Pennsylvania State Capitol

The Pennsylvania State Capitol in Harrisburg.

Associated Press

HARRISBURG — Lawmakers returned to the Pennsylvania Capitol amid a three-month-old budget stalemate Monday, but optimism from top Republican lawmakers about an evolving proposal to fill a $2.2 billion revenue gap did not translate into action.

The Capitol was a flurry of lobbying and rumors, as Democratic Gov. Tom Wolf’s office and top lawmakers negotiated details behind closed doors. No votes were scheduled, and no drafts of bills emerged, as hundreds of pages of legislation remained in private discussions.

The proposed package leans heavily on borrowing, one-time fund transfers and an expansion of casino-style gambling to help bail out the state’s deficit-riddled finances from its biggest cash shortfall since the recession, lawmakers said.

A package of tax increases also would be part of the mix. The deal under discussion does not include a tax on Marcellus Shale natural gas production after House backers — including Democratic leaders — could not raise enough support last week to overcome opposition from House GOP majority leaders and rank-and-file members from northern and western Pennsylvania.

Rank-and-file House Republicans on Monday focused their attention on a proposal to impose the state’s 6 percent sales tax onto commercial storage. Rep. Rob Kauffman, R-Franklin, said the tax covers warehouse operators, one of the biggest employers in his Interstate 81 corridor district.

“As you go down the interstate, there are so many warehouses that are leased out, that’s where the tax would get into,” Kauffman said.

Rep. Russ Diamond, R-Lebanon, called it a “job killer” for his I-81 corridor district.

“For us, that’s equivalent to the shale tax up in northern or western Pennsylvania for Marcellus Shale,” Diamond said.

The deal also would extend the state sales tax to purchases in online marketplaces and fireworks, while scaling back the net operating loss carry-over for larger businesses.

The proposed package is the latest stage of discussions since lawmakers overwhelmingly approved a $32 billion budget bill June 30, about a 3 percent increase, without any agreement on how to fully fund it.

Since then, Wolf has had to postpone certain large payments for lack of revenue flowing into the state’s bank account, and Standard and Poor’s lowered its rating on Pennsylvania’s debt for the second time in three years. With the lower rating, Pennsylvania is now among the bottom five states rated by Standard and Poor’s.

Borrowing would provide the biggest piece of the puzzle, nearly $1.3 billion. The total cost, interest included, could exceed $2 billion over 20 years.

Another $500 million could come from off-budget programs that provide everything from medical malpractice insurance to funding for mass transit agencies and environmental cleanups.

Meanwhile, the package would expand gambling in Pennsylvania, already the nation’s No. 2 commercial casino state.

The state’s licensed casinos could bid on up to 10 licenses to operate a smaller casino with hundreds of slot machines and table games in an area that is far enough away from existing casinos, lawmakers said.

Meanwhile, casinos could pay millions of dollars for a license to open an online portal for people in Pennsylvania to gamble on casino-style games on the internet, while truck stops that meet certain conditions could install slot machine-style machines called video gaming terminals.

The deal under discussion could include a sweetener for supermarkets and groceries that sell beer or wine: removing a requirement that they maintain separate cash registers for alcohol purchases.

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