said legislative surpluses started to be built up during the budget battles of Republican Gov. Dick Thornburgh's administration in the late 1970s and 1980s.

A Temple University examination of the Legislature and its history also highlighted Gov. Robert P. Casey's 1988 veto of some legislative funding as heightening "legislative leaders' anxieties about the vulnerabilities of their caucuses ... weakening their ability to balance the power of the executive" in a prolonged budget impasse.

"I think the Legislature does need reserves ... if you look at the history of our budget stalemates, they go on for months sometimes," said Joseph McLaughlin, director of the Institute for Public Affairs at Temple University and a former adviser to Gov. Ed Rendell, and the author of the study.

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