GOVERNOR RELEASES FY 2017-2018 BUDGET PROPOSAL
On Tuesday, Feb. 7, Gov. Wolf announced his $32.3 billion fiscal proposal for FY 2017-2018, which represents an increase of about $571 million, or 1.8 percent, over FY 2016-2017. Responding to an anticipated $3 billion structural deficit, the proposal includes recommendations for approximately $2 billion in cost-saving measures and other cuts, and about $1 billion in new revenues.
The proposed revenues would come from a variety of sources, including the implementation of iLottery, an online lottery platform. Also, the governor again proposed a 6.5 percent shale gas severance tax, but in a way which would keep the impact fee under Act 13 of 2012 in place and allow natural gas companies to use the amount paid in impact fees as a credit against the severance tax. One of CCAP's priorities for 2016 remains maintenance of the shale gas impact fee, complete and 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.
The governor's plan includes several recommendations for consolidation of state agencies and other cost-savings initiatives, including restructuring the existing departments of Aging, Health, Human Services and Drug and Alcohol Programs into a single Health and Human Services agency, projected to save more than $90 million. Counties will be evaluating the impacts of this proposal, and other cost-savings measures, since many county human services programs fall under the jurisdiction of these departments. Counties' experience with the human services block grant serves as evidence of the potential for functional consolidation, but also as a reminder that time and care must be taken to avoid unintended outcomes.
Other cost savings proposals include regionalization of the County Assistance Offices, a lease-back arrangement for the Farm Show Complex, and deletion of many small special-purpose line items. The proposal also assumes implementation of reforms under the Justice Reinvestment Initiative II, estimated to save $108 million over five years, and a $25 per capita fee on municipalities without local police coverage who instead rely on the State Police.
For counties, given the current budget environment, the governor's proposal represents a good starting point, with generally level funding across line items, particularly in human services. The proposal includes several positive elements, such as a $26.2 million waiting list initiative to move individuals with intellectual disabilities and autism into services and a net three percent increase in children and youth funding. In addition, the governor's budget plan addresses the opioid epidemic, another county priority, with $10 million in federal funds to expand access to naloxone for first responders, as well as $3.4 million in federal funds to expand drug courts. Further, a $45 million bond initiative ($15 million dollars annually across three years) has been requested in order to fund watershed protection activities.
Still, the state's fiscal condition works against needed growth in funding for the broad spectrum of county human services programs. And so as the process goes forward, counties' top priority for 2017 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.
CCAP has assembled a number of budget resources on its Budget News and Updates web page, including a spreadsheet of the proposed funding levels for county line items.
BUDGET HEARINGS TO BEGIN
The House and Senate Appropriations Committees will commence a three-week long series of budget hearings on Feb. 21, allowing state agencies to provide detail on Gov. Wolf's FY 2017-2018 commonwealth budget proposal. Of interest, House Appropriations hearings with the Department of Aging will be held Feb. 27, while hearings with the Departments of Health and Drug and Alcohol Programs will be Feb. 28 and the Department of Human Services March 7; the Senate Appropriations Committee will hold one hearing for the proposed Health and Human Services Department, comprising all four current agencies, on March 8. 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.
CONSULTANT'S REPORT IDENTIFIES COST SAVINGS
Following the release of his FY 2017-2018 budget proposal, Gov. Wolf made available a report from the McKinsey consulting firm, hired to identify ways to reform state government and eliminate waste. Many of the consultants' recommendations, such as consolidation of human resources and technology services across agencies, merging several agencies into a new Health and Human Services Department, and a cost-sharing model for municipalities that currently use state police for their primary local coverage, were included in the proposed budget.
However, the consultant's report also references several other issues, specifically recommending re-evaluating the level of support for programs such as county court reimbursements. Particularly problematic is a flawed finding that only Michigan and New York among Pennsylvania's peer states reimburse local courts at a higher level, and that the commonwealth spends the most among its peer states out of its General Fund for county court reimbursement. In actuality, the reverse is true; other states fund their lower courts as part of a state system, while Pennsylvania's model has the counties fund the lower courts, and the state's contribution represents only a nominal state reimbursement. Reports filed with DCED indicate Pennsylvania's counties spend in the range of $900 million annually to fund the staffing, physical plant, and overhead support for the 60 judicial districts of the Courts of Common Pleas.
In addition, the report notes that giving the Department of Revenue access to real property ownership data, currently housed at the county level, could enable that agency to better identify non-reporting and under-reporting taxpayers, as well as collect delinquent revenue more effectively. The full report can be accessed at www.budget.pa.gov.
SENATE APPROVES "SANCTUARY CITY" BILL
One of the first bills to receive consideration in the 2017-2018 session, SB 10, sponsored by Sen. Guy Reschenthaler (R-Allegheny), was recently approved by a 37-12 vote of the Senate and sent to the House for its consideration. The bill defines how local governments must interact with Immigration and Customs Enforcement (ICE) regarding federal immigration law, or risk either incurring liability for future damages caused by the individual who is the subject of the enforcement action or losing eligibility for state grants.
Prior to the final floor vote, the Senate Rules Committee adopted an amendment that removes a specific requirement for local governments to enforce federal immigration law, although continuing ineligibility for state funds or to participate in the sale of state surplus property if it refuses to enforce an ICE detention request, unless the entity is unable to transfer custody of the individual to the federal government within the requested timeframe. Further, the amendment requires local governments to verify with state agencies that they are in compliance with the provisions of the bill as a condition of access to state funds or state surplus property. However, the amendment, and SB 10 as amended, fail to include needed language exempting local governments from the bill's provisions making a local government liable for any future damages caused by the individual who is the subject of a detention request and released, regardless of whether it does so in compliance with the timeline otherwise offered by the amendment.
CCAP continues to seek amendments to address these concerns with liability, noting the bill as currently written opens a dangerous precedent by imposing liability on municipalities and their taxpayers for unforeseen acts by an individual or errors in judicial judgment, regardless of the bill's intent that it is based on timing of release. Importantly, all counties currently follow all of the procedures required under state and federal law regarding communications with ICE on questions of immigration status. Even so, SB 10 in its current form would create a lose-lose situations for counties where they are exposed to costly lawsuits if they detain a bail-qualified individual in a county prison pursuant to an enforcement request, or are exposed to litigation for subsequent acts if they release the detainee.
The bill is now before the House Judiciary Committee.
HOUSE PANEL ADVANCES STUDY OF RIGHT TO KNOW LAW IMPACTS
The House Local Government Committee on Feb. 8 gave its unanimous approval to HR 50, sponsored by Committee chair Rep. Kate Harper (R-Montgomery), which would direct the Legislative and Budget Finance Committee to conduct a review of the fiscal impacts to state and local governments of implementing the state's Right-to-Know (RTK) Law. In 2008, the General Assembly undertook a major rewrite of the RTK Law, which resulted in changes to definitions, requests for access, electronic access, retention, response standards and redaction, while also making changes to the presumption on records and the burden of proof for their disclosure. CCAP supported the original rewrite to ensure a proper level of guidance was provided while maintaining a balance between the public's need for access and the privacy of individuals. Since adoption, common concerns have arisen on a regular basis, including costs of compliance. The resolution is now before the full House for consideration.
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 26-28 at the Hilton Harrisburg, and features meetings of standing policy committees, and numerous educational session. General session speakers include Budget Secretary Randy Albright, Secretary of the Commonwealth Pedro Cortés, state Supreme Court Justice Max Baer, and Congressman Tim Murphy.