Penn State Extension may be saved, but the fight for state ag funding is not over.

Veterinary labs, fairs and other agriculture programs are still waiting on almost $26 million in state funding.

After a protracted fight with the Republican-controlled Legislature, Democratic Gov. Tom Wolf allowed a supplemental budget to become law on Sunday, funding Extension, 4-H, the All-American Dairy Show and the Keystone International Livestock Exposition.

But Wolf vetoed the fiscal code, a separate bill that would have released funding for the state Animal Health Commission, vet labs, fairs, race horse drug testing and Pennsylvania Farm Show premiums.

The money for those programs is allocated in the supplemental budget, but the 100-page fiscal code would have authorized disbursements for those programs via the state’s Race Horse Development Fund.

“The perception is that this is all over, and that couldn’t be farther from the truth,” said Chris Herr, executive vice president of PennAg Industries Association.

Wolf vetoed the fiscal code over concerns about its power plant regulation and “inequitable” education funding. The code also contained funding for health care and environmental programs.

The veto is a setback for the state’s three animal diagnostic labs.

Keeping these labs at full capacity could be critical if the state is hit with a major disease outbreak, such as highly pathogenic avian influenza.

“Not having the diagnostic infrastructure in place would be devastating,” said Gary Althouse, chairman of the department of clinical studies at the University of Pennsylvania’s New Bolton Center, which houses one of the labs. “I can’t see ramping down the labs.”

The university secured some of its state funding in the supplemental budget, but it is still waiting for funding for its animal diagnostic lab and equine toxicology research lab, which does race horse testing, Althouse said.

This year’s budget struggle has made PennVet cautious about adding or growing its services. Unless reliable, on-time funding is available, “it’s really hard to plan for the future,” Althouse said.

Penn State had cut back its vet lab capacity somewhat in the last few weeks as the budget talks dragged on, but the lab is now being brought back up to full capacity, said Chuck Gill, a spokesman for the university’s College of Agricultural Sciences.

The Pennsylvania Department of Agriculture, which runs the state’s other animal diagnostic lab, was still working on Wednesday to assess the veto’s effect on the department, said Brandi Hunter-Davenport, the agency’s press secretary.

In addition to the vet lab funding, the fiscal code contained funding for the Penn State Ag Resource Centers. The partnership with the state Department of Agriculture provides information on animal care, food safety and plant health, Gill said.

Althouse and Gill said they were not sure when their universities will be getting the state funding already allocated to their other ag programs.

Herr, of PennAg, said that key officials are still pushing for the remaining ag programs, but he is afraid the effort could lose its momentum while the lab funding is still in limbo.

In the euphoria over the supplemental budget, many people assumed that all of the ag programs had been funded. “Even legislators have the impression that it’s done,” Herr said.

Indeed, Penn State University President Eric Barron thanked supporters of the university in a blog post on Monday, but did not mention the school’s vet lab.

“The agricultural community was particularly impressive in its outreach,” Barron said.

In his post, Barron also tried to patch things up with the 1,100 employees would have been laid off on May 1 had Extension not received state funding.

The fiscal code bill received nearly unanimous support when it passed the Senate in December. A two-thirds vote in that chamber could override Wolf’s veto.

On Wednesday, legislators were still developing their strategy for restoring the vetoed funding.

“There’s a lot of different components to the fiscal code” that could be handled separately or together, said Mike Rader, executive director of the state Senate Agriculture and Rural Affairs Committee.

Meanwhile, fairs are adjusting as they head into their second straight year of uncertain state funding.

“It’s the smaller, free fairs that can really be hurt,” said Dennis Worley, president of the Denver Fair in Lancaster County.

Berks County’s Kempton Country Fair, one of those small, free fairs, has canceled for this year in part because of the funding bottleneck.

Denver, though also small and admission-free, is in a good financial situation.

After some recent lean years, the fair made a big push to add sponsorships from local businesses and individuals, Worley said.

The state money would certainly be nice, but the fair is not dependent on it, he said.

“We’re fine,” agreed Sue Werner, chairwoman of the Lebanon Area Fair, a much larger fair.

“We’re very fortunate. We don’t have a free gate. We have some well-attended tractor pulls” that help the fair’s finances, Werner said.

Farm Show exhibitors are taking their late payments in stride.

It’s not unusual for premiums to be paid this late, said Dwight Mickey of Shatzer Fruit Farm, who has been exhibiting at the Farm Show for 40 years.

“I figured that was a minor issue” compared with Penn State Extension funding, he said.

Mickey’s Chambersburg orchard won a slew of awards for its apples at January’s Farm Show.

“It’s the young people I feel bad about,” Mickey said.

Youth exhibitors may have needed the money to start their next project, and the slowness of the payments does not set a good example for them, he said.

Phil Gruber is the news editor at Lancaster Farming. He can be reached at (717) 721-4427 or pgruber.eph@lnpnews.com. Follow him @PhilLancFarming on Twitter.