Budget Related News Clips: Friday

Budget-Related News Clips

House GOP vows to fight budget plan passed by PA Senate
Pittsburgh Tribune-Review, 7/27/2017
House Republican leaders told members Thursday they won’t support a Senate-crafted revenue package to cover PA’s new budget. “The amendments to these bills were neither agreed-to, nor shared with the House in advance of the committee meetings, so we certainly have no intentions to rubberstamp these bills,” the House GOP leadership team told members in a memo. From the beginning, when we passed a full and balanced budget on April 4, our goal was to protect the wallets of taxpayers. Make no mistake; that is still where our caucus stands,” the memo continues. “With respect to the process moving forward, it is going to take some time to review what is actually contained in each of these proposals — for both our caucus and the Democrats” … Wolf, a Democrat, has expressed support for the Senate-crafted revenue plan. House GOP leadership said the Appropriations Committee will review the proposals. House members are on six-hour call … The severance tax would generate $100 million a year. Gas companies would still pay the existing impact fee, which helps funds some state government programs and local grants to communities in the Marcellus region. Senate lawmakers approved loosened environmental permitting rules as a concession to the oil and gas industry, which riled environmentalists … “It’s not what I want. It’s not perfect, but I recognize that there are things we have to do as leaders and individuals to try to reach a compromise,” said Senate Democratic Leader Jay Costa. PA could see a credit downgrade without a balanced budget, which could increase borrowing costs. It could also force Wolf to freeze some government spending, potentially affecting schools, grant programs, tax credits and counties that administer social service programs.

No budget yet: PA House majority starts ‘review’ of Senate/Wolf plan
Penn Live, 7/27/2017
This ain’t over. That was the no-so-subtle subtext of a memo sent by leaders of the PA House’s Republican majority to their 120-member caucus Thursday, hours after the Senate passed a $2.2 billion revenue package that included about $530 million in new taxes … The Senate votes represented a brief moment of success in what has turned into a frustrating summer in Harrisburg. But the House GOP leadership – which took a no-tax detour from those talks early last week – is not on board, so there is no ready-made expectation for what the next step will be. “The amendments to these bills were neither agreed-to, nor shared with the House in advance of the committee meetings [late Wednesday, where the final language was inserted in the bills]. So we certainly have no intentions to rubber stamp these bills,” stated the memo issued jointly in the name of House Speaker Mike Turzai, Majority Leader Dave Reed, and the rest of their leadership team … For the moment, the leaders wrote, they plan a thorough review of the Senate package. “Once the review is complete, discussions will begin on how to move forward.” The memo concludes by advising members that they should expect to be returning to Harrisburg for session days at some point before the end of August … The one abiding consensus at the Capitol Thursday was that we are in uncharted waters. At no time in the last political generation, Republican & Democratic sources agreed, has one chamber of the General Assembly passed a tax vote that the other chamber has not agreed to, only to see it sit in limbo indefinitely … But the political pressures may grow quickly in tandem with fiscal pressures … the budget woes are compounded this year, Treasurer Joe Torsella has noted in multiple interviews, by a deteriorating cash-flow situation that could leave state government upside-down in terms of operating funds by mid-September … [Senate Appropriations Committee Chairman Pat] Browne said, all sides should be feeling urgency to close out this budget sooner rather than later. “Delay is only going to make it harder,” Browne said.

PA Senate sends its budget package to state House
Capitolwire “Under the Dome”, 7/28/2017
… before anyone thinks this is the beginning of the end to this budget drama, this would appear to be far from over. House Republicans, who hold a sizable majority in the state House of Representatives, stated they were not party to the package produced and approved by the Senate. House GOP leaders also indicated they would be reviewing the package and determining their response during the next few weeks, with a return to session sometime before the end of August – and that’s as detailed as they got with the timing. There’s also the narrow 26-24 approval of the majority of the Senate’s revenue package by that chamber, and whether the issues raised by some in the Senate will make it more difficult to find 102 votes in a 203-member House. Senate leaders in both parties – but more so the GOP than the Democrats – were visibly unhappy with the argument made by some (along with their negative votes) that without addressing the community impacts by natural gas pipeline construction, the revenue package including plenty of natural gas taxes doesn’t do enough to help those communities (with the indication those communities desire some form of impact fee payment similar to the compensation other communities receive for drilling activity impacts).

PA Senate approves taxing natural gas drillers and utility bills
Philadelphia Inquirer, 7/27/2017
After his no-new-taxes budget proposal went nowhere last weekend, Republican House Speaker Mike Turzai challenged his GOP colleagues in the state Senate: You try doing something. On Thursday, the Senate delivered, narrowly approving a plan to balance Pennsylvania’s nearly $32 billion budget in part by taxing drilling for natural gas, and by raising or imposing new taxes on telephone, electric, and gas bills. Now, the spotlight returns to the House, which appears to be in no rush to come back to the Capitol to debate the Senate’s revenue package. In a letter to their members Thursday afternoon, GOP leaders said to expect to return sometime before the end of August. When they do, the leaders wrote, “we certainly have no intentions to rubber stamp these bills.” The game of political chicken increases the likelihood of a prolonged impasse … Gov. Wolf may be forced to freeze spending. His administration has avoided answering questions on when or if that would occur … The Senate’s vote Thursday sought to jump-start the process, even though Republicans who hold a commanding majority in the chamber knew it would be a heavy lift because tax has been a curse word in the Capitol for years, as the legislature has grown more conservative. “It’s a tough day for many of us,” Senate Majority Leader Jake Corman said Thursday during debate on the revenue package, which passed, 26-24, and with both Democrats and Republicans voting for and against it. “It’s not a day that we wanted to do. I guess some advocate that we shouldn’t do anything. We should sit back and let Rome burn … We’re open to see what the House wants to do. I think the speaker said last week he wanted to see what the Senate and the governor would support. Well, here it is” … Together, the taxes approved Thursday would raise about $500 million, according to Senate estimates. The Senate also voted to borrow $1.3 billion against a landmark settlement between tobacco companies and the states …

Senate budget measure would outsource environmental permit review
State Impact PA, 7/27/2017
The PA Senate on Thursday approved a package of budget measures that includes a startling plan to speed up state approval of environmental permits by outsourcing reviews to third parties … The package included a plan to reform the Department of Environmental Protection by appointing third-party contractors to review all permit applications, including those from the oil & gas industry. The amendments to HB 542 direct the DEP to “contract with third party licensed professionals for the purpose of administering the permit program” within 2 years of the bill becoming law. The amendment defines qualified professionals as geologists, engineers, land surveys, and landscape architects. The measures also call for a new air quality advisory panel, whose members would be appointed by the legislature & the governor, and which would have veto power over oil & gas regulations such as those reducing emissions of methane, a powerful greenhouse gas … critics were aghast at the idea that permit applicants could ask for their permits to be considered by an outside contractor, and said the measure was an unprecedented assault on an agency that has already been weakened by years of budget cuts. “Practically speaking, these amendments gut the function of the DEP, and effectively destroy its purpose and mission,” said John Quigley, the last DEP Secretary, who was fired by Gov. Tom Wolf in 2016. “They are incredibly bad and dangerous ideas.” Quigley said the measures would subject environmental regulation to political influence and manipulation by non-experts. He said the plans should be challenged on constitutional grounds, and may violate state and federal laws … the bill has no provisions on conflict-of-interest or ethics; no requirement for public participation, and no provisions for appeal … Adam Garber, deputy director of PennEnvironment, called the package a “last-minute end run around the system to try and undermine clean air and clean water protections.” Garber said it was unclear which legislators instigated the measure because it is part of a package of budget measures that were negotiated late Wednesday behind closed doors … The package is expected to go before the House on Monday, where Democrats seem inclined to support the amendments, and appreciate the “bipartisan” work done by the Senate, said Bill Patton, a spokesman for the party.

Senate-passed education bill tries again to eliminate seniority-based teacher layoffs
Penn Live, 7/27/2017
A renewed effort to have PA begin to eliminate seniority-based teacher layoffs won Senate approval on Thursday as part of a multi-faceted education bill. The budget-related legislation, which passed by 34-16 vote, would allow school districts to lay off teachers and administrators for economic reasons … This controversial idea, which now goes back to the House for concurrence on the Senate changes, has been a policy priority for House & Senate Republicans for several years. A similar proposal reached Gov. Tom Wolf’s desk in the last legislative session only to have him veto it. Wolf spokesman Mark Nicastre offered no indication what the governor might do this time, saying only on Thursday, “Governor Wolf will review the final legislation” … PSEA opposes the elimination of seniority-based layoffs … The multi-faceted bill is a near-mirror image of the school code bill the House was considering with one exception … The Senate-passed measure doesn’t include an increase for the popular Educational Improvement Tax Credit program like the House proposal does. The House was looking to jack up funding for this program that gives tax breaks to companies that donate to preschool & private school scholarships and innovative public school programming by $20 million for a total of $145 million …

State Senate approves Medicaid work requirement
Pittsburgh Tribune-Review, 7/27/2017
The state Senate passed a bill Thursday that would impose work requirements on people enrolled in Medicaid. Senators amended the bill, which passed the House two weeks ago, and sent it back to the House for another vote, according to vote information on the General Assembly website. If it passes the House, it would require the approval of Democratic Gov. Tom Wolf to become law. Wolf has said he opposes the measure. The Senate amendments removed a provision that would have imposed premiums on families that make about $250,000 per year — well above standard income eligibility thresholds — but qualify for Medicaid because of their children’s severe disabilities. The amendments also eliminated a provision that would have prevented people from switching among the Medicaid managed care plans that administer the program’s benefits … Consumer groups oppose the work requirement, noting that Department of Human Services figures show 58% of Pennsylvanians who qualify for Medicaid through a state expansion of the program are employed. Among people who qualify under traditional guidelines — which are tighter and take disabilities into account — 51% are employed, according to the DHS data. Antoinette Kraus, director of Philadelphia-based consumer group PA Health Access Network, said she is concerned the proposal could get caught up in budget negotiations and be passed despite Wolf’s opposition. “It’s a very problematic piece of legislation that will result in folks losing benefits and creating more red tape,” Kraus said. “And it’s just a vehicle that’s going to hurt already working Pennsylvanians and add more costs in the long run” …

Scarnati: “The need to govern is much higher in our chamber”
PLS Reporter, 7/27/2017

The PA Senate on Thursday morning narrowly passed and sent to the House a revenue package to balance the FY 2017-2018 spending plan and close out the FY 2016-2017 deficit.

While narrowly passing the chamber by a 26-24 margin, the revenue package cobbled together by the Senate with a mix of Republican and Democratic support was said to be a product of a chamber aimed at leading the state’s lawmaking bodies through a nearly month-long standoff on how to fund two budgets that are roughly $2.2 billion out of balance.

The nearly $570 million in recurring revenue is booked through the reimplementation of a gross receipts tax on natural gas, an increase in the gross receipts tax on electricity and telecommunications, a two cent per thousand cubic feet severance tax on natural gas extracts, the closing of a sales tax loophole for third-party internet vendors, and a 12% tax on fireworks along with stepped up back-tax collections enforcement.

Additionally, $1.225 billion is borrowed that is securitized by payments to the Tobacco Settlement Fund to cover the FY 2016-2017 deficit.

The move by the Senate came after the House failed to gain enough support to lift a no-tax revenue plan the prior weekend.

“We made a decision here in the Senate that we feel it is our responsibility that — facing an over $2 billion hole in the budget, downgradings from S&P/Moody’s, and the State Treasurer now putting a date certain that in September we can’t write checks anymore — the need to govern, I think, is much higher in our chamber with our members,” said Senate President Pro Tempore Joe Scarnati.

“I’d rather be criticized for leading than for people to be laughing at us for hiding.”

Much like Senate Majority Leader Jake Corman, Sen. Scarnati noted that the tax package and other revenue generators in the Senate plan represent the last preferred choice after years of budget cuts and newly considered budget balancing options that would leave PA in a further fiscal hole.

“Although this is far from our first choice — this is our last choice — but it’s governing, it’s leadership, and I’ll be more than glad to take the cracks from whether it’s the right or the left, but we’re here to get the budget done,” he said.

Not all Republicans were in favor of the plan and, in fact, less than a majority of Senate Republicans supported the Tax Code bill, meaning the caucus waived its unspoken “majority of the majority” rule for bringing up bills for votes before the full Senate.

In opposing the plan, leading GOP critic Sen. Scott Wagner reiterated an argument against the revenue package he made in the Senate Appropriations Committee Wednesday night — that PA’s fiscal issues are due to over-spending, not revenue problems.

“If we manage our agencies we would get our spending under control,” he said on the Senate Floor Thursday morning, noting recent polls showing PA’s poor economic competitiveness ratings.

“Today, by taking this vote, we take another step backward, not forward.”

Some Democrats were also skeptical of the revenue plan, particularly as it relates to a reliance on the consumer-driven gross receipts tax and not the industry-paid severance tax.

Senate Minority Leader Jay Costa, however, called the revenue proposal an overall win for Pennsylvanians and indicated that the plan was made in consultation with his caucus, something that proved critical in getting a compromise revenue package over the finish line.

“We are very pleased today to be able to send over to the House in a bipartisan way a revenue package that has significant recurring revenue to help us stabilize our fiscal situation here in PA,” he said.

In addition to the Tax Code, the Senate also passed four other budget and revenue related Code bills: the Fiscal Code, the Public School Code, the Administrative Code, and the Human Services Code.

The next stop for the proposals is the House where they face an uphill battle and an uncertain future.

According to House Democratic caucus spokesperson Bill Patton, that caucus is eager to look into the details of the Senate-passed plan.

“There’s a lot of interest in the severance tax especially,” he said. “The initial impression on the Democratic side is favorable and we appreciate the serious bipartisan work done by the Senate.”

According to a memo sent to rank-and-file House Republicans by the caucus’s leadership team Thursday, it does not appear that the chamber will be moving with alacrity toward a consideration of the proposal, although members were told that they should expect to return to session before the end of August.

“The amendments to these bills were neither agreed-to, nor shared with the House in advance of the committee meetings, so we certainly have no intentions to rubberstamp these bills. From the beginning, when we passed a full and balanced budget on April 4, our goal was to protect the wallets of taxpayers. Make no mistake; that is still where our caucus stands,” the leaders told members in Thursday’s memo.

“With respect to the process moving forward, it is going to take some time to review what is actually contained in each of these proposals – for both our caucus and the Democrats … As House Republicans, we made our mark when we passed a budget in April with a host of non-tax revenue options. With today’s July 27 vote, the Senate has made its mark. We will continue to move forward as we always have – in a deliberate manner with the consideration of all feedback from the members of our caucus.”

In the past, many of the concepts articulated in the Senate revenue plan have not been met favorably by House Republicans and many rank-and-file members took to popular social medial platforms Thursday to voice their displeasure with the components sent their way.

One bellwether conservative House Republican, Rep. Seth Grove, issued a statement panning the Senate-passed revenue plan.

“Increasing taxes should never be considered until all options have been exhausted. Today, the Senate approved imposing even more taxes on hard-working and retired Pennsylvanians without first examining other ways to increase revenue without further burdening taxpayers,” he said.

“Corporations owe the state $1.2 billion in back taxes, which would all but fill the spending gap in the 2017-18 budget. Additionally, state government has traditionally underspent appropriations by $1.4 billion each year. There is absolutely no way the General Assembly should even entertain this haphazard plan to increase taxes.”

However, Sen. Scarnati said he thinks that as time wears on and the state gets closer to the point where it can no longer write checks, more pressure will be on the House to return to session and consider the Senate plan — perhaps favorably.

“I think it depends on the date of that vote, possibly the date — if that would be next week—that outcome might not be positive,” he said. “But, I think if it’s after the Treasurer stops writing checks, I think that’s a different dynamic.”

Gov. Tom Wolf’s office praised the Senate-passed plan Thursday.

“Gov. Wolf commends the Senate for taking a responsible step toward balancing the budget and for their willingness to include a tax on Marcellus Shale,” said spokespreson Mark Nicastre. “Gov. Wolf believes all parties must quickly come together to bring this process to a close.”

PA’s $31.99 billion spending plan for FY 2017-2018 has been law since Gov. Tom Wolf let it lapse into enactment on July 11, 2017, without his signature. Even with the non-enacted funding for state-related universities, the spending plan remains several hundreds of millions of dollars out of balance.

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