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FY 2016-2017 BUDGET BECOMES LAW
Governor Wolf allowed
SB 1073
, the commonwealth appropriations bill for the FY 2016-2017 fiscal year, to become law without his signature on July 11. The final budget agreement spends about $31.6 billion in state funds, representing an increase of about $1.4 billion over FY 2015-2016 spending but less than the $32.7 billion budget proposed by the Governor in February. This special edition of the Bulletin contains highlights and analysis of impacts to counties.
The FY 2016-2017 budget will not include an increase in the state's personal income or sales tax, as Gov. Wolf originally proposed, but still requires new revenues to balance the spending plan. On July 13, a conference committee reported HB 1198, including a $1 per-pack tax increase on cigarettes (to $2.60 per pack), an extension of the state's six percent sales tax to digital downloads of music, videos, books and apps, as well as higher taxes on banks and an extension of wholesale taxes to smokeless tobacco and electronic cigarettes. Both the House and Senate concurred, and late that day the Governor signed the revenue package into law. Earlier in June, Act 39 of 2016 had also authorized expanded sales of wine and beer across the state, expected to generate around $150 million in FY 2016-2017.
The spending plan fails to include a three-year phased restoration of the ten percent aggregate cut to seven line items in FY 2012-2013 which, while part of the Human Services Block Grant, impacts core services across all 67 counties. Restoration was proposed by the Governor and is the counties' priority on human services funding. Thus, the cut is maintained for the fifth straight year. Although budget funding increases by about $33 million for FY 2016-2017 for county child welfare funding, the budget also retains the rebalancing initiative which shifts a full quarter of funds into the following fiscal year. Fiscal code language adopted earlier in the year mitigates its effect, allowing the Department of Human Services (DHS) to issue certified funding for needs based budgeting purposes and allows dispersal of fourth quarter funds the following July, even if a budget is not in place.
Counties did see significant wins on two county priorities in the omnibus amendments to the Human Services Code that were approved in HB 1062. First, the amendments will phase out the requirement that county nursing homes pay ten percent of the non-federal cost of services for Medicaid residents in their nursing homes, also referred to as the "county share," concurrent with the implementation of Community HealthChoices but no later than 2019. Eliminating the county share requirement would help ensure county homes can remain open to serve those most in need. House Bill 1062 also contains language to suspend Medicaid benefits for inmates, rather than terminating them, ensuring better continuity of treatment, access to medications and therapy services, and increased potential for avoiding future incarceration. CCAP extends its appreciation to the General Assembly for enacting these two important county priorities.
Legislation to expand the Human Services Block Grant, SB 613, passed the Senate in the last week of June, but is on hold in the House as CCAP and DHS make several clarifications to the bill's language, and so the program remains open to just 30 counties.
Counties also received some unexpected good news in the Fiscal Code amendments in HB 1605 - an increase in the payment in lieu of taxes (PILT) that offsets the loss of property tax revenue to local governments related to tax-exempt state park and forest lands within their borders. While the PILT was increased in 2006 to $1.20 per acre, per local government, that fee had since remained static; the Fiscal Code amendments in HB 1605 increase the PILT to $2.00 per acre, per local government, for forest and park lands effective July 1, 2017. Payments for game lands remain at $1.20 per level of government.
Highlights of the budget's impact on counties follows, with comparisons to funding levels available in FY 2015-2016. For analysis of more county line items, check CCAP's commonwealth budget page at www.pacounties.org.
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AGRICULTURE AND THE ENVIRONMENT
The State Food Purchase Program sees an increase of $750,000, and funding for county fairs is level funded at $4 million. The Agriculture College Land Scrip Fund, which includes revenues for the Penn State Extension program, sees an additional $1.3 million.
The State Farmland Preservation Board set the 2016 state funding threshold for farmland preservation at $31 million at its February meeting, and the revenue package signed into law includes an additional $5 million for the state farmland preservation program from cigarette tax revenues.
West Nile virus prevention programs are increased by $1.4 million, with the program expanded to include Zika virus control, while black fly prevention programs are level funded. In addition, conservation districts remain level funded, maintaining $3.375 million in total General Fund dollars from the departments of Agriculture and Environmental Protection. Conservation districts are also set to receive more than $7.5 million annually under Act 13 of 2012.
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ALCOHOL, TOBACCO AND OTHER DRUGS
The enacted budget provides an increase of 2.2 percent to the Department of Drug and Alcohol Programs for FY 2016-2017, which is expected to continue the allocation of $3.5 million that was available during FY 2015-2016 as a response to the overdose epidemic. A special legislative session on overdose addiction is also planned for the fall of 2016. The DHS budget also includes an additional $10 million in the Behavioral Health Services Initiative line; traditionally, 60 percent of this line item has been used for substance abuse treatment and the remainder is dedicated to mental health services. Also, $1.5 million has been set aside within the Department of Corrections
for non-narcotic medication assisted substance abuse treatment, created by the enactment of
Act 80 of 2015. The program is designed to increase opportunities for counties to provide long-acting non-narcotic, non-addictive medication (known as Vivitrol) combined with comprehensive substance abuse treatment to eligible offenders on release from county prisons.
The total amount of funding available through Act 152 is not yet available. These funds are intended to fund residential treatment for individuals who are eligible for Medical Assistance and HealthChoices, but not yet enrolled. Intermediate Punishment programs will be level funded at $18.2 million for FY 2016-2017, and CCAP is further working to clarify the amount of tobacco settlement funding for Prevention and Cessation activities.
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CHILD WELFARE
The child welfare budget continues the rebalancing initiative for FY 2016-2017. In FY 2015-2016, the enacted state and federal funding was $1.37 billion, representing 87.5 percent of the reasonable aggregate need submitted to the legislature, as determined by the Department of Human Services. The remaining 12.5 percent of the funding for FY 2015-2016 was to be appropriated in FY 2016-2017. Under the new budget, state and federal child welfare funding is increased to $1.573 billion for FY 2016-2017; of that amount, about $166 million is dedicated for the remaining payment for FY 2015-2016. According to the budget, the aggregate state and federal allocation for FY 2016-2017, including the 12.5 percent anticipated to be allocated in FY 2017-2018, is expected to be $1.8 billion, or a 4.5 percent increase over the aggregate FY 2015-2016 funding.
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COMMUNITY AND ECONOMIC DEVELOPMENT
Under the Department of Community and Economic Development, the budget allocates $11.4 million for tourism ma
rketing, which represents an increase of $2 million over the FY 2015-2016 enacted budget and $7.1 million over the Governor's proposal. While the Governor proposed a $25 million increase to the Pennsylvania First Program, the FY 2016-2017 budget keeps the program level-funded at $20 million. Other areas that experienced level-funding include the Partnership for Regional Economic Performance ($11.8 million), the Ben Franklin Technology Development Authority ($14.5 million), Marketing to Attract Businesses ($2.0 million), and the Municipal Assistance Program ($642,000), which includes shared services, flood plain management, and community planning. Additionally, the Office of Open Records experienced a slight increase of $100,000 to a FY 2016-2017 total of $2.5 million. The aggregate decrease for the Center for Local Government Services is reflective of a transfer of funds for fire services for the city of Harrisburg to the Department of General Services, at the City's request.
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HOMELESS ASSISTANCE PROGRAM
Funding to provide temporary shelter to homeless individuals and rental assistance to those in danger of becoming homeless is level funded at $18.5 million.
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HUMAN SERVICES DEVELOPMENT FUND
HSDF is also level funded at almost $13.5 million; this funding allows counties to use dollars not only where they are most needed, but where they can best reduce costs to human services programs in the long run.
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HUMAN SERVICES BLOCK GRANT
Legislation has passed the Senate,
SB 613, to enact counties' priority
on expansion of the block grant to any willing county beyond the 30 counties now in the program, and CCAP and DHS continue to work on the bill's language. The budget fails to include the counties' priority ask to begin a three-year restoration of the ten percent cut sustained in FY 2012-2013 across all line items.
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The funding for county court costs, including the per judicial position funding, is decreased by $12 million in the FY 2016-2017 budget, with the funds shifted to cover a shortfall in the initial appropriation for judicial salaries. Elsewhere, the budget adopts the Governor's request at the same levels of funding from FY 2015-2016 for most judicial line items that impact the counties. However, the Governor's requested increases for adult probation and intermediate punishment were not included, and the lines are left at $18.2 million and $16.2 million for FY 2016-2017, respectively.
There is no direct allocation for the district attorney salary reimbursement, but concurrent with budget action in 2009, a permanent court fee surcharge was imposed to raise funds for the commonwealth share and the reimbursement is gradually catching up
. Still, counties sought the addition of a line item in the FY 2016-2017 budget that is sufficient to bring all payments to all 64 eligible counties current.
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JUVENILE DETENTION
Funding levels for juvenile detention are unavailable at press time, and the Department of Human Services will provide a breakdown of the specific funding levels within the next few weeks. Although secure detention utilization has continued to decrease, more intensified and specialized service drives costs and so continue to impact local and state budgets. So, while overall system costs appear to decrease due to lower overall demand, the investment per child for moderate and high-risk offenders needs to increase as providers intensify services which are more likely to result in reduced recidivism (future victimization) and ultimately reduced long-term costs.
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LIBRARIES
In the Department of Education, the public library subsidy will remain level-funded at $54.5 million for FY 2016-2017 following a two percent increase in FY 2015-2016.
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LONG-TERM CARE
The budget does not contain an increase in Medicaid payment rates for nursing homes, even though Gov. Wolf had proposed a one percent increase. Years of stagnant rates have resulted in a wide gap between the cost of caring for Medicaid patients in nursing homes and the amount that is reimbursed. While the failure to increase funding levels is disappointing, counties appreciate the elimination of the county share under HB 1062.
As in previous years, the long-term care appropriation in the budget is split into three areas - home and community-based services, long-term care managed care, and long-term care which includes funding for nursing homes. Once again, additional funding sources such as the lottery fund, tobacco settlement, and nursing home assessment are being utilized to help support the funding levels for long-term care. State funds of $398 million for home and community-based services in the budget (which includes lottery funds of $120 million) and federal funds of $464.8 million provide an increase for FY 2016-2017. In addition, long-term care managed care (the LIFE program) is funded at about $273.6 million in state and federal funds, representing is a small increase from FY 2015-2016.
For nursing homes, the projected long-term care state funding for FY 2016-2017 of $997.5 million shows a slight increase compared to the enacted allocation for FY 2015-2016. The nursing home assessment is expected to be funded at approximately $489 million and the IGT is also expected to be funded in FY 2016-2017 although exact amounts are not yet known.
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MEDICAL ASSISTANCE TRANSPORTATION PROGRAM
The level of state funding for MATP in the budget is almost $64 million, and
combined with federal match funds of $79.5 million, provides a total funding increase for MATP of 4.6 percent.
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MENTAL HEALTH, INTELLECTUAL DISABILITIES, EARLY INTERVENTION AND AUTISM
Combined federal and state mental health dollars remain essentially flat with the state increase being sufficient to cover a federal funding gap; while state funding for county mental health services receives a three percent increase in state funding compared to FY 2015-2016, up to more than $789 million for FY 2016-2017, federal funding decreased by eight percent.
State and federal funds combined for Intermediate Care Facilities for intellectual disability fell by about eight percent to $306 million. The intellectual disabilities community base program realizes a two percent increase to $211 million in combined state and federal funds, and the intellectual disabilities community waiver program is increased by six percent to $2.6 billion total in state and federal funds.
Early Intervention for birth to three years of age remains flat funded at $183 million. Autism services has an overall increase of 18 percent, with state funding increased by more than $3 million.
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TRANSPORTATION
The FY 2016-2017 budget reflects the overall funding increases for roads, bridges, transit systems and other infrastructure under Act 89 of 2013; specific amounts will be published. Those funds, along with the appropriation for the maintenance and construction of county bridges set at $5 million retained from Act 44 is included.
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