STILL NO REVENUE RESOLUTION; GOVERNOR TAKES INDEPENDENT ACTION
Hopes were raised when the Senate was called to a previously unscheduled session week, joining the House during the week Oct. 2, but by week's end both chambers adjourned without a final resolution to balance the FY 2017-2018 state budget.
Early in the week, it appeared many options remained on the table as part of the final revenue package to close the $2.2 billion budget shortfall. Among the reported options were one-time transfers of claimed surpluses from dedicated funding sources such as transportation and environmental programs (although perhaps not to the level originally proposed by the House), as well as the potential for adjusting or reducing the appropriations to various line items that were enacted in July. For new revenues, as it became apparent that a severance tax was unlikely to be agreed to, a proposal emerged to generate revenues by extending the state sales tax to commercial storage facilities. That proposal quickly received significant pushback, so when the House Rules Committee took up Tax Reform Code amendments to HB 542 the amendments instead included an additional five percent state tax on hotel rooms, on top of the existing six percent state sales tax and county hotel taxes. The bill was reported from Committee that Tuesday, but was not brought up for a vote by the full House before the chamber recessed on Wednesday.
In the midst of these discussions, Democratic House members called for action on a discharge resolution on HB 113, Rep. Kate Harper's (R-Montgomery) legislation to implement a severance tax on top of the existing impact fee. House Bill 113 has been in the House Environmental Resources and Energy Committee since introduction in January, although the committee did amend the bill in September to remove its additional severance tax provisions and simply rename the existing impact fee as a severance tax. The discharge petition failed by an 83-115 vote, with ten Republican members and all but six Democratic members voting in favor. In another effort to revive the severance tax debate, the House Finance Committee has now scheduled HB 1401 for consideration on Oct. 16; the bill, introduced by Rep. Gene DiGirolamo (R-Bucks), would also add a severance tax on top of the existing impact fee.
Following the lack of resolution that week, Gov. Wolf announced that he would take action to manage the current state budget, primarily by borrowing $1.25 billion against revenues generated by the Liquor Control Board and the sale of wine and spirits within the commonwealth. According to the Governor, doing so would address nearly all of the prior fiscal year's deficit and reduce the need for additional borrowing to pay current fiscal year bills. Further, Gov. Wolf also indicated the commonwealth will begin to accept proposals to execute a lease-leaseback arrangement for the state's Farm Show Complex to generate revenues, a plan originally part of his FY 2017-2018 budget proposal.
Reports indicate the process to borrow from the Liquor Control Board could take about two and a half months to complete, while the Farm Show lease could be executed by year's end; questions are also being raised by some in the General Assembly regarding the ability of the Governor to move forward absent legislative action. For now, the Governor sought and received another short-term loan from Treasury to be used to help cover the state's October bills to schools and human services providers, among others. In announcing his decision to authorize a five-day $700M line of credit to the general fund, Treasurer Joe Torsella again called for adoption of a balanced spending plan but stopped short of threatening to disapprove further borrowing, saying instead that he will "monitor all legislative, executive and financial developments carefully in the weeks ahead to determine future actions."
STATE MAKES $5 MILLION AVAILABLE FOR NALOXONE
Gov. Wolf has announced that $5 million is being made available to purchase through a state-procured contract more than 60,000 naloxone kits, to be made available to Pennsylvania's first responders over a two-year period.
One main point-of-contact for each county or region, such as the county commissioners, single county authority, district attorney's office, or local health agencies, must be identified to coordinate the process of getting the intranasal naloxone kits into the hands of first responders. That point-of-contact will be responsible for identifying first responder naloxone needs within that county or region, and must apply to the Pennsylvania Commission on Crime and Delinquency to request the naloxone cases. The application requires a letter of support from the single county authority or the board of commissioners and proof of a prescription or standing order for naloxone. The number of cases available per county is based on factors including population, number of overdose deaths, and information from the state's prescription drug monitoring program.
The application can be found at www.pccd.pa.gov, and must be submitted by Nov. 6, 2017. As a 2017 priority, counties support efforts to prevent substance abuse and drug overdose, and seek strong federal, state and local partnerships to effectively address the opioid epidemic.
DEP SHUTS DOWN RECYCLING GRANT PROGRAM
Facing the sunset of the fee that funds the state's Recycling Fund, the state Department of Environmental Protection announced in late September that it will no longer be accepting applications for municipal solid waste planning and household hazardous waste education grants under section 901 of Act 101. Although the actual expiration of the $2 state tipping fee is not until January 1, 2020, many of the contracts awarded for Act 101's grant programs to local governments for recycling programs are multi-year, and so the ability of DEP to award new contracts is growing increasingly limited.
Counties get assistance from the Fund for developing their mandated decennial solid waste plans, for planning and implementation of programs, and for covering the cost of the county recycling coordinator. In addition, many counties provide supplemental recycling services to their constituents, including household hazardous waste pickup, recycling of electronics and tires, and recycling drop-off centers; those counties are also eligible for various grants offered under Act 101. The Senate acted in June to approve SB 646, introduced by former Delaware County council member Sen. Tom Killion (R-Delaware), which would remove the sunset provision so that funding for important grant programs to local governments can continue. The House later amended the bill to extend the sunset by just one year; that bill remains before the House. Separately, efforts have been made to amend a sunset extension into HB 118, Administrative Code amendments that are part of the budget discussions. To date, however, none of these efforts have been advanced to the Governor's desk.
PA RECEIVES GRANT FOR OPIOID ADDICTION TREATMENT
In late September, Pennsylvania was awarded a $5.7 million Medication-Assisted Treatment Prescription Drug and Opioid Addiction (MAT-PDOA) grant from the U.S. Department of Health and Human Services to help in the state's ongoing fight against the opioid crisis. The MAT-PDOA grant, made available by the federal Substance Abuse and Mental Health Services Administration, aims to help Pennsylvania enhance its access to evidence-based medically assisted treatment services.
The MAT-PDOA grant will be administered jointly by the state departments of Health and Drug and Alcohol Programs through University of Pittsburgh Medical Center (UPMC), using a "hub-and-spoke" model of service delivery with Allegheny County as the hub and Blair, Erie and Lycoming counties as the spokes. Although the initial focus is on western Pennsylvania, Acting Health Secretary and Physician General Dr. Rachel Levine has indicated that the goal is to expand access throughout the commonwealth.
In addition, Pennsylvania will soon award four $1 million federal PA Coordinated (MAT) grants to providers via the 21st Century Cures grant funding.
Prevention of substance abuse and drug overdose continues to be a priority for Pennsylvania's counties.
LOSS OF SALT DEDUCTION PROPOSED IN FEDERAL TAX REFORM EFFORTS
The federal tax reform proposal recently unveiled by Congressional and White House leaders would eliminate the long-standing federal deduction for state and local taxes (SALT).
The SALT deduction has been part of the federal tax code since 1913, and allows taxpayers to deduct the amount they pay in state and local taxes from their federal tax burden. Eliminating the deduction effectively creates double taxation, with taxpayers paying federal taxes on income put toward state and local taxes. A loss of the deduction would also put pressure on local governments to lower local tax rates to offset the increased burden.
On Oct. 5, the U.S. House of Representatives approved a budget blueprint for 2018, directing lawmakers to pursue a tax code overhaul through the budget reconciliation process, which allows for approval through a simple majority vote in the Senate. However, the House-approved budget differs significantly from the proposal currently under consideration in the Senate, particularly in terms of how to pay for the tax plan. Once both chambers have adopted a reconciled budget with common reconciliation instructions for the tax overhaul, the House Ways and Means Committee will release the tax legislation and go to markup. Speaker of the House Paul Ryan (R-Wisconsin) has indicated that keeping Congress in session over Christmas is an option if they have not advanced a tax reform bill by then.
Additional information about the impacts to counties can be found at www.naco.org, and sample county resolutions and letters opposing elimination of the SALT deduction are also available on CCAP's Legislative Action Center at www.pacounties.org.