GOVERNOR UNVEILS FY 2019-2020 BUDGET PROPOSAL           

On Tuesday, Feb. 5, Gov. Wolf delivered his fifth budget address, announcing his $34.1 billion fiscal proposal for FY 2019-2020 before a joint session of the House and Senate.

The proposal represents an increase of about $927.4 million, or 2.8 percent, over FY 2018-2019. Much of the proposal focuses on a package of policies and funding initiatives - together called the Statewide Workforce, Education and Accountability Program - that would support workforce development through education, job training and other coordinated programs. Although the Governor did not call for any new broad-based tax increases such as a sales or income tax to fund his proposed budget, he did recommend reforms to eliminate the "Delaware loophole" for multi-state corporations and lowering the corporate net income tax rate to 5.99 percent by 2024.

For counties, the Governor's proposal represents generally level funding across line items, particularly in human services. As the process goes forward, one of counties' top priorities for 2019 is 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. CCAP has recently completed an analysis detailing the critical need for additional funding for county human services in the face of the historic and ever-present reality of stagnant - or even declining - state funding. That full analysis can be found on CCAP's Budget News web page.

The proposal includes several positive elements, such as a $15 million waiting list initiative to move individuals with intellectual disabilities and autism into services. In addition, the Governor's budget plan recommends $5 million each in new funding for home visiting services and early intervention programs. Gov. Wolf also proposed nearly $25 million to modernize the statewide radio system to comply with federal requirements, and $5 million in state funding to address spotted lanternfly, avian flu and other response readiness programs.

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 effective and responsible delivery of constituent services. CCAP has assembled a number of budget resources on its Budget News web page, including a spreadsheet with the Governor's proposed funding levels for county line items and additional detailed analysis about how the funding in those lines would be used.

ELECTIONS FUNDING PROPOSAL   

As part of his FY 2019-2020 budget proposal, Gov. Wolf included $15 million within the Department of State for grants to counties for new election systems, as the first year of a five-year funding plan that would total $75 million. This follows last fall's settlement agreement between the Department of State (DOS) and the Stein presidential campaign that will require replacement of existing voting systems in Pennsylvania with voter-verifiable paper trail equipment by the April 2020 presidential primary. At the same time the agreement was announced, Gov. Wolf's administration indicated its intention to seek state funding of at least 50 percent of the cost of new systems, which the administration anticipates will require a state outlay of about $75 million. No additional details have yet been determined as to how that funding would be distributed to counties.

Without state funding to help cover the cost, counties - and county property taxpayers - would bear full funding responsibility. While the Governor's plan represents a positive first step in the upcoming budget discussions, counties' 2019 priority is to continue to work with their state partners to achieve maximum funding for equipment replacement. In addition, counties ask for the funding schedule to be shortened to a single year to match the timeframe in which they have to purchase equipment.

RESTORE PA INITIATIVE UNVEILED TO FUND INFRASTRUCTURE PROJECTS 

While not directly part of the budget proposal itself, Gov. Wolf also offered several policy initiatives in the week leading up to the address, including Restore PA, a $4.5 billion bond initiative that would provide funding over four years in areas such as expansion of high-speed internet access, flood control structures, storm water infrastructure, manufacturing sites, access to natural gas, blight demolition and rehabilitation, brownfield cleanup, green infrastructure, and transportation projects. The Governor calls for a severance tax to fund the bond repayment, which would be a flat tax per thousand cubic feet and responsive to natural gas prices. The current impact fee under Act 13 of 2012 would remain unchanged and be unaffected; CCAP supports maintenance of the shale gas impact fee as it is now, with the ability to grow as the industry grows and with the same distribution to impacted local governments as well as the Legacy Fund distributions to all counties and to conservation districts and state agencies. 

OFFICE OF BROADBAND INITIATIVES SURVEY DEADLINE FEB. 18     

The House Appropriations Committee began hearings with state agencies the week of Feb. 11 to learn more about their respective funding requests as outlined in the Governor's FY 2019-2020 state budget, opening with the state's Independent Fiscal Office (IFO). IFO director Matthew Knittel reiterated the message he presented during the Office's annual long-term economic and budget outlook last November, with projections indicating that the General Assembly should consider long-term fiscal planning, in the face of an economic downturn expected in the next year or two. If the General Fund continues to grow at a normal rate of three percent, there could be an impact of $1 billion annually. The IFO also indicated it had moved its original revenue estimate for the current fiscal year upward by about $373 million; the Department of Revenue later shared its belief that the state would end about $425 million ahead of estimate by the end of June, with the difference between the two entities primarily based on differences in estimates for the corporate net income tax.

The Senate Appropriations Committee will begin its budget hearings on Feb. 19, also with the IFO and Department of Revenue, and will meet with the Department of State and the Pennsylvania Emergency Management Agency later in the week. The full schedule, which goes through mid-March, can be found on CCAP's Budget News page. Both House and Senate hearings can be viewed at pcntv.com.

On Jan. 29, the Senate Veterans Affairs and Emergency Preparedness Committee unanimously reported SB 127, which would address the need to reauthorize the 911 Public Safety Emergency Telephone Act.

The 911 Act signed into law in 2015 was a comprehensive rewrite of the original 1990 statute that improved system administration and coordination and provided a more sustainable financing structure. It was scheduled to sunset in four years, on June 30, 2019, and so a reauthorization is now needed. Senate Bill 127, introduced by Committee chair Sen. Mike Regan (R-Cumberland), would offer a two-year extension, and also calls on the Legislative Budget and Finance Committee to review the law and make recommendations prior to June 30, 2021. The legislation does not make wholesale changes to the underlying law, including the funding structure, but would add the State Fire Commissioner and the chair of the State Geospatial Coordinating Board as voting members of the state's 911 Board. It would also permit PEMA to use its funding under the law to purchase a system to allow individuals to have their disabilities associated with a phone number, so a 911 operator would have access to that information during a call.

In the House, Rep. Stephen Barrar (R-Delaware), chair of the House Veterans Affairs and Emergency Preparedness Committee, has circulated a co-sponsorship memo for similar legislation, although with a four-year extension instead of two years.

NACO LEGISLATIVE CONFERENCE  

The National Association of Counties Legislative Conference will be held in Washington, D.C. from March 2 to March 6, including sessions on a broad range of federal issues. NACo's policy committees will also meet during the Conference, and attendees will have time for visits to Capitol Hill. The Conference agenda and online registration information are available on the NACo website, www.naco.org.