- Associated Press - Tuesday, October 13, 2015

HARRISBURG, Pa. (AP) - Gov. Tom Wolf said Tuesday he won’t cave on his demand that lawmakers agree to measures to wipe out a long-term deficit that has plunged Pennsylvania’s credit rating into the bottom ranks of states.

The Democrat, in a regularly scheduled appearance on Pittsburgh radio station KDKA-AM, reported no progress in budget talks since the House last week defeated his $2.4 billion tax package. But he said he believes Republicans know they have to fix the deficit and he will insist on it.

“I think there’s a dawning awareness that I’m not going to cave on this, I can’t cave on this,” Wolf said. “I’m one of 12.7 million Pennsylvanians, and we’ve got to have our state on a sound financial basis. That’s all I want.”

Pennsylvania’s government has been in a partial shutdown for more than 100 days as the Republican-controlled Legislature resists Wolf’s request for a multibillion-dollar tax increase that Wolf says is necessary to resolve the deficit and help correct steep disparities in public school funding.

The stoppage of state aid has resulted in layoffs and millions in borrowing costs as school districts, counties and social service organizations and businesses try to scrape by. Waiting lists for in-home care services for the elderly are growing. Some programs, such as relocation assistance for domestic abuse victims or the homeless, have no money.

Republicans have effectively agreed to one of Wolf’s key demands - $400 million in new aid to schools for operations and instructional expenses - but they have otherwise rejected Wolf’s push to raise the money primarily from an increase in the state income or sales taxes.

Wolf did not mention during the interview whether he would continue to seek higher income or sales taxes. His administration and Senate Minority Leader Jay Costa, D-Allegheny, said later Tuesday that they have not abandoned the idea.

All three major credit rating agencies - Fitch Ratings, Moody’s and Standard & Poor’s - downgraded Pennsylvania’s debt after last year’s budget was balanced with more than $2 billion in one-time items. That followed two earlier downgrades in the previous two years.

Wolf, a first-term governor, maintained Tuesday that a refusal to fix the deficit now will mean cuts next year in education and human services, an assertion that Republicans dispute.

In the meantime, Republicans have pressed Wolf for concessions on benefit cuts in the state public employee pension systems and privatizing the state-controlled wine and liquor system. They also are advancing an expansion of casino gambling as a way to lessen the need for a tax increase.

Lawmakers who support a gambling expansion estimate it could mean hundreds of millions of dollars in one-time license fees plus collections from taxing a new stream of gambling profits.

“I haven’t heard anybody say that is the end-all be-all to our budget deficit,” Wolf said Tuesday. “I’m open to a conversation on that, and I presume you can design it in a way that would bring in some revenues but not enough to plug a $2 billion deficit.”

Among the bills pending in the Legislature are measures that would allow Pennsylvania’s casinos to offer Internet gambling or station slot machines in new locations, including off-track betting parlors and international airports.

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