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| STATE REVENUE DEAL REMAINS ELUSIVE
In late July, the state Senate narrowly approved a $1.8 billion revenue package amended into HB 542, to balance the state's FY 2017-2018 budget which became law on July 10. The legislation awaits action by the House, and potentially a conference committee if House-amended, before it can go to the Governor's desk. As of this writing, the earliest scheduled session days are mid-September.
In the most recent developments, House Majority Leader Dave Reed (R-Indiana) told the media that the House Republican caucus does not support the Senate's revenue package because of its reliance on broad-based taxes such as new or expanded gross receipts taxes on natural gas, electricity and telecommunications. Instead, his members would prefer alternatives such as further liquor privatization efforts and the legalization of video gaming terminals.
In the meantime, Gov. Wolf announced that he is putting $188.3 million in discretionary state spending in reserve, covering 68 line items across multiple agencies. The move has been described by the Governor's office as a temporary measure to help manage funding, such as discretionary grants that go to specific organizations or programs, and does not reflect final decisions related to these programs if the FY 2017-2018 budget shortfall is not addressed.
In addition, state Treasurer Joe Torsella authorized a $750 million line of credit to support the state's General Fund, to pay bills from Aug. 14 to Aug. 23. That transfer, according to Torsella, is both earlier and larger than other lines of credit that have been similarly authorized in previous years. The Treasurer more recently warned that on Aug. 29 the General Fund will again approach a negative balance, and expressed concern about providing a second loan to the commonwealth without a balanced budget in place.
On the positive side, the state's Independent Fiscal Office, in its July 2017 monthly trends report, noted that the commonwealth had collected $2.1 billion in General Fund revenues for the month, an increase of $113 million (5.7 percent) compared to July 2016. The full report, including a breakdown of select General Fund tax revenues, can be found at
www.ifo.state.pa.us
.
Additional details will be provided on CCAP's
Budget News and Updates web page
as they are available.
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PRESIDENT DECLARES NATIONAL EMERGENCY ON OPIOID EPIDEMIC
On Aug. 10, President Trump issued a federal emergency declaration pertaining to the nation's battle against the opioid epidemic. A week earlier, the President's Commission on Combating Drug Addiction and the Opioid Crisis issued a report advising urgent action on its interim policy recommendations. An emergency declaration, although typically reserved for short-term crises, allows the government to rapidly mobilize and deploy treatment resources with less administrative oversight.
While the White House is expected to release a more detailed plan, there is speculation that the emergency declaration could temporarily empower states to override regulations around Medicaid funding for mental health services, and provide states with model legislation to make overdose antidote naloxone more accessible to the public. Others have suggested that a federal fund could be established to improve access for treatment for opioid addiction.
Prevention of substance abuse and drug overdose continues to be a priority for Pennsylvania's counties, which have called for strong state, county and local partnerships to be reinforced with appropriate resources to effectively address the opioid epidemic. At the federal level, the National Association of Counties (NACo) has partnered with the National League of Cities to create a National City-County Task Force on the Opioid Epidemic, which has developed a report and other strategic recommendations.
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SENATE HOLDS ROUNDTABLE ON PROPERTY TAX REFORM
The Senate Republican and Democratic Policy Committees held a roundtable on property tax reform in Upper Darby, Delaware County, on Aug. 15, hosted by former CCAP member Sen. Tom McGarrigle (R-Delaware).
The roundtable focused largely on school property tax reform, primarily
SB 76
, introduced by Senate Republican Policy Committee chair Sen. David Argall (R-Schuylkill). The legislation seeks to eliminate school property taxes and replacing those funds with state revenues generated by increased sales and personal income taxes. Other options on the table for discussion included the proposed constitutional amendment to expand the homestead exclusion, which won the approval of the General Assembly for the second consecutive session in July (
HB 1285
) and will be on the ballot for voter referendum in November.
CCAP Director of Government Relations Lisa Schaefer participated on the roundtable and noted that counties also rely exclusively on the property tax as a local revenue source to support core government services such as child protective services, mental health, intellectual disabilities, substance abuse programs, and the county courts and corrections systems. Schaefer explained that counties have prioritized the need for county taxing options as alternatives to the property tax, such as a local sales, personal income or earned income tax, which would allow counties to determine the most appropriate mix of taxes based on their demographic and economic characteristics.
Full video of the roundtable can be found at
policy.pasenategop.com
. The Policy committees previously held a similar roundtable in Monroe County, and plan to hold additional discussions on the issue in the coming weeks.
More information about this county priority can be found at www.pacounties.org by clicking on Priorities under the Government Relations tab.
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FIRST CHANCE TRUST FUND AMENDED INTO FISCAL CODE
Among the comprehensive amendments the Senate offered to Fiscal Code legislation, HB 453, in late July was the inclusion of language creating the First Chance Trust Fund. Modeled after SB 790, introduced by Sen. Vince Hughes (D-Philadelphia), the First Chance Trust Fund would create scholarships and provide grants to evidence-based programs that benefit youth who are at risk of entering the justice system, including children with a parent in prison.
The Trust Fund, believed to be the first of its kind in the country if enacted, would target regions that have statistically higher high school dropout rates and risks of incarceration. It would be administered by the Pennsylvania Commission on Crime and Delinquency and would be funded by private, tax-deductible donations along with a one percent surcharge on vendors that have a contract in place with the Department of Corrections exceeding $5 million. Other commonwealth agencies would also have the option to include such a provision in their contracts.
The amended HB 453, which includes a number of other issues as well, was approved by a 40-10 vote of the Senate; the bill now goes back to the House for its consideration.
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STATE PLANNING BOARD SENDS RECOMMENDATIONS TO GOVERNOR
In 2016, Gov. Wolf issued a three-part charge to the State Planning Board, seeking input on how to better coordinate state and local infrastructure to provide incentives for regional planning, how to address fragmentation at the state, county and local level, and how to support Pennsylvania's struggling older cities and towns.
Following a series of meetings over several months gathering stakeholder input, the Board approved its
recommendations
in July to send to the Governor. The recommendations include establishing specific state goals and strategic investment principles, using the Keystone Principles as a starting point, that reward regional infrastructure planning, promote shared services and reduce fragmentation, and target investments that revitalize struggling communities. The recommendations also encourage assistance to local governments for planning, for elimination of blight and economic development, for promotion of regional service delivery, and for initiatives to improve the fiscal health of local governments.
Of particular interest to counties, the fiscal recommendations include support for a broader menu of local taxing options for county government, such as a local sales, personal income or earned income tax, to reduce over-reliance on property taxes. In addition, the Board indicated its support for the work of the Local Government Commission's Assessment Reform Task Force, which was formed to look at the state's assessment laws and the reassessment process and to recommend legislative changes and best practices.
Further, the Board noted that a modest measure of additional state funding could be maximized by leveraging funding from counties and match from municipalities to undertake local plans and coordinate them at a county scale. It also suggested providing legal authority to counties to deliver services that are traditionally municipal services; for example, allowing a county to provide police or road maintenance, either directly or by contract, at the request of one or more municipalities.
The Board also recommended specifically encouraging regional service delivery in four areas, including storm water management, e-government (e.g., shared use of digital storage or applications), providing public works services and addressing blight. To the latter point, the Board emphasized the need to promote existing tools and to build capacity for land banks.
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VOTING MATTERS
On Aug. 15, each CCAP voting member was emailed an electronic ballot containing the proposed policy resolutions for 2017 that were reviewed by the delegates at the Aug. 8 business meeting of the CCAP Annual Conference. The member vote taken by electronic ballot will constitute final action on each resolution. Under the CCAP bylaws, the electronic ballot remains open for 10 days, and so will close at 8 a.m. on Aug. 25. Questions can be directed to
PACountiesGR@pacounties.org.
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