FY 2018-2019 STATE BUDGET DEAL REACHED       

On June 19, the House Appropriations Committee amended HB 2121 with the FY 2018-2019 budget agreement, a $32.7 billion spending plan representing an increase of about $560 million, or 1.7 percent, compared to FY 2017-2018, with no tax or fee increases. The House approved the measure the following day by a 189-9 vote, and as this Bulletin went to print, the Senate was expected to vote on the bill on Friday, June 22.

 

Much of the increase in HB 2121 is directed to educational line items, with an additional $100 million for basic education, and another $70 million for school safety. In addition, half of a projected FY 2017-2018 surplus - some $74.5 million - will go into the Rainy Day Fund, the first time money has been added since FY 2006-2007.

 

For counties, the FY 2018-2019 budget represents largely flat funding in most lines that impact them, with some small increases for home and community-based long-term care services, autism services and the Medical Assistance Transportation Program. It also includes funding to serve 965 more individuals with intellectual disabilities currently on the waiting list, and to give 800 more families affected by opioids access to evidenced-based home visit services.

 

Additional details, including a spreadsheet comparing line items in HB 2121 to FY 2017-2018 allocations, are available at www.pacounties.org by clicking on Budget News under the Government Relations tab. A more detailed analysis and other information will be posted as available.

 

As this Bulletin went to print, details about the Fiscal Code and Human Services Code amendments that will accompany the FY 2018-2019 budget were still pending.

HOUSE SUBCOMMITTEE HOLDS HEARING ON LOCAL TAX REFORM   

Indiana County commissioner Rod Ruddock recently shared counties' priorities for local tax reform with the House Finance subcommittee on tax modernization and reform.

 

Specifically, Ruddock noted that the property tax is not just a school issue, but is also the only source of tax revenue available to counties. Counties seek the option to choose a revenue mix, including options for a sales, earned income or personal income tax, which would better fit the demographics and economy of their communities.

 

Ruddock also discussed the challenges he faced when his county went through a recent countywide reassessment, and noted that he had been part of a subcommittee working with the Local Government Commission's Assessment Reform Task Force to make improvements to the assessment system. Several of the Task Force's projects (see related articles in this Bulletin) have been completed and are available as resources for counties.

 

The full testimony provided by Ruddock is available at www.pacounties.org on the Legislative Action Center, as is CCAP's written testimony submitted to the subcommittee.

LOCAL PROPERTY TAX COLLECTION OPTIONS SUBJECT OF SENATE HEARING    

The Senate Local Government Committee held a hearing on June 19 to discuss SB 1099, which would allow local governments the option to eliminate the local elected tax collector by providing other options for property tax collection. The bill was introduced by former CCAP member Sen. Scott Martin (R-Lancaster), who serves as acting chair of the committee.

 

Tioga County chief assessor and tax claim bureau director Deb Crawford joined a panel of local government representatives testifying in support of SB 1099, sharing the positive results of her collecting property taxes for 17 of her county's 39 municipalities where there are vacancies in the office of elected tax collector. Several other counties in the commonwealth also have local options for tax collection in place currently under other laws or home rule charters, and have found the arrangement to be extremely beneficial for local governments and their taxpayers. However, not every local government has the ability to review its local tax collection system in conjunction with constituent needs. Crawford's full testimony is available on www.pacounties.org.

 

As this Bulletin went to print, SB 1099 was scheduled for consideration by the Senate Local Government Committee on Friday, June 22.

CIVIL SERVICE MODERNIZATION GOES TO GOVERNOR'S DESK   

Following the unanimous approval of the House on June 21, SB 1037 now heads to the Governor's desk. The legislation, introduced by Sen. Mike Folmer (R-Lebanon), streamlines the testing and selection process for county and state civil service positions by moving several responsibilities of the State Civil Service Commission to the Office of Administration. The change will lead to better customer service for those who use the civil service system, including counties who have experienced many years of frustration with the current system. At the same time, the legislation assures adherence to fair and impartial hiring procedures, and does not affect the criteria for hiring under the system, the positions subject to civil service hiring, or any existing criteria related to veterans' preference.

SPROCK FIX SIGNED INTO LAW   

Gov. Wolf has signed SB 851, introduced by Sen. David Argall (R-Schuylkill), into law as Act 38 of 2018. The law amends 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 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 then 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. Act 38 clarifies 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.

ASSESSMENT REFORM PROJECTS APPROVED       

The Local Government Commission recently approved several tools and resources developed over the past year and a half by its Assessment Reform Task Force to improve the fairness, transparency and efficiency of the property assessment process. CCAP and its affiliate, the Assessors Association of Pennsylvania (AAP), were actively involved with the Task Force. Completed resources include data collection standards to promote complete and accurate collection of property characteristics, a model RFP and contracting guidelines for counties undertaking a reassessment, and a self-evaluation tool to assist counties in identifying key trends that may affect the fairness, equity and accuracy of property values.

 

These resources, as well as information about assessment related legislative proposals sponsored by the Commission, are available on CCAP's Assessment Reform Task Force web page.

FEDERAL OPPORTUNITY ZONES APPROVED       

Pennsylvania's Opportunity Zones, designated under the federal Tax Cut and Jobs Act of 2017, were recently approved by the Secretary of the U.S. Treasury and the Internal Revenue Service. The Opportunity Zones are a new community development program to encourage long-term investments in low-income urban and rural communities nationwide, offering tax incentives for investors to put their unrealized capital gains into a fund that is dedicated for investing, with a 10-year commitment, in the designated Opportunity Zones.

 

Each governor was given the opportunity to designate up to 25 percent of eligible low-income census tracts, with Pennsylvania selecting 300 tracts based on economic data, recommendations from local partners and the likelihood of private sector investment. Recommendations were made primarily based on the potential to eliminate poverty (about 40 percent of the commonwealth's Zones have a poverty rate above 35 percent), as well as areas with business activity. They are spread across the state, allowing for a diverse range of economic growth and development throughout the commonwealth.

 

More information about Pennsylvania's Opportunity Zones can be found at dced.pa.gov. The IRS continues to develop guidance for the certification of investment funds that will be qualified to participate and eligible investments, expected to be available in the fall. In the meantime, a series of FAQs is available at www.irs.gov by searching "Opportunity Zones."

PUC RELEASES IMPACT FEE DISTRIBUTIONS       

The state's Public Utility Commission has posted detailed information about the 2018 distribution of impact fees under Act 13 of 2012. The total distribution is $209.6 million, an increase of about $36 million from the 2017 distribution of $173.3 million. Of that amount, about $114.8 million will be distributed to local governments. Spreadsheets outlining the distributions to counties with spud wells, as well as Legacy Fund distributions to all counties for open space purposes, are available at www.act13-reporting.puc.pa.gov and are also posted on CCAP's Shale Gas/Act 13 Analysis and Resources web page. Distributions are expected to be made to local governments on or around July 1; impact fee funds for at-risk bridge purposes are typically distributed separately around August.

PROPOSED OVERTIME REGULATIONS TO BE PUBLISHED       

The state Department of Labor and Industry has submitted proposed regulations to increase over the next four years the salary level used to determine overtime eligibility, raising the threshold from the federal minimum of $23,660 annually to $47,892 by 2022. The regulations are expected to be published in the Pennsylvania Bulletin on June 23, with public comment to be accepted until July 23, 2018.

 

The proposed regulation is available at www.irrc.state.pa.us by searching IRRC number 3202.