Legislative Bulletin
Number 8
April 14, 2017
An e-newsletter of the County Commissioners Association of Pennsylvania
The Voice of Pennsylvania Counties Since 1886
House Republicans responded to Gov. Wolf's FY 2017-2018 budget proposal on April 3, releasing a $31.5 billion plan that is about $800 million less than proposed by the Governor. That plan, amended into HB 218, contains sweeping cuts in funding for human services, criminal justice, and administrative programs that counties perform on the Commonwealth's behalf. The cuts amount to millions of dollars, and threaten setbacks in important programming and raise the likelihood of local property tax increases.
Most alarming, the House proposes elimination of state funding for adult probation ($16.2 million), juvenile probation ($18.9 million), intermediate punishment treatment programs ($18.2 million), county trial reimbursement ($200,000), senior judge reimbursements ($1.4 million) and county grants for court interpreters ($1.5 million). In addition, the House proposal cuts the county court reimbursement by $3.5 million, following a $12 million cut to the same line in FY 2016-2017, as well as cutting the Human Services Development Fund and homeless assistance lines by 15 percent. While the Governor requested a $4 million increase for the Behavioral Health Services Initiative, HB 218 maintains level funding from FY 2016-2017; HB 218 further cuts mental health base funds by another $5 million beyond the $14 million cut proposed by the Governor.
Facing a projected $3 billion deficit, House leaders noted they need about $1.6 billion in savings and revenue to balance the proposed spending in HB 218. Their proposal does not rely on broad-based tax increases such as the sales or income tax. Instead, about half would come from efficiencies and other savings, while about $790 million would come from a list of revenue options that have not yet been decided upon. Those options could include legalizing video gaming terminals, which House Republicans estimate could bring in $389 million, as well as other expanded gaming options estimated to yield nearly $376 million such as online gambling (i-Gaming), slots at additional locations, fantasy sports or gaming and slots at airports. They also suggested up to $250 million could be redirected from dedicated special fund revenues to the General Fund, and have proposed divesting the state's liquor sales business.
CCAP expressed its grave concerns with the budget proposed in HB 218, noting that far from being a "no-tax-increase" budget, it instead represents a continuing pattern of the state failing to meet its full responsibility to its service delivery partners and its citizens most in need. The county line items in line for cuts are statutory mandates, and so the only option locally will be to increase the local tax burden - the property tax - to maintain services. Although recognizing that the House proposal is a first step in the budget process for FY 2017-2018, it represents a starting point that counties cannot support. Additional details, including a spreadsheet with line-by-line analysis, are available on CCAP's Budget News and Updates web page.
The House moved swiftly to amend their plan into HB 218 in the Appropriations Committee on April 3, and approved the bill on a largely party-line vote of the full House the following day. The bill now goes to the Senate as negotiations between the legislature and the Governor's office continue.
A signature efficiency proposal in Governor Wolf's budget package is unification of the Health, Aging, Drug and Alcohol and Human Services departments into a single Health and Human Services agency. Legislative committees have the proposal under active review, and are hosting public hearings with key stakeholders to gather their input.
Counties are uniquely positioned as key partners with the state in the delivery of human services programs at the local level, and in that context CCAP testified on the proposed unification on April 13 in Reading before the Senate committees on Aging and Youth, Health and Human Services, Intergovernmental Affairs and the Appropriations subcommittee on Health and Human Services, and is scheduled to testify before the House Human Services Committee, Health Committee, and Aging and Older Adult Services Committee at a similar joint hearing on Monday, April 17, at the Capitol.
While the Association remains neutral on the proposed consolidation, CCAP has identified the basic and necessary components that must be adopted as part of a unified model, as well as opportunities to enhance partnership and cooperation with the state. First and foremost, counties believe the goals of any change made must be focused on the service recipient. Further, counties must remain in the forefront of delivery models that may result, and counties must be at the table as those plans are developed, as they are closest to the people who rely on critical services.
Berks County commissioner Christian Leinbach and CCAP Deputy Director Brinda Carroll Penyak testified at the Reading hearing, sharing the top items that counties are advocating, including opportunities to improve data systems and the elimination of silos, maintaining a full continuum of services related to substance abuse issues and older adult programs, and involvement of counties in addressing concerns of federal regulatory and funding agencies such as CMS. Dauphin County commissioner and CCAP Human Services Committee chair George Hartwick will offer additional commentary from the counties' perspective at the April 17 House hearing.
The full comments provided by CCAP to the Senate and House committees are available at www.pacounties.org by clicking Government Relations, then Legislative Action Center and then Legislative Testimony.
The Department of Revenue recently released the March 2017 revenue collection totals, showing that current year revenues continue to lag behind estimates. The state collected $4.4 billion in General Fund revenue in March, with all major tax categories including sales tax receipts, personal income tax, corporation and realty transfer taxes below estimate for the month. The most significant lags are corporation tax (8.7 percent below estimate) and realty transfer tax (14.5 percent) amounting to $229.6 million (4.6 percent) below estimate for the month. March revenue collections generally experience the highest collection rates during the fiscal year with April being the second highest.
Overall, the department reported that General Fund totals for the year are $679.3 million (2.9 percent) less than anticipated, and are potentially on course to yield a greater deficit for the current fiscal year than projected by both the Governor and Independent Fiscal Office.
As the beginning of the 2017-2018 fiscal year looms closer and negotiations continue, media reports have indicated that state Treasurer Joe Torsella is evaluating the spending authority of the Treasury in the event of an impasse.
During the nine-month state budget delay in FY 2015-2016, then-Treasurer Timothy Reese determined that the state could continue paying out funds to the branches of state government, covering salaries and other expenses. However, Treasurer Torsella is reviewing that determination and is reported to be developing official policies for how, or if, state funds can be released in the event of an impasse.
County human services were pushed to the breaking point during the FY 2015-2016 state budget impasse, as they covered the state's funding obligations at county property taxpayer expense to avoid directly impacting clients. As part of their 2017 priority on Human Services Funding and System Reform, counties are asking for mechanisms to be put in place to assure any future budget delays do not force counties and those they serve to deal with the consequences.
Relatedly, HB 398, sponsored by Rep. Gene DiGirolamo (R-Bucks), would specifically require funding for "essential services" (including the line items in the Human Services Block Grant, as well as county child welfare funding and any other funds for which the county provides services on behalf of the commonwealth) to continue at current levels if a state budget is not enacted by July 1 in any given year. That bill was reported unanimously by the House Human Services Committee in March. Similar legislation, SB 585, was also introduced recently by Sen. Pat Stefano (R-Fayette).
For information about the impact of the FY 2015-2016 impasse on counties, see CCAP's full report on the Legislative Action Center.
The House recently gave its unanimous approval to legislation that would examine the impact of the opioid epidemic on children. House Bill 235, introduced by Children and Youth committee chair Rep. Kathy Watson (R-Bucks), would create a task force comprising the secretaries of Human Services, Health and Drug and Alcohol Programs, and ten other legislative and gubernatorial appointees with experience in medicine, behavioral health treatment, early intervention programs, county children and youth offices and child advocacy. The task force would examine the existing laws and practices related to diagnosis and treatment of substance-exposed infants, as well as permanency and placement of children at risk due to parents' substance abuse disorders. By Jan. 31, 2018, the task force would provide a report identifying strategies and recommendations to address these matters. The bill now goes to the Senate for consideration.
Throughout the month of June CCAP policy committees will be holding their annual conference call meetings to consider resolutions amending the PA County Platform, in anticipation of a membership discussion and vote in conjunction with the CCAP Annual Conference in early August. County officials are encouraged to begin reviewing the Platform now and to send any proposed resolutions to CCAP Government Relations staff at PACountiesGR@pacounties.org, or to discuss them with CCAP policy committee chairs.