PA Environment Digest

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Day 38 Without A Complete State Budget; Treasurer Torsella Issues $750M Line Of Credit

Gov. Wolf said Thursday on WITF’s SmartTalk it’s up to the House Republicans to sign on to the Senate-passed revenue package endorsed by all the other parties in the budget negotiations-- Senate Republicans and Democrats, House Democrats and him.

Wolf said he believes adopting the Senate package will allow the state to avoid a credit downgrade. “There are no smoke and mirrors” in this budget.

Wolf said he is very concerned, like State Treasurer Joe Torsella, the state may not be able to pay its bills if the budget revenue package is not passed by the end of August.

More specifically, Gov. Wolf said he believes the House will end up supporting the natural gas severance tax, adding 80 percent of the tax will be paid by companies and consumers outside Pennsylvania.

[Note: Conservative members of the House and Senate have already come out opposing the severance tax and all the other new and increased taxes in the Senate revenue package, as a recent hearing by House conservatives in York demonstrated.

[AP: Budget/Staff Cuts Caused DEP Permit Review Problems

[Marc Levy of the Associated Press Saturday wrote a story-- Senate Jams Shale Tax, Industry Permits Into Unhappy Package-- that summarizes part of the Senate-passed revenue package dealing with the natural gas severance tax and sweeping changes to all of DEP’s permitting programs.

[But at the end of the story, a comment by Dan Weaver, President of the PA Independence Oil and Gas Association, put a spotlight on the key issue behind permit review problems at DEP--

["So tell me how they're supposed to get their permits through on an expedited basis if they have less money and less staff? And here they go and cut their budget further. Doesn't that exacerbate the problem?"]

On natural gas pipelines, Gov. Wolf said he has spoken to the CEO of the company building the Mariner East 2 Pipeline to express his concerns about the spills and water contamination resulting from construction.

Pipeline construction was stopped at 55 sites July 25 because of the spills by the Environmental Hearing Board. However, the EHB Friday allowed construction to restart at 16 of the 55 sites. A hearing on whether to extend the ban further is set for August 9.

Gov. Wolf also repeated his support for the Paris Climate Accord and noted Pennsylvania is actually ahead of its obligations to reduce greenhouse gas emissions to meet the Accord. He said he wants to continue to take actions to make progress.

State Treasurer Authorizes $750M Line Of Credit

During the second half of the program, State Treasurer Joe Torsella said he now projects about the second week of September the state’s “checking account” will drop into a deficit situation and that deficit will continue for 8 months if no responsible revenue package is adopted soon.

He said the deficit will result in significant new borrowing to fill those gaps, perhaps as much as $3 billion through this new fiscal year. Torsella said again, these kinds of deficits may be beyond the capacity of state to borrow money from other state accounts to make up.

In fact, later Thursday Treasurer Torsella announced his office had authorized a $750 million line of credit to the state General Fund so it could keep paying its bills. He noted the State Treasurer’s Office loaned the General Fund $2.5 billion last fiscal year, according to comments he made to PLS Reporter.

Torsella said the Commonwealth has been warned by the credit rating agencies Pennsylvania needs a balanced and responsible budget. If we do not, it may result in a downgrade.

He said Pennsylvania has one of the worst credit ratings of any state in the nation and that has a cost to taxpayers.

Torsella noted Auditor General Eugene DePasquale has called credit downgrades a “backdoor tax” because it raises the cost of state borrowing.

He said if no revenue package is passed soon, the first bills that may not get paid are the nonpreferred appropriations for Penn State, Pitt, Temple and Lincoln universities. The next option is identifying what expenses can be differed.

In response to a question, Torsella said budget and other actions by Congress and the federal government have a major impact on Pennsylvania, and not just cuts in federal appropriations, but also changes in things like tax law.

Click Here for the full announcement of the line of credit.

Auditor General - State Is Running Out Of Money

Auditor General Eugene DePasquale, who was also a party to issuing the $750 million line of credit, said Thursday-- “Today I added my signature to the $750 million line of credit that Treasurer Joe Torsella authorized from Treasury’s Short Term Investment Pool (STIP) to prevent the state’s general fund cash balance from hitting zero this month.

“The fact the state is running out of money in the second month of the fiscal year should be a wake-up call to every elected official in Pennsylvania.

“My concern goes beyond the cash-flow problem that indicates the state’s unaddressed structural deficit. I am concerned that schools and county agencies across the state are once again worried about funding uncertainties.”

Click Here for the full statement.

Senate GOP Leaders - Difficult Decisions Made

Three Senate GOP Leaders put out statements after the Treasurer’s action saying the Senate made difficult decisions to avoid “negative ramifications.”

“We understand the severity of the Commonwealth’s finances,” said Senate Majority Leader Jake Corman (R-Centre). “It’s this reason that the Senate acted quickly last week to adopt a reasonable revenue package to fund the spending plan approved by the House and Senate. We have an obligation to govern and make the difficult decisions that will move toward steadying our financial footing.”

Click Here for the full statements

House GOP Conservatives Hold Hearing On Revenue Proposal

House GOP members of the PA Taxpayers’ Caucus received input during a hearing in York County Tuesday on how the Senate-passed revenue package would affect businesses and the tax-paying public, if the legislation becomes law.

Not surprisingly, the testimony they heard was all in opposition to the revenue package and comments by individual House members attending the hearing was all negative.

Click Here for a summary of the hearing.

July Revenue Ahead Of 2016

The Department of Revenue Tuesday announced Pennsylvania collected $ 2.1 billion in General Fund revenue in July, the first month of the 2017-18 fiscal year. Click Here for more.

In 2016, state General Fund revenue for July were $1.97 billion, in July 2015 the state collected $2.135 billion and in 2014 $2.246 billion. Click Here for more.

For the record, the PA Gaming Control Board Wednesday reported gross revenue from slot machines at the 12 Pennsylvania casinos fell 2 percent in July, continuing a downward trend.

What’s Next?

The House remains on a 6-hour call and the Senate is recessed to the call of the President Pro Tempore.

In other words, there is no firm date for returning to Harrisburg, except for the Fall legislative which begins September 11 for the House and September 18 in the Senate.

NewsClips:

AP: Senate Jams Shale Tax, Industry Permits Into Unhappy Package

Op-Ed: Gov. Wolf Reneges On Promise To Protect Air, Water In PA

Op-Ed: What’s Behind Wolf’s Environmental Giveaway To Big Business?

Editorial: Radical, Ill-Advised 3rd Party Review Of DEP Permits

House Members Prepare For Natural Gas Severance Tax Fight

Editorial: Tax On Gas Drilling A Necessity In Unsatisfying Spending Plan

Editorial: PA Gas Industry The Fuel To Solve State Budget Woes

Editorial: Radical, Ill-Advised 3rd Party Review Of DEP Permits

AP: State Treasurer OKs Short-Term $750 Million Line Of Credit

State Treasurer Calls New $750M Line Of Credit Extraordinary, Without Precedent

Wolf Expresses Confidence In Stalled Budget, House Position Hazy