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Jun 18, 9:58 AM EDT

Democrats take leap of faith into budget talks with GOP



HARRISBURG, Pa. (AP) -- It's the big head-scratcher in the Pennsylvania Capitol.

House Democrats this month helped pass bills that advanced a couple long-sought Republican priorities - scaling back traditional public pension benefits and breaking state-control over wine sales - apparently without any assurance that the Legislature's huge GOP majorities will return the favor to Democratic Gov. Tom Wolf.

With less than two weeks until the fiscal year ends, the question now is what Wolf will get from tax-averse Republicans to advance his efforts to wipe out a damaging deficit and close huge funding inequities between wealthy and poor school districts.

"We're negotiating with them," said House Minority Whip Mike Hanna, D-Clinton. "That's probably the biggest thing in the world. I mean, at this point last year, (House Republicans) had told us we weren't in the room, that they were going to pass their budget with no Democratic input."

Wolf and lawmakers spent much of the last year mired in a bare-knuckled partisan fight over Wolf's first budget, an embarrassing crisis that all sides seem determined to avoid repeating, particularly in an election year.

Legislative leaders and Wolf say there's been a different, more positive tone as they enter the final stretch to the July 1 fiscal-year deadline. But they also so far have failed to reach agreement on basic elements of a budget package, including how much the state will spend and whether taxes will go up to pay for it.

For sure, cooperation between House Republican and Democratic leaders is a turnaround from the hard-charging partisan tactics of majority Republicans in the last five years. Plus, the pension and wine sales legislation contained concessions that endeared Democrats, concessions that had been missing from previous GOP bills.

Still, rank-and-file Democrats privately worry that they've taken an ill-advised leap of faith.

"We needed to create a better atmosphere here, we needed to create a sense that we can work together and get things done, and I think we're going to have to continue to do that," said House Minority Leader Frank Dermody, D-Allegheny. But, he acknowledged, "we're still working on what revenue, and where we're going to get that revenue and how we're going to raise it. That's crucial."

Asked what kind of leverage he has left, Wolf said he already tried a broad compromise with lawmakers in his first budget. That collapsed amid a House GOP revolt and played into a record-breaking stalemate. Now, Wolf said, he's trying to deal with individual pieces of legislation as they become ready.

"As I keep saying, I'm noting a very open and cooperative spirit in this building and I think we're moving forward with the budget process," Wolf said Thursday.

For his part, Wolf proposed a spending increase of $3.3 billion, or 10 percent, to $33.3 billion, paid for by a $2.7 billion tax package, anchored by higher taxes on income, sales and tobacco products. He asked for a two-year, $550 million increase for public school instruction and operations - lawmakers approved $200 million of that already - and the elimination of "smoke and mirrors" to balance budgets.

However, lawmakers haven't approved a major election-year tax increase in modern Pennsylvania history, and Republicans say they won't consider anything close to that. House officials have reported no agreement there on spending, although Senate Minority Leader Jay Costa, D-Allegheny, said he expected a $31.5 billion House budget bill that will require changes to pass that chamber.

Talks in the House revolve around raising cigarette taxes and expanding casino-style gambling, but Democrats say more must be done to cover a 2016-17 deficit projected in January by the Legislature's Independent Fiscal Office at $1.8 billion.

Luke-warm tax collections aren't providing much help and it's not clear whether a gambling expansion - ideas include expanding casino-style gambling to airports, bars, truck stops, off-track betting parlors and casino-run websites and mobile applications - can even pass.

Lawmakers are eager to leave the Capitol without a fight and return to their re-election campaigns. That is fueling speculation that Democrats will have to swallow an ugly - if not late - budget packed with one-time stopgaps that requires fixing after the election.

"It'll be in the back of everyone's mind," said Rep. Rob Matzie, D-Beaver, "whether or not the governor or leadership will admit to it."

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Follow Marc Levy on Twitter at www.twitter.com/timelywriter. His work can be found at http://bigstory.ap.org/author/marc-levy.

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