|
|
|
|
|
BUDGET SECRETARY OFFERS MID-YEAR BRIEFING
Budget Secretary Randy Albright issued the state's annual mid-year budget briefing on Dec. 14, offering an overview of the commonwealth's fiscal status for FY 2017-2018. Secretary Albright indicated that the administration is projecting a modest $31 million surplus, with revenue projections through November at $47.2 million above original estimates and corporate, consumption and other taxes exceeding expectations. For that reason, Albright said he does not anticipate a need for supplemental appropriations for the current fiscal year.
Yet to be implemented for FY 2017-2018, though, is a requirement that the budget secretary develop a list of $300 million in transfers from dedicated funds to the General Fund; during his briefing, Albright noted that based on continuing review, the administration feels there may be tens of millions available in those funds, but not hundreds of millions. In addition, the transfer of $200 million from the Joint Underwriting Association to the state's general fund has been delayed, after a federal judge granted an injunction sought by the Association while it challenges the transfer in court. Albright indicated the administration believes it is on solid legal ground and the transfer will proceed.
Looking ahead to FY 2018-2019, the Secretary said the revenue package signed into law in October should not lead to a structural deficit, nor should the governor's upcoming FY 2018-2019 budget proposal require broad-based tax increases in order to balance. Gov. Wolf is scheduled to deliver his FY 2018-2019 budget address on Feb. 6.
Albright commented as well on the annual long-term economic and budget outlook released last month by the state's Independent Fiscal Office (IFO), which acknowledged that the FY 2017-2018 funding package is expected to make approximately $2.3 billion of new revenue available for the current fiscal year - enough to maintain a positive ending balance - but also noted its belief that this impact is largely temporary because most of the proceeds are derived from borrowing and one-time transfers.
The IFO also projected that long-term costs will continue to grow, while long-term revenue potential is limited. Together, the IFO felt this could lead to a potential budget imbalance of nearly $1 billion in the 2018-2019 fiscal year, although if FY 2017-2018 revenues are not realized as expected, that could produce an additional deficit for the current year that would have to be addressed. Albright recognized the differences between his update and the IFO outlook, saying the IFO reported obligations and expenditures that are higher than the administration believes they are, and that the IFO underestimated expected revenues.
|
|
HOUSE ADVANCES BUDGET REFORM LEGISLATION
A six-bill legislative package seeking to reform the state budgeting process has been approved by the House and is now on its way to the Senate. As a whole, the legislation imposes additional budget management requirements on the executive branch once enacted, particularly in the event of revenue shortfalls, as well as more information about balances in special funds and mandated costs.
House Bill 1940
, introduced by majority leader Dave Reed (R-Indiana), would require an official revenue estimate to be signed when the general appropriations bill becomes law, regardless of whether the bill is signed, and would require the budget secretary to put the amount of any deficit into reserve. Along the same lines, Rep. George Dunbar (R-Westmoreland) sponsored HB 1942 to require the budget secretary to place funds in reserve in the event of a mid-year projected deficit, starting in December and revising revenue estimates each month thereafter.
Other bills would require additional information as part of the governor's budget proposal, as well as throughout the budget process. Specifically, HB 1944 (Rep. Sheryl Delozier, R-Cumberland) would require the governor to submit suggested legislative language to implement his budget proposal within 15 days of delivering the budget address to the General Assembly. More details would also be required for supplemental appropriation requests under HB 1945 (Rep. Rosemary Brown, R-Monroe), including an explanation of cost-savings or other reforms which address the causes underlying a supplemental appropriation request. Finally, legislation offered by House Appropriations Committee chair Stan Saylor (R-York), HB 1941, would provide time limits on budgetary waivers before unused funds would lapse and be returned to the State Treasury, while HB 1943, introduced by Rep. Eric Nelson (R-Westmoreland), would require each state agency to prepare quarterly reports on funding committed and awarded from special funds for grants and subsidies.
All six bills were approved by a 116-76 vote, with Republican members voting in favor and Democratic members voting in the negative.
In addition to these bills, on a 103-83 vote the House approved
HB 110
, a proposed amendment to the state constitution to limit the growth in state spending. The measure, offered by Rep. Ryan Warner (R-Fayette) would restrict budget increases in a given year to the average change in the consumer price index over the preceding three years plus the average change in the state's population over the past three years. A constitutional amendment requires approved by General Assembly in the same form in two subsequent legislative sessions, and then voter approval by referendum. This is the first session for consideration of the legislation and no action is yet scheduled by the Senate.
|
|
SPROCK FIX ADVANCES FROM COMMITTEE
On Dec. 12, the House Urban Affairs Committee unanimously reported HB 1814, introduced by former CCAP member Rep. Mark Keller (R-Perry), which would amend the Real Estate Tax Sale Law (RETSL) to clarify that the owner of property in the delinquent tax sale process remains responsible for the maintenance and upkeep of that property, regardless of the property's status in the process. In 2002, the Commonwealth Court held in Commonwealth v. Sprock that because a delinquent property exposed at tax sale but not sold was subsequently held in trust by the tax claim bureau, the tax claim bureau was considered the owner for the purpose of the local municipality's nuisance ordinance. House Bill 1814 would clarify that if a property is exposed to a tax sale but not sold, legal title remains with the owner of record. The county tax claim bureau's role as trustee would offer only the control necessary to convey the property under RETSL and would not subject the county to any liability for maintenance or nuisance remediation.
House Bill 1814 now goes to the full House for consideration. Similar legislation, SB 851 (Sen. David Argall, R-Schuylkill) was also reported by the Senate Urban Affairs Committee in October and has been re-referred to the Senate Appropriations Committee.
|
|
CONGRESS APPROVES TAX REFORM PACKAGE
A Congressional conference committee released the final text of a comprehensive tax reform plan on Dec. 15, representing a compromise between versions previously adopted by the U.S. House and Senate in early December. Both chambers moved quickly to send the bill to the President's desk, with a final Senate vote of 51-48 and a final vote in the House of 224-201. All Republican members of the Pennsylvania congressional delegation voted in favor of the measure, with all Democratic members voting in the negative.
In general, the Tax Cuts and Jobs Act (H.R. 1) maintains seven individual tax brackets, but reduces the rates for all tax brackets. The bill also doubles the standard deduction individuals and families may take, reduces the corporate tax rate to 21 percent beginning in 2018 and includes a new deduction for owners of pass-through businesses. Perhaps most notably, the bill phases out all personal income tax provisions, including the rate cuts, at the end of 2025, setting up a significant fiscal decision for future lawmakers.
While previous House and Senate bills had proposed to eliminate the state and local tax (SALT) deduction for income taxes, with a property tax deduction capped up to $10,000, the compromise retains a capped SALT deduction for a combination of property taxes and either income or sales taxes. The final bill also reduces the mortgage interest deduction limit to $750,000, where the Senate had originally proposed to maintain the $1 million limit and the House had proposed to cap it at $500,000.
For counties, good news in the final package included preservation of the tax-exempt status of municipal bonds and private activity bonds. On the other hand, the compromise eliminates the tax-exempt status of re-financing bonds, which would be effective Dec. 31, 2017; counties have used this exemption to save taxpayers money on infrastructure projects. Additional analysis can be found at www.naco.org.
|
|
2018 JUDICIAL SALARIES
In the Dec. 15 Pennsylvania Bulletin, the Administrative Office of Pennsylvania Courts published the judicial salaries that will take effect on Jan. 1, 2018. The 2018 salaries will be subject to a 0.8 percent cost-of-living adjustment and thus the annual salary of a judge of the court of common pleas, against whose pay the district attorney salary is also established, is set at $180,299
.
|
|
FINAL 2017 COUNTY PRIORITIES STATUS REPORT
In January 2017, CCAP members identified four priority issues for the year, including human services system reform and funding, diversifying the county tax base, maintaining the shale gas impact fee, and preventing substance abuse and drug overdose. A final report on the status of these priorities and the related legislative, communications and grassroots activities that have occurred throughout 2017 is available at www.pacounties.org by clicking Priorities under the Government Relations tab.
|
|
| |
|
