SENATE APPROVES REVENUE PACKAGE
Although the state appropriations bill for FY 2017-2018 became law in early July, agreement on the revenues needed to balance the spending plan and address the projected deficit for the coming fiscal year remains elusive.
The House returned for a rare July Saturday session day on July 22 to continue discussions on the revenue side of the ledger, remaining focused on non-tax revenue such as gaming expansion and expansion of liquor sales. However, no consensus emerged from those House discussions, and no votes were taken on any revenue-related bills.
Just a few days later, the Senate returned to session and put a $1.8 billion revenue package on the table that included $1.3 billion in borrowing and $571 million in new revenues. Those revenues, as amended into HB 542, include a "volume differential tax" on natural gas, at a rate ranging from 1.5 cents to 3.5 cents per Mcf (based on the average annual price of natural gas) on each producer currently subject to the existing impact fee under Act 13 of 2012. Although the Act 13 impact fee would remain in place exactly as is, as called for in CCAP's priority to maintain the shale gas impact fee, the Senate's proposal includes one additional benefit in that money from the volume differential tax would be use to ensure that the impact fee revenue is maintained at no less than $200 million in a given year before the proceeds would go to the General Fund.
Other revenue sources in HB 542 include new or expanded gross receipts taxes on electricity, natural gas and telecommunications, a tax on consumer fireworks, and imposition of the sales tax on internet-based sales. The plan also depends on a $200 million fund transfer and $200 million from a gaming bill that has yet to be approved.
After amending the plan into HB 542 in the Senate Appropriations Committee on July 26, the full Senate approved the measure by a narrow 26-24 vote the following day. The revenue package needs to be approved by the House as well before it can go to the Governor's desk; as of this writing, neither the House nor the Senate have any scheduled session days until mid-September, nor was it certain whether the House would bring the bill up for a vote when it does return. Additional details will be provided on CCAP's Budget News and Updates web page as they are available.
GRANT FUNDING REAUTHORIZED BY SENATE
In addition to the revenue package approved by the Senate in late July (see article above), the Senate also approved amendments to the Administrative Code, in HB 118. Of note to counties, the amendments include reauthorization of senior judge support grants to counties, retroactive to the expiration date of June 30, 2017. The language mirrors similar bills that had been offered by Rep. Hal English (R-Allegheny) as HB 1451 and by Sen. Stewart Greenleaf (R-Montgomery) as SB 741. Funding for the grants is included in the FY 2017-2018 state budget, level funded at $1.375 million.
Also, the amendments permanently reauthorize the statewide tip fee, which provides grants through the state's Recycling Fund to local governments with recycling programs. Although not set to sunset until January 1, 2020, because many of the contracts awarded for Act 101's grant programs are multi-year, the state Department of Environmental Protection is not awarding new contracts until the fee is reauthorized. The initiative was first sponsored by former CCAP member Sen. Tom Killion (R-Delaware) in SB 646, which was later amended by the House to just extend the sunset by one year; that bill remains before the House.
The Senate approved HB 118 by a 37-13 vote, and it now goes back to the House for a concurrence vote.
LOCAL GOVERNMENT BIDDING BILLS MOVE IN THE GENERAL ASSEMBLY
Two bills that would provide flexibility in the local government bidding process have recently been moving through the House and Senate, to address situations in which local governments receive no responses when services are bid. Although current law provides a mechanism to overcome the problem, it applies just to situations where the bid is for purchase of goods and sale of real and personal property, and does not apply to services (i.e., purchase of labor). The omission means that the county has no recourse to get a services-based project completed, absent someone finally responding to additional bid requests or someone agreeing to do the project at a rate below the bidding threshold.
House Bill 1364, introduced by Rep. Lee James (R-Venango) and SB 693, introduced by former CCAP member Sen. Judy Schwank (D-Berks), would extend the law to cover any service contract or purchase where bids are required but not received, under the same terms as the current law. Specifically, if no bids are received for a contract for services after two advertisements, the local government would be able to initiate negotiations for a contract to obtain the services advertised. The legislation requires that the terms of any negotiated contract, including the proposed contract price and identity of the parties, must be publicly announced at a meeting of the governing body before the contract is executed. This clarification of the statute will assist local governments in assuring they can take steps to complete necessary projects if no bids for services are received, while still maintaining appropriate standards of transparency.
The House bill was reported by the House Local Government Committee and won the unanimous approval of the House on June 29, while SB 693 was unanimously reported by the Senate Local Government Committee in early June.
HOUSE DISCUSSES CIVIL SERVICE SYSTEM
On July 26, the House State Government Committee met to discuss regulations proposed by the Civil Service Commission (CSC) directly related to Act 69 and Act 167 of 2016. Those statutes were intended to modernize Civil Service related to application, examination, notification and hiring practices, in particular by allowing candidates to be notified by email, allowing the "rule of three" to be expanded, and allowing for vacancy based hiring. The laws also increase the number and type of personnel assessment tools and require advertisement of veterans' preference provisions.
CSC chair Bryan Lentz explained that the Commission has held three public hearings on the proposed regulations, and there has been an opportunity for public comment through the Independent Regulatory Review Commission. However, committee chair Daryl Metcalfe (R-Butler) shared his concern that it has taken more than a year to get to this point of implementation, and that the CSC added language to the regulations beyond the scope of Act 69 and 167.
Several state agency officials, including Sharon Minnich, secretary of the Office of Administration, told the committee that implementing Act 69 and 167 as written would help to modernize the hiring process and help the commonwealth recruit employees with the skills needed to fill positions. CCAP also submitted written comments to the committee sharing counties' historical difficulties in filling positions and finding qualified staff as a result of Civil Service Act provisions and practices of the CSC, for which Act 69 and Act 167 were intended to provide relief. CCAP has urged the CSC to amend the proposed regulations to be consistent with the intent of Act 69 and Act 167, and to work with the counties in redrafting proposed regulations that are consistent with the law. Full commentary can be read at www.pacounties.org under the Legislative Action Center, then clicking Legislative Testimony.
LAND BANK CHANGES GO TO HOUSE
Legislation that was recently approved by the Senate would grant redevelopment authorities the same powers as land banks for the purpose of acquiring blighted, dilapidated, and abandoned properties from the tax sale process for restoration. Senate Bill 667, sponsored by Sen. Pat Stefano (R-Fayette), will also authorize redevelopment authorities, which share similar goals and responsibilities for rehabilitating blighted properties, to acquire tax delinquent properties without requiring counties to form an entirely new and duplicative entity to do so. Like land banks, redevelopment authorities would be permitted to eliminate the tax liens on properties they acquire and to recapture up to 50 percent of the property taxes generated by those properties for up to five years to help fund its operations. The bill does not affect existing powers afforded to land banks under the Pennsylvania Land Bank Acts, nor does it preclude counties from establishing land banks as separate entities should they wish to do so.
The Senate approved SB 667 by a 46-3 margin on July 26, and the bill is now in the House Urban Affairs Committee .
NFIP REAUTHORIZATION IN MOTION
Congress has begun work on the reauthorization of the National Flood Insurance Program (NFIP), which expires later this year. In the House, the Financial Services Committee has marked up a series of seven bills, including H.R. 2874, which would increase the annual limit on premium increases from five to eight percent for NFIP policy holders, and create a new state affordability surcharge on each non-residential policy issued under the program. The surcharge could be added to publicly owned properties including county facilities, as well as businesses that operate within a flood zone.
On the Senate side, there are currently two major proposals including S. 1313, which would reauthorize the NFIP over a 10-year term to help limit uncertainty in the insurance and housing markets, as well as reallocate existing surcharges under the NFIP to better finance pre-disaster mitigation and FEMA's flood mitigation assistance programs. Additionally, the bill would provide affordability vouchers to offset the cost of flood insurance premiums and fees that would result in total housing costs exceeding 40 percent of an individual's household income. Another bill, S. 1368, would reauthorize the NFIP for six years, freezing interest payments on the debt that the NFIP is accruing and providing low-interest loans for homeowner mitigation projects. This bill would also provide additional funding to current mitigation assistance grant programs, which are estimated to have a 4:1 ratio of return on investment. Finally, the SAFE NFIP Act would authorize funding for LiDAR mapping technology, acknowledged as one of the most accurate ways to map flood risk.