Pa. legislature making few cuts, no promises to tap hefty reserves as state faces massive budget shortfall

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HARRISBURG — The coronavirus outbreak in Pennsylvania could cost the state budget upwards of $4 billion, and Gov. Tom Wolf has taken action to cut spending, laying off more than 2,500 employees, halting paychecks for an additional 14,000 workers, and freezing all but essential hiring and department purchases.

But the Republican-led state legislature — one of the largest and highest paid in the country, spending $360 million each year in addition to holding $172 million in reserves — has so far taken few steps to cut expenses or offer up money of its own during the crisis.

In fact, Senate Republicans recently hired Charles Zogby, a onetime top aide to two former GOP governors, at an annual salary of $110,000 to be a special assistant on budget issues. In February, Zogby departed as the state-appointed financial administrator for the Erie School District.

“It’s a little tone deaf,” said Christopher Borick, a political science professor at Muhlenberg College.

For the most part, it has been largely business as usual for the 253-member legislature.

Lawmakers are paid more than $90,000 a year, with leadership earning up to $141,000. In addition to that, they are allowed to collect $178 in per diems when they travel to the Capitol for voting sessions or committee meetings, without needing to provide receipts.

Legislators also have access to state-paid vehicles, and if they opt to drive their own car, they can collect 57 cents per-mile reimbursement.

In both chambers, some members have continued traveling to the Capitol — allowing them to potentially collect mileage and per diems — despite the fact that government offices have largely shut down and both chambers passed temporary rules allowing meetings and voting sessions to be conducted remotely.

Mike Straub, spokesperson for House Majority Leader Bryan Cutler (R., Lancaster), said fewer than half of the chamber has chosen to come to Harrisburg for votes, though legislative officials acknowledged they would be eligible to collect per diems if they did.

“Those members are fulfilling their duties on behalf of their constituents to represent their constituents on the floor, or in committee proceedings,” Straub said.

Neither the House nor Senate has offered to relinquish all or a portion of the money it has in reserves to put toward next year’s state budget, which is widely expected to be battered by sagging revenue collections and increased demand for public assistance programs.

The legislature’s reserve fund is large enough that it could fund the individual budgets of several state departments — including the Department of Health, a critical agency at the center of the coronavirus response — for an entire year. It is half the size of the state’s entire $340 million rainy day fund, which the governor can tap to help pay for services during an economic downturn or other emergency that leads to an unexpected dip in revenues.

But unlike the state’s rainy day fund, the legislature’s reserve — which can be rolled over from one year to another — doesn’t have to be used for a specific purpose. Though it has historically been justified as necessary to protect the balance of power should the governor cut off legislative funding during a budget battle, there are no rules — or limits — on how the money can be spent.

One year, for instance, lawmakers used reserve money to give themselves the option of an early pay raise that was later struck down by the courts

“It’s a fair question to inquire whether or not this level of financial independence is excessive — and to ask the follow-up question of whether this independence is beyond what’s prudent, let alone earned or deserved,” said Robert P. Strauss, an economics and public policy professor at Carnegie Mellon University.

Straub said leaders are discussing options for cost savings because they “anticipate long-term effects,” though he did not elaborate or give any specifics.

In the Senate, Republicans who control the chamber made no commitments.

Kate Flessner, spokesperson for Senate President Pro Tempore Joe Scarnati (R., Jefferson), said in an emailed response that the Senate continues to “operate fully,” despite largely working remotely, and that constituent demand for services during the public health crisis has only increased.

Any cost savings that may come from holding remote voting sessions or other work adjustments “will be examined as part of the budget process,” Flessner said.

She sidestepped questions about whether the chamber would consider relinquishing some or all of its reserve cash to help prevent cuts to state aid or programs.

Senate Republicans also declined to respond to questions about their decision late last month to hire Zogby, 58, who served as the budget secretary under Gov. Tom Corbett, and as a policy chief and education secretary under Gov. Tom Ridge.

He is known as an advocate for school choice, charter schools, and privatizing the state liquor and wine stores. In 2018, Wolf appointed him to be the financial administrator for the distressed Erie School District. He left that post in late February.

In his new position, Zogby, who began March 26, will focus on analyzing the impact of the $2.2 trillion federal stimulus legislation, legislative officials said.

Zogby declined comment. Sen. Pat Browne (R., Lehigh), who chairs the Senate Appropriations Committee, did not respond to requests for comment on the decision to hire Zogby.

Browne’s committee already employs budget analysts and other staff who examine the fiscal impact of legislation. Wes Leckrone, a political science professor at Widener University, also noted that the state has an Independent Fiscal Office, an agency created by the legislature to provide, among other duties, independent analyses of the state’s finances.

“It seems you could use them for budget projections,” Leckrone said.

Earlier this week, the fiscal office released a report that said the state could face a nearly $4 billion shortfall as the coronavirus crisis shutters businesses, leading to mass layoffs, and weakens revenue collections.

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