HARRISBURG — In an unusual move brought about by the state’s ongoing budget impasse, the State Treasury has said it will advance nearly $1.9 million to the House Democratic caucus so it can pay staff during an ongoing state budget stalemate.
Because the state entered the new fiscal year July 1 without a signed budget, the 253-member Legislature and its staff have been operating on reserve funds, which for the House Democratic caucus have been exhausted.
The treasurer’s office said in a statement, “sufficient legal justification exists to pay legislative employees even without a budget appropriation” and the agency intends to fulfill a payroll request submitted by the Comptroller of the House so that House Democrats can meet their payroll obligation next week.
“Without the ability to pay its employees, the General Assembly would be unable to enact laws related to the promotion and preservation of the general welfare — including the enactment of a budget. Therefore, just as it is necessary to pay executive and judicial branch employees who perform essential functions, it is necessary to pay legislative employees who perform the essential functions of the General Assembly,” according to the treasurer’s statement.
Executive branch and judicial employees are being paid as normal, despite the state not having an enacted budget, the treasurer’s office noted in an eight-page legal opinion obtained by the Post-Gazette outlining the legal basis for paying the legislative salaries during the impasse.
“Additionally, it is the position of the Treasurer that all state employees, including those in the legislative branch, have an absolute right to be paid for [work] performed. As a result, Treasury plans to continue to make payments when presented with a properly executed payroll request as it has since the beginning of the budget impasse.”
The legal opinion from Treasury’s Chief Counsel Christopher Craig noted that while these funds will be used by House Democrats, Treasury believes the same legal rationale would apply to any employees of the Legislature, regardless of their caucus.
It’s not clear if Republicans in the Legislature will contest an advance from the Treasury on constitutional grounds. Other caucuses have said they would likely seek lines of credit from private lenders should they run out of funds as the budget impasse continues.
“This is an unprecedented occurrence, where you have the Treasury, without a budget or authority, transferring these funds,” said Steve Miskin, a spokesman for House Republicans.
House Democrats have been affected before other caucuses because House funds used to be split evenly between Republicans and Democrats, but that changed in 2011, and more funds went to the majority party.
Democratic caucus spokesman Bill Patton said, “This was always an option for us and we’re using it now that our caucus reserve funds are gone. Once a new budget is enacted, all funds advanced by Treasury will be deducted from the legislative appropriation.”
The state treasurer is usually an independently elected official. However, the current treasurer, Timothy Reese, was appointed by Democratic Gov. Tom Wolf to fill the vacancy in that office earlier this year when Treasurer Rob McCord was forced to resign.
A spokesman for the governor, Jeffrey Sheridan, said Mr. Wolf’s budget office was only involved as far as establishing a ledger account for the funds — essentially a necessary bookkeeping function to help keep track of what funds are being spent during the impasse.
“This is completely bookkeeping and not a policy decision,” Mr. Sheridan said, and was done at the request of House Minority Leader Frank Dermody, D-Oakmont.
Mr. Wolf vetoed a Republican-crafted budget passed by the Legislature on June 30; since that time, the two sides have been negotiating but an agreement does not appear to be close. Because of the budget standoff, state money that would normally flow to schools and human service agencies has been halted since July 1, forcing some school districts and nonprofit service providers to seek lines of credit.
“We understand the hardships that are being faced” by schools and nonprofits, Mr. Sheridan said. He said the governor is working toward a final budget and wants any agreement to cover interim borrowing costs for school districts and human service providers.
First Published: September 10, 2015, 2:56 p.m.
Updated: September 11, 2015, 3:51 a.m.
