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GOVERNOR RELEASES FY 2018-2019 BUDGET PROPOSAL
On Tuesday, Feb. 6, Gov. Wolf delivered his fourth budget address, announcing his $32.9 billion fiscal proposal for FY 2018-2019 before a joint session of the House and Senate. The proposal represents an increase of about $989.8 million, or 3.1 percent, over FY 2017-2018.
The proposal does not call for any new broad-based tax increases such as a sales or income tax, but Gov. Wolf again called for a severance tax. Rather than a percentage-based tax, though, the governor recommended a flat tax per thousand cubic feet (Mcf) that would range from four cents when natural gas prices range up to $3.00, to seven cents when natural gas prices are $6.00 or more. The current impact fee under Act 13 of 2012 would remain unchanged; one of CCAP's top priorities for 2018 remains maintenance of the shale gas impact fee, complete and as it is now.
The governor's plan again recommends consolidation of several state agencies, including the consolidation of the Department of Corrections and the Board of Probation and Parole, as well as the restructuring of the current Health and Human Services agencies into the Department of Health and Human Services. Unlike his FY 2017-2018 proposal, however, this restructuring would not include the departments of Aging or Drug and Alcohol Programs.
From the county perspective, the governor's proposal represents generally level funding across line items, particularly in human services, but does include several positive elements such as a $16 million waiting list initiative to move individuals with intellectual disabilities and autism into services, and state and federal funding to address the opioid epidemic. As the process goes forward, counties' top priority for 2018 remains advocacy for human services funding, recognizing that county capacity to meet service needs has been compromised by a steady decrease in funding over more than a decade, at the same time that mandates and service needs continue to increase.
Ultimately, counties' overarching theme for this year's policy and budget objectives is to emphasize the state-county partnership in service delivery, recognizing that a mutual understanding of that partnership can yield a promise of effective and responsible delivery of services. CCAP has assembled a number of budget resources on its Budget News and Updates web page, including a spreadsheet with the governor's proposed funding levels for county line items.
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BUDGET HEARINGS TO BEGIN
The House and Senate Appropriations Committees will commence a three-week long series of budget hearings on Feb. 20, allowing state agencies to provide detail on Gov. Wolf's FY 2018-2019 commonwealth budget proposal. Of interest, House Appropriations hearings with the Departments of Health and Drug and Alcohol Programs will be March 1 and the Department of Human Services March 6; the Senate Appropriations Committee will hold a hearing for both the Health Department and the Human Services Department on March 7. A full schedule of appropriations hearings can be found on CCAP's Budget News and Updates web page and the hearings will be streamed live at www.pcntv.com.
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PRESIDENT INTRODUCES INFRASTRUCTURE PLAN
On Feb. 12, President Trump unveiled his proposed infrastructure plan for the country's highways, airports and railroads. The proposal includes $200 billion in federal funding that seeks to leverage additional money from states, local governments and private investors that, combined with reduced costs for accepting federal dollars, intends to generate at least $1 trillion in total infrastructure spending.
Under the President's proposal, an Infrastructure Incentives Program ($100 billion) would offer incentives in the form of grants to states and local governments, conditioned on achieving progress milestones within identified timeframes. A Rural Infrastructure Program ($50 billion) would further incentivize states to partner with local and private investments for completion and operation of rural projects, including transportation, broadband, water, waste, power and electric, while another $20 billion would be used to advance transformative, innovative projects.
Other funding proposals to be pursued under the President's initiative include expansion of the Transportation Infrastructure Finance and Innovation Act (TIFIA), including broader eligibility for the program as well as lifting the cap on private activity bonds and expanding eligibility to other non-federal public infrastructure. The President also indicated his support for more state flexibility to toll interstate highways and funding for the Water Infrastructure Finance and Innovation Act (WIFIA) program. The proposal would further enhance the environmental review and permitting process, accountability for agency review and permitting of projects, designation of a single entity to see a project through the process, and moving permitting responsibility to state and local governments where appropriate.
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PA TO REQUIRE VOTER-VERIFIABLE PAPER BALLOTS
Acting Secretary of State Robert Torres announced on Feb. 9 that all voting systems purchased from that date forward must use a voter-verifiable paper ballot or paper record of votes cast. The Department of State indicated the directive is necessary because it is in line with the latest equipment offered by manufacturers and allows counties to expand their auditing practices. The directive does not prohibit a county from purchasing equipment to support and maintain the county's current voting system for as long as that system is certified for use in the commonwealth.
Gov. Wolf also sent a letter to Pennsylvania's congressional delegation stressing the importance of election infrastructure and urging Congress to authorize the remaining $396 million in Help America Vote Act funds for election improvement. The governor further requested new funding to replace aging voting equipment, which would aid counties in meeting their responsibilities.
One of counties' priorities for 2018 is to secure funding to begin replacing county voting systems, as most of the voting equipment in Pennsylvania is approaching the end of its useful life and will need replaced in the next few years.
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IFO ISSUES IMPACT FEE ESTIMATES
The state's Independent Fiscal Office (IFO) has released estimates of impact fee collections for calendar year 2017, which producers will remit in April 2018. Based on production data and recent natural gas prices, the IFO is estimating that collections will be $219.4 million, or about $46.1 million more than the amount collected in 2016. The increases are attributed to an upward adjustment to the fee schedule, triggered by an increase in the average annual price for natural gas, as well as fee revenues from new wells spud in 2017 more than offsetting reduced collections from older wellsand newly-exempt wells. The full IFO report is available at www.ifo.state.pa.us.
The exact effect on overall revenue collections - and therefore on local government distributions which will occur around July 1 - will not be known until after the April 1 collection deadline. Act 13 payment information will be available at www.act13-reporting.puc.pa.gov in mid-June, and the PUC will not release estimates or actual payment information prior to June 15.
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EMERGENCY FUNDING FOR SPOTTED LANTERNFLY
U.S. Department of Agriculture Secretary Sonny Perdue recently committed $17.5 million in new emergency funding to combat the spotted lanternfly, an invasive species that has spread to 13 southeast Pennsylvania counties and could have a significant negative impact on the state's agriculture industry. The Pennsylvania Department of Agriculture has been working in collaboration with the U.S. Department of Agriculture, other state agencies and partners to prevent the spreading of the spotted lanternfly.
Relatedly, Gov. Wolf proposed nearly $1.6 million in funding specifically for spotted lanternfly surveillance and response as part of his FY 2018-2019 budget plan.
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FCC DENIES PETITION TO REALLOCATE BROADBAND FUNDING
The Federal Communications Commission (FCC) has denied Pennsylvania's petition for access to $140 million in federal broadband funding through the Connect America Fund Phase II that was declined by Verizon in 2016.
The FCC collects fees on ratepayers' phone bills and provides the funds to internet providers to build new broadband infrastructure or expand or upgrade broadband networks. While the funds typically stay in the same state as the ratepayers, if the service provider refuses the funding, it can then be used in other states for broadband expansion. However, Pennsylvania had petitioned the FCC to reallocate Verizon's declined funding to other Pennsylvania service providers.
CCAP sent a letter to the FCC in May 2017 supporting Pennsylvania's petition, arguing that reallocating the funds to other providers would further the goal of accelerating Pennsylvania's broadband deployment in the rural unserved census blocks for which the funding support is intended.
Members of Pennsylvania's congressional delegation, including Congressmen Lou Barletta, Bill Shuster, Lloyd Smucker, Glenn Thompson, Patrick Meehan, Brian Fitzpatrick, Keith Rothfus, Tom Marino, Ryan Costello and Scott Perry as well as Senator Pat Toomey, also sent a letter in late January asking the FCC not to deny the state's petition. However, on Jan. 30, the FCC voted to do just that, determining that absent more specific information from Pennsylvania about the level of state funding to be made available, and how the state would award that funding, granting the relief would not be in the public interest.
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VOTING MATTERS
CCAP members will elect the two CCAP representatives to the NACo Board of Directors at the business meeting to be held during Tuesday's closing session of the CCAP Spring Conference. The Conference takes place March 18-20 at the Hilton Harrisburg, and features meetings of standing policy committee and numerous educational sessions.
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