Dear Friend,

I am pleased to send you my Session Wrap Up e-newsletter. This e-newsletter features events and legislative activities from the session week of March 16, 2015.

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Scott

Special Report: 2015-16 Budget Hearings

The Senate Appropriations Committee held its first week of public hearings on Governor Wolf’s proposed state budget for the 2015-16 Fiscal Year. The Appropriations Committee heard detailed reports from several cabinet secretaries and other officials over the four-day period of March 16-19. This special edition of Harrisburg Happenings provides day-by-day highlights from those hearings.

More information on the budget, as well as photos, audio and video from the hearings, is available at: www.pasenategop.com/state-budget/

Monday, March 16, 2015

Governor's Budget Office/Executive Offices/Office of the Governor

The Senate Appropriations Committee opened its three-week series of hearings on the Governor’s proposed 2015-16 budget with a discussion of the Governor’s Budget Office/Executive Offices/Office of the Governor with Budget Secretary Randy Albright. Issues discussed during the hearing included:

• Pennsylvania’s projected revenue surplus for the current fiscal year and the Commonwealth’s current economic climate.
• The Administration’s proposed spending increase and the movement of PSERS funding from the General Fund to a separate restricted account.
• The potential inequity of the Governor’s proposal to increase state income and sales taxes for a reduction of property taxes at the local level.
• The impact of the Governor’s proposed tax increases on Pennsylvania’s economy.
• Contract negotiations with the state’s labor unions and the costs of pensions and benefits.
• The impact of the Governor’s tax increases on small businesses.
• The proposed severance tax and the impact on lease holders.
• Parallels between Governor Wolf’s proposed tax increases and those by Governor Casey in 1991.
• Productivity and accountability in state government operations.
• Elimination of prevailing wage mandates on school districts.
• Legal issues related to imposing combined reporting by business.
• Cost containment efforts by local school districts.
• Funding for the state’s film tax credit program.
• Costs of intermediate units.
• State funding per student and wealth redistribution for education funding.
• The Governor’s proposal to float a pension obligation bond that would be repaid by liquor store revenues.

Click here to watch the hearing.

Independent Fiscal Office

Independent Fiscal Office Director Matthew Knittel briefed the committee on the economic outlook for the coming fiscal year as well as debt levels and general revenue trends. Committee members focused on the following topics:

• The need for conservative revenue estimates.
• How to estimate the effect of tax increases on revenue and economic growth.
• The effective rate of PIT and Sales taxes versus those of surrounding states.
• Proposed changes in corporate income tax structure.
• Property tax relief and pension relief funds being used for General Fund expenses.
• The effect of elderly population growth effect on state budgets.
• Concerns about Pennsylvania’s long-term debt going forward.
• The difficulty in calculating and administering a Sales Tax rate of 6.6 percent.
• The need to calculate the total tax and fee burden on Marcellus Shale development.
• Projected increase in school property taxes under the Governor’s plan, without elimination.
• Pension plans’ rate of return and investment growth sectors.
• Comparing total local and state tax burden in Pennsylvania to other states.
• The difficultly in comparing states in job growth and severance taxes.
• The need to measure effectiveness of tax credits.
• The estimated revenue that would be generated by a state personal income tax on public pensions.
• Savings realized by school districts by eliminating prevailing wage rates for construction projects.
• Pension management fees.
• Measuring structural deficits, Senate Bill 76 and district debt, and the school retiree pension crisis.
• Pulling money out of economy to subsidize economic development through borrowing.
• The danger in balancing the budget by moving expenditures.

Click here to watch the hearing.

Department of General Services

Questioning regarding the proposed budget for the Department of General Services focused on how to achieve cost savings, ensure best use of state resources.  Specific topics included:

• Cost savings achieved through strategic sourcing of contracts.
• How rapidly changing markets can affect requests for proposals.
• Statistics on the amount of unused office space and the cost to the state.
• Locating state offices in downtown locations to encourage economic development.
• The status of the sale of SCI Greensburg.
• The importance of fair and transparent purchasing.
• Giving preference to PA-owned companies when contracting for services.
• The importance of keeping options open leases for liquor stores.

Click here to watch the hearing.

Tuesday, March 17, 2015

Attorney General

Attorney General Kathleen Kane outlined her office’s activities and funding needs. Committee members focused on the following topics:

• Human trafficking and missing children.
• An update on the Child Predator Interceptor Unit.
• An outline of drug prevention efforts, including enforcement.
• The impact of the Mobile Street Crimes Unit.
• Plans for boosting the number of Medicaid fraud investigators.
• Efforts to combat Pennsylvania’s heroin epidemic.
• Defense of local gun ordinance preemption and referral to the Office of General Counsel.
• Updated staffing levels and vacancies in the office.
• Reimbursements to counties for full-time district attorneys.
• The need to update the Older Adult Protective Services Act to target financial fraud against older Pennsylvanians.
• The problem of drug gangs from Mexico operating in Pennsylvania.
• The need to provide documentation of outside legal counsel.
• The role of the office in defending the Administration in the case of Right to Know Office director.
• Reciprocity with neighboring states regarding licenses to carry firearms.
• Consumer complaints about misleading gas royalty payments.
• How to legally prevent drillers from passing on to landowners the proposed Marcellus Shale tax increase.
• The legality of the governor’s death penalty moratorium.
• Gaming enforcement with the Pennsylvania State Police.
• The budget impact of requests for more staffing.
• Disbursement of the mortgage fraud settlement with Standard & Poor's.

Click here to watch the hearing.

Treasury Department

Representatives of the Pennsylvania Treasury Department highlighted the importance of addressing the public employee pension crisis and the impact of the state’s bond rating downgrade. Other topics discussed during the hearing included:

• The potential effect of additional borrowing in Governor Wolf’s budget.
• Funding levels for the PA 529 College Savings Program.
• The rate of return on Treasury investments.
• Improvements to the Unclaimed Property program.
• Information technology upgrades.
• Interest on securities.
• The cost of outside legal services.

Click here to watch the hearing.

Auditor General

Auditor General Eugene DePasquale repeatedly stressed the need for public pension reform and the impact that the costs are having on Pennsylvania’s municipalities. Other topics discussed during the hearing included:

• Personnel, union contract and IT issues.
• Board of Claims cost increases.
• The frequency of state audits for public school districts and charter schools and the problems found during those audits.
• Previous finds of fraud, waste and abuse in the Department of Public Welfare (now known as the Department of Human Services).
• Capital expenditures by school districts and prevailing wage.
• Costs incurred for state vehicles.
• Efforts to reform the Delaware River Port Authority.
• Active versus passive investment strategies.
• Unencumbered fund balances in state agencies.
• The need for accountability measures for Department of Community & Economic Development programs.

Click here to watch the hearing.

Wednesday, March 18, 2015

Judiciary

The Appropriations Committee discussed the budget requests of the Unified Judicial System of Pennsylvania with a panel including Supreme Court justices Michael Eakin, Max Baer and Correale Stevens. Topics covered included:

• Proposed level funding for the system in 2015-16.
• The results of the system’s cost-cutting efforts.
• The problem of pension contributions, medical benefits and COLAS driving up costs.
• The success of problem-solving courts across Pennsylvania.
• Increased revenue to courts system through the collection of fines.
• Effects of reducing the number of local Magisterial District Judges.
• Spending on summer interns.
• The possibility of tying the number of local judges to population changes.
• The cost of incarceration versus house arrest and recidivism rates.
• The number of support staff in the system.
• Calculating whether fines are keeping up with court costs.
• The cost of COLAS that don’t correspond to inflation and posting complete salary information online.
• The Judiciary’s compliance with the Right to Know Act.
• Justices paying more for health care costs and eliminating automatic COLAs for judicial branches.
• The backlog of cases before the Judicial Conduct Board.
• Request for funds to expand court technology.
• The need for public officials to sacrifice financially during difficult budgetary times.
• The elimination of Philadelphia Traffic Court.
• The need to promote early staff retirements to control court pension costs

Click here to watch the hearing.

State Police

Appropriations Committee members recognized the loss of fallen State Troopers and commended State Police for the successful Eric Frein manhunt. Acting State Police Commissioner Colonel Marcus Brown and Lieutenant Colonel George Bivens answered questions concerning:

• Funding for 350 additional cadets and current State Police complement.
• Increased workload from covering municipalities that dissolve local police departments.
• The level of State Police training capabilities.
• Pension reform and excluding State Police from pension benefits reductions.
• Costs associated with the Eric Frein manhunt and the performance of equipment during the search.
• Performance of new State Police vehicles.
• The Acting Commissioner’s stance on local police radar.
• The number of troopers assigned to casinos and projections of future needs.
• Overtime costs and projected retirements.
• Cost of statewide radio system and progress on implementation.
• The cost of legislative affairs personnel within State Police.
• Gaming enforcement troopers paid by casinos.
• Costs of mandatory background checks and fingerprinting.
• The possibility of using county 911 centers to dispatch state police.
• Giving municipalities the ability to pay for State Police coverage.
• Federal lawsuit on standards for female State Police applicants, and diversity hiring efforts.
• State Police investigations under the state Clean Indoor Air Act.
• Coordinating federal and interstate efforts to battle heroin epidemic.
• The Acting Commissioner’s support for the Second Amendment.
• Legislation to combat underage drinking and binge drinking.
• The effect of the Administration’s long-term economic policy on the ability to fund essential services such as State Police.

Click here to watch the hearing.

Department of Drug and Alcohol Programs

Members questioned Pennsylvania Secretary of Drug and Alcohol Programs Gary Tennis regarding programs and allocation of funding to combat the state’s heroin epidemic. Other topics of discussion included:

• Current and future personnel costs and staffing needs.
• The department’s position on the legalization of medical cannabis.
• Measures to address prescription drug abuse.
• Use of funds for drug and alcohol abuse education.
• Coordination with law enforcement to distribute overdose prevention drugs.
• The growth in compulsive gambling disorders.
• Continuing treatment of overdose survivors.

Click here to watch the hearing.

Thursday, March 19, 2015

Gaming Control Board

Pennsylvania Gaming Control Board Chairman William Ryan answered questions regarding the health of the gaming industry and potential avenues to increase gaming revenue. Other topics of discussion included:

• The impact of recent Atlantic City casino closures on Pennsylvania’s gaming industry.
• How the industry would be affected by the tax increases in the governor’s budget proposal.
• The potential approval of new kinds of table games and online gaming.
• The effect of casinos on the horse racing industry.
• Competition from neighboring states that have legalized casino gambling.
• Measures to prevent underage and prohibited individuals from playing in casinos.
• Recent suggestions by casino owners to enact 24-hour alcohol laws at gaming facilities.
• State Police presence in casinos and the effect on crime.
• Saturation in the Philadelphia market.

Click here to watch the hearing.

Pennsylvania State System of Higher Education

Chancellor Frank Brogan and representatives of several schools discussed declining enrollment and its effect on tuition.  Dr. Karen Whitney, President of Clarion University, and Katie Hill, Student Government President at Slippery Rock University were in Harrisburg to participate at the hearing.  Other questions discussed on Thursday included:

• Programs and approaches to help non-traditional students.
• The need for additional job training and technical programs.
• Trends in the number of students requiring remedial education.
• Attracting out-of-state students and international students.
• Changes in graduation rates.
• Articulation agreements with community colleges.
• Campus safety issues.
• Tuition reimbursement and other programs for members of the military.
• Encouraging civic involvement in universities and host communities.
• Grant assistance for low- and middle-income students.
• Online education.

Click here to watch the hearing.

Community Colleges

Questions about state funding for community colleges from members of the Appropriations Committee were fielded by a panel consisting of Elizabeth Bolden, President of the Pennsylvania Commission for Community Colleges, Nick Neupauer, President of Butler County Community College and Chairman of the Pennsylvania Commission for Community Colleges, and Ann Bieber, President of Lehigh Carbon Community College. Topics discussed during the hearing included:

• Partnerships with State System of Higher Education schools.
• Workforce development programs.
• State support as a ratio of community colleges’ total funding.
• Capital funding.
• Local sponsorships.
• Affordability and availability of training programs for EMS and firefighters.
• The popularity of online courses.
• Dual enrollment.
• Retirement plan options for staff and faculty.
• Trends in remedial/developmental education.
• The Governor’s proposal to tax textbooks and student fees.

Click here to watch the hearing.

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