Behind the scenes of the state budget process: How the $40 billion deal came together

• Julia Agos/WITF
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  Julia Agos was a reporter and the host of All Things Considered for WITF.

(Harrisburg) – Late last week, state lawmakers passed a nearly $40 billion general fund budget.

The deal between GOP legislators and Democratic Gov. Tom Wolf sends a few hundred million extra dollars to schools and infrastructure projects.

It also puts about $2.5 billion in a rainy-day fund.

WITF’s Capitol Bureau Chief Sam Dunklau sat down with All Things Considered host Julia Agos to give us a behind-the-scenes look on how the deal came together.

Below are highlights of the interview, edited for length and clarity.

Last year state lawmakers couldn’t come to an agreement on time, so they ended up passing two 6 month packages instead. But this year it looks like they are going to make that June 3oth deadline. How did the budget come together so quickly relative to last year?

The biggest factor in my mind is that Governor Tom Wolf was really willing to support what Republicans came up with. He signaled at a very crucial point last week that he was going to approve the spending plan just as soon as lawmakers could agree to it.

Some political motivation here is going on as you could imagine, Governor Wolf is a lame duck governor. He’s going to be termed out in 2022. His veto pen still carries some power. But I don’t think that Wolf is wanting to get in the way of whoever the Democratic nominee is in 2022, probably wanting to set that person up for success. And if you have a sound budget that’s on time, that helps that person – in the same way that it’ll help a lot of state lawmakers, especially in those Republican areas throughout the state, when they’re up for reelection next year as well.

In order for the Republicans to maintain a hold on power, you have to have a budget that in their minds best positions the state for the upcoming year.

So, we’re already thinking about 2022, it sounds like. Who were the major players in these negotiations, Sam? And what were their interests?

The major players every budget season are the chamber’s Appropriation Committee chairs. They are people you probably have never heard of, but they hold enormous power because they are the ones who are directing state budget negotiations. All things budget wise passes through them. For people like Republican Stan Saylor, for Republican Pat Brown in the House and Senate, they both showed a keen interest in putting as much of the state’s excess money away as possible.

They say there’s a looming fiscal crisis coming up in the next year or so. And because the state often has more expenses than money to pay for it, having a little extra cash in the bank can help plug whatever holes might be coming up in the next year.

The other major players on this side are, of course, the Democratic Appropriations chairs – Matt Bradford in the House and Vince Hughes and the Senate. Bradford criticized Republicans for taking what he called the “fiscal fetal position,” being too scared to spend much of that money on things that are needed right now. Things like helping, struggling businesses and maybe giving school districts a little more money.

Speaking of which one of the major winners in this year’s budget was public education. Right?

Right. So, a big bright spot that both Republicans and Democrats came together on. 300 million bucks extra for K through 12 school districts, a third of that going to the state’s 100 least funded districts.

There’s a group called The Level Up Coalition that says that sending that extra money to those districts will help get them closer to their wealthy counterparts. So that’s a bipartisan win from what I can gather. There’s tens of millions of dollars for other things like special education. Universities that are part of the state system of higher education are also going to get a little more money, a share of $50 million from the American Rescue Plan. And that’s one of the only instances that the state legislature actually put that money to use.

As you mentioned, a lot of left leaning Democrats and human service groups were pretty upset that more money isn’t going to be spent in areas that they say need it. Did anyone at the negotiating table reveal how that decision was reached?

Well, House Republicans shared something with us that I thought was interesting, which is – the GOP is hesitant to often spend more money in any given year because they believe that’ll set the state up for failure later on.

Let’s say you give a program a bunch of money, a giant infusion one year, that then sets that as their new base level of funding. So, if you don’t have the cash to keep that going year after year, it’ll lead to deficit spending later on for whatever that agency or program was counting on.

Republicans also lean on a rule in state law that says a budget must be balanced each year. So, they don’t want to put more money towards something one year and not be able to prop it up others. Economists are divided on that as to whether or not that would actually happen, but I think Republicans kind of feel their hands are tied legally and politically into this sort of austere position.

WITF’s Capitol Bureau Chief Sam Dunklau. Sam, thanks for joining us.

Thanks, Julia.