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LEGISLATURE SENDS FUNDING PACKAGE TO GOVERNOR
A flurry of legislative activity to resolve the revenue shortfall in the FY 2017-2018 budget has resulted in a full package of bills now on the Governor's desk.
The House had adopted amendments to the Tax Reform Code in HB 542 the previous week, reflecting that chamber's latest proposal to close the $2.2 billion budget gap, by a 102-88 vote. The amendments derive $1.5 billion from the state's Tobacco Settlement Fund, either by borrowing against the funding stream or by selling a portion of the settlement fund over 10 years; impose a new tax on consumer fireworks; and require online vendors to remit the state sales tax, among other provisions.
When the Senate returned on Oct. 23, the Senate Appropriations Committee proceeded to amend HB 674 with changes to the Fiscal Code, also required for implementation of the FY 2017-2018 budget. Those amendments add a provision requiring $300 million to be transferred from special funds and restricted accounts; unlike earlier proposals for one-time transfers from dedicated funds that identified which transfers would take place, the proposal gives discretion to the Budget Secretary to develop a list of amounts to be transferred that would then be submitted to the state Treasurer.
The Fiscal Code amendments also include language establishing the First Chance Trust Fund, proposed in prior legislation, which would create scholarships and provide grants to evidence-based programs for the benefit of youth at risk of entering the justice system. The proposal includes children with a parent in prison, and targets regions that have statistically higher high school dropout rates and risks of incarceration. Unlike prior versions of the bill, the amendments do not include an extension of the state's recycling fee, set to expire on Jan. 1, 2020. The Senate approved HB 674 as amended by a 41-9 vote, and the House concurred in amendments the following day by a 109-75 vote. The bill is now on the Governor's desk.
In addition, the revenue package includes an estimated $238 million from expanded gaming for the General Fund; those provisions are detailed in the following article.
Prior to this week's action, Gov. Wolf had announced plans to
manage the adopted state budget, primarily by borrowing $1.25 billion against revenues generated by the Liquor Control Board, although an emergency injunction was filed to temporarily halt the process. In addition, Gov. Wolf indicated the commonwealth will begin to accept proposals to execute a lease-leaseback arrangement for the state's Farm Show Complex to generate revenues. It was unclear as the Bulletin went to press whether those measures would continue to be pursued in light of the legislative resolution to the revenue shortfall.
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EXPANDED GAMING GOES TO GOVERNOR'S DESK
As part of the revenue plan to balance the FY 2017-2018 budget, the General Assembly approved legislation expanding gaming in Pennsylvania. In the process they reauthorize the local share assessment on casino slot machine revenue that was declared unconstitutional by the Supreme Court in 2016, with an annual assessment of $10 million for Category 1 and 2 casinos.
The amendments to HB 271 also authorize up to ten Category 4 licenses (mini-casinos), which would be available via sealed bid auctions open to Category 1 and 2 licensees. However, the mini-casinos cannot be located in within 25 miles of another Category 1, 2 or 3 casino, or within Pike, Wayne, Fayette or Montgomery counties; in addition, municipalities would have until Dec. 31, 2017, to exercise the option to prohibit location of a Category 4 facility in the municipality. Table games at these facilities would be taxed at a rate of 14 percent to be deposited in the state's General Fund, and slots would be taxed at a total of 50 percent, with 34 percent deposited in the Property Tax Relief Fund, five percent going to the Commonwealth Financing Authority (CFA) for grants in any county, five percent to counties which saw a decrease in local share assessment funds from slots compared to FY 2017-2018, and six percent to the Gaming Economic Development Trust Fund. A local share of one percent on table games and two percent on slots would be used for grants through the CFA to the host county, as well as the same share to the host municipality.
Further, HB 271 would authorize video gaming terminals (VGTs) at truck stops, although counties hosting a Category 1, 2 or 3 facility would have 60 days to opt out and no VGTs could then be placed in that county. A local share of ten percent would go to the CFA for grants to any county. Casinos would also be permitted to offer interactive gaming (iGaming), and interactive gaming would be authorized at airports with local shares to host counties in both instances.
The Senate approved the bill by a 31-19 vote, while the House approved the bill by a 109-72 vote, sending the bill to the Governor's desk.
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SENATE HOLDS HEARING ON ELECTRONICS RECYCLING
On Oct. 24, the Senate Environmental Resources and Energy Committee held a hearing on SB 800, introduced by Sen. Rich Alloway (R-Franklin), to overhaul the state's electronics recycling law by creating a statewide system that also changes how funding for electronics recycling is calculated. The intent is to better ensure costs will be covered by manufacturers, a problem under current law.
CCAP participated on a panel with the PA State Association of Township Supervisors and Keep Pennsylvania Beautiful, noting that many counties that had offered electronics recycling opportunities are no longer able to do so. As a result of the loss of these and other collection opportunities, illegal dumping of electronics is increasing across the state.
CCAP noted that counties have called for changes that authorize multiple entities to establish collection sites, including counties that are willing and able to do so, offer flexibility rather than a single convenience standard, and provide full funding by manufacturers to cover costs. While CCAP raised some questions about the implementation of the bill and further indicated that market development for electronics recycling is critical to any program's success, SB 800 generally meets the elements sought by counties. CCAP's written testimony can be found at www.pacounties.org on the Legislative Action Center.
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SPROCK FIX ADVANCED BY SENATE PANEL
The Senate Urban Affairs and Housing Committee recently reported SB 851, introduced by Sen. David Argall (R-Schuylkill), 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, Commonwealth Court held in Commonwealth v Sprock that because a delinquent property exposed at tax sale but not sold is 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. Senate Bill 851 would clarify that if a property is exposed to a tax sale but not sold, legal title would remain 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 the county would not be subject to any liability for maintenance or nuisance remediation.
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ELECTRONIC BALLOT RETURN FOR OVERSEAS MILITARY CONSIDERED
The Senate State Government Committee recently reported SB 563, introduced by Sen. Patrick Stefano (R-Fayette), which would require the Pennsylvania Department of State to develop a secure online system for military and overseas voters to electronically transmit completed ballots by email or fax. While counties have supported legislation promoting accommodations for military personnel and overseas civilians to use electronic means to facilitate absentee balloting, CCAP indicated concerns with electronic transmittal of completed ballots, including by email or fax, until concerns for the security and integrity of the election process have been fully addressed.
An amendment was unanimously adopted in committee to require the Department of State to promulgate regulations for the electronic submission of election materials within 18 months of the effective date of the bill. Senate Bill 563 has been re-referred to the Senate Appropriations Committee.
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LOSS OF SALT DEDUCTION REMAINS ON TABLE
As discussions on federal tax reform continue, elimination of the long-standing federal deduction for state and local taxes (SALT) remains a significant threat. The SALT deduction has been part of the federal tax code since 1913, allowing taxpayers to deduct the amount they pay in state and local taxes from their federal tax burden. However, the proposal would eliminate the deduction for individuals and families, effectively creating double taxation, with taxpayers paying federal taxes on income put toward state and local taxes. At the same time, businesses would still be permitted to deduct SALT payments as eligible business expenses. The U.S. House voted 216-212 on Oct. 26 to adopt a 2018 budget resolution that included language to eliminate the SALT deduction, paving the way for introduction of a tax reform bill which House Ways and Means Chair Kevin Brady (R-TX) indicated would occur on Nov. 1, with committee markup scheduled for Nov. 6.
NACo has co-founded Americans Against Double Taxation, a coalition of state and local government organizations, service providers and others to preserve the SALT deduction. Advocacy resources and more details about the impact of the elimination of the deduction can be found at www.americansagainstdoubletaxation.org.
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CCAP FALL CONFERENCE ACTIVITIES
CCAP policy committee members will meet Nov. 19 in conjunction with the CCAP Fall Conference, Nov. 19 to 21 at The Hotel Hershey, to develop their 2018 work plans and set legislative priorities for 2018. The Conference also includes a membership voting session on Tuesday, Nov. 21. The agenda includes votes on the Association's 2018 action plan and 2018 dues schedule. The voting information will be emailed to the membership in advance of the Conference.
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