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Final Budget Bills Littered With Bad Environmental Riders; A Budget That Failed To Address ANY Environmental Shortfalls

The Senate and House Thursday finished work on the final pieces of the budget revenue package to deal with the state’s $2.2 billion budget deficit and fund the FY 2017-18 budget.

They passed Tax Code, Fiscal Code, gaming expansion and Education Code bills, along with bills funding the state-related universities of Penn State, Pitt, Temple, Lincoln and the University of Pennsylvania Veterinary School and sent them to Gov. Wolf.

 The previous week they passed an Administrative Code bill that completes the package.

Senate Majority Leader Jake Corman (R-Centre) and House Majority Leader David Reed (R-Indiana) both expressed the hope their work on the revenue package will not only fill the budget hole left over from last year, but this year and next fiscal year as well.

With their budget work done, the Senate and House will break for the election and are not scheduled to return to Harrisburg until November 13.

Key Elements Of Revenue Package

Here are the key ingredients in the revenue package--

-- $1.5 billion borrowed by securitizing or “liquidating” the Tobacco Settlement monies Pennsylvania receives;

-- $300 million in special fund transfers to the General Fund to be picked by the Governor;

-- $200 million transfer to General Fund from the Professional Liability Joint Underwriting Association Fund;

-- $238.5 million from gaming expansion application and license fees, $25 million from iGaming, $10 million for Lottery Fund-- recurring revenue of an estimated $80 to $90 million;

-- $43.5 million from expanding Sales Tax to online marketplaces;

-- $31.7 million from a 12 percent tax on expanding the kinds of fireworks purchased in the state; and

-- Hope that state revenues continue to run above estimates.

Tax Code

The Senate Wednesday voted 29 to 21 to send a Tax Code bill-- House Bill 542 (Thomas-D- Philadelphia)-- to the Governor’s desk with NO unrelated environmental riders.

The bill authorizes the Commonwealth Financing Authority to borrow $1.5 billion by securitizing or “liquidating” the Tobacco Settlement and possibly some other General Fund monies, would apply the Sales Tax to online marketplaces ($43.5 million) and impose a new 12 percent assessment on fireworks purchases ($31.7 million).

Also included are provisions related to the Net Operating Loss in the event of an adverse PA Supreme Court decision, changes to the timing and withholding of individual and lease taxes, a deduction for manufacturing innovation and reinvestment was added along with establishing two film production tax credit districts and an entertainment economic enhancement program tax credit for rehearsal areas.

There are no commercial storage, hotel or natural gas severance taxes. 

There are no unrelated environmental riders or a natural gas severance tax, but it does include a provision extending the Wild Resource Conservation Tax Checkoff indefinitely.

Click Here for a House Fiscal Note and summary.

Fiscal Code

The House Tuesday voted 109 to 75 to send a Fiscal Code bill-- House Bill 674 (Sponsor Withdrew)-- to the Governor with a long list of environmental riders and a general provision requiring the transfer of $300 million from unnamed special funds to the General Fund to balance the state budget.

The transfer provision requires the Governor to develop the list of special funds from which to take the $300 million and then submit that list to the State Treasurer.

The bill was passed after attempts to amend the bill and declare it unconstitutional with respect to the provisions dealing with cessation of oil and gas well royalties were beaten back.

Environmental riders include--

-- Oil and Gas Lease Fund: Transfers $20 million [supposed to be $35 million] from the Oil and Gas Lease Fund to the Marcellus Shale Legacy Fund for distribution to the Environmental Stewardship Fund and $15 million transferred to the Marcellus Legacy Fund to transfer to the Hazardous Sites Cleanup Fund.

-- Air Pollution Act Transfer:  Transfers $30.4 million from a settlement by the Attorney General relating to violations of the Air Pollution Control Act by Volkswagen received during the fiscal year to the General Fund.

-- Small Water And Sewer System Funding: $15 million available for small water and sewer projects with a cost of not less than $30,00 or more than $500,000.  Transfers an additional $10 million from Building PA Program to small water and sewer projects.

-- Funding Sewer/Water Laterals: Allows public municipal authorities to use funds to replace private water and sewer laterals.

-- Susquehanna and Delaware River Basin Commissions: Authorizes the Auditor General to audit the river basin commissions and the commissions shall reimburse the Auditor General for the cost of the audit.  In addition, no more than 25 percent of the appropriations to the commissions may be spent in any quarter.

-- Increase Access To Natural Gas: $6 million transfer from the Building Pennsylvania Program to the Natural Gas Infrastructure Development Fund to improve access to retail use of natural gas for schools, hospitals and businesses.

-- Repeals Drilling Moratorium End Date In Southeast: Repeals the January 1, 2018 expiration on the drilling moratorium in the South Newark Basin in Southeast PA.

-- Temporary Cessation Of Oil & Gas Wells: Provisions relating to payments of royalties during periods of nonproduction.

-- Washington Crossing State Park: Requires DCNR to spend $2.2 million on maintenance and upkeep of the park.

Click Here for a Senate Fiscal Note and summary.  Click Here for a House Fiscal Note and summary.

Administrative Code

The House and Senate Wednesday sent the Administrative Code bill-- House Bill 118 (Kaufer-R-Luzerne)-- containing a whole series of environmental riders to the Governor for his action, even though they gave final approval to the bill on October 18.

The environmental riders (some bad, a few good) include--

-- Recycling Fee Extension: Removes the sunset date for the $2/ton municipal waste recycling fee and funds will remain in the Recycling fund for grants.

-- Solar Borders: Requiring solar energy credits under the Alternative Energy Portfolio Standards to be purchased within Pennsylvania. [Senate Bill 404 this session, House Bill 2040 last session.]

-- Manganese Standard: Directs the Environmental Quality Board to adopt a proposed manganese standard within 90 days that includes the 1 milligram/liter manganese standard established under 25 Pa Code Chapter 93.7 and insure the standard is met at the point of intake for water suppliers (25 Pa Code Chapter 96.3). The 1 milligram/liter standard is 20 times the level of manganese that water suppliers are allowed to have in their water supplies, according to EPA’s secondary maximum contaminant level. [Supported by the coal industry. Click Here for more.]

-- Conventional Oil & Gas Wastewater Treatment: Requires water treatment facilities providing water disposal services exclusively to conventional oil and gas wells shall be allowed to operate under existing permits through December 31, 2019. [Supported by conventional oil & gas drilling industry and applies to three privately-operated conventional wastewater treatment facilities.]

-- Wyoming County State Park: Requires DCNR to conduct a feasibility study for the establishment of a state park in Wyoming County, including an appraisal of the fair market value of property proposed for a state park. [No funding provided.]

Click Here for a copy of the House Fiscal Note and summary.  Click Here for a copy of the Senate Fiscal Note and summary.

FY 2017-18 Spending Plan Failed To Address ANY Environmental Shortfalls

Just to refresh everyone’s memory, the General Fund spending plan passed June 30 and that became law without Gov. Wolf’s signature failed to address ANY of the environmental shortfalls pointed out during multiple Senate and House budget hearings this year.

The budget bill-- House Bill 218 (Saylor-R-York)--  did not address the shortfalls in DEP’s Safe Drinking Water Program criticized by EPA for failing to have the resources to meet minimum federal requirements for inspections and other obligations.

DEP’s General Fund budget in the new year-- $147.7 million-- is $17.9 million BELOW what it was in 1994-95-- $165.6 million and 40 percent BELOW what it was in 2002-03-- $245.6 million.  Plus a $118 million balance left from FY 2015-16.

Since 2002-03, the General Assembly cut DEP's General Fund budget 40 percent.

This means DEP will have to continue to rely on permit fee increases to fund its programs.

Agency Highlights

Some other budget highlights include--

-- DEP: slight decrease from $148.3 million to $147.7 million, that’s higher than the House Republican-passed budget in April of $139.3 million.

-- Personnel line-items essentially level funded

-- Conservation Districts same as last year $2.5 million

-- West Nile Virus & Zika Virus slight cut $5.3 million to $5.2 million

-- Black Fly same as last year $3.3 million

-- Susquehanna River Basin Commission cut in half $473,000 to $237,000

-- Delaware River Basin Commission cut in half $434,000 to $217,000

-- Interstate Commission On The Potomac River cut in half $46,000 to $23,000-- Chesapeake Bay Commission same as last year $275,000

-- DCNR: Slight decrease from $106.9 million to $105.5 million, that’s higher than the House Republican-passed budget, but primarily due to a significant increase in using General Fund monies to fund agency operations, rather than the Oil and Gas Lease Fund monies. However, there is still a $4.7 million overall increase in DCNR budget (not shown on the budget spreadsheet) as a result of a transfer from the Lease Fund.  There is a total transfer of $61.2 million from the Fund -- $11.2 million of that to pay for DCNR State Park and Forestry operations and $50 million to fund recreation and conservation projects (page 366, House Bill 218).  [Gov. Wolf put $500,000 from State Park Operations in budgetary reserve in August.]

-- Heritage Parks same as last year $2.875 million [Gov. Wolf put $625,000 of this in budgetary reserve in August.]

-- Agriculture: Slight increase from $143.6 million to $144.1 million, that’s higher than the House Republican-passed budget in April, but due primarily to $30 million in funding for the University of Pennsylvania Veterinary School

-- Conservation Districts same as last year - $869,000

-- Nutrient Management Fund same as last year - $2.7 million

Click Here for the FY 2017-18 Senate Republican budget spreadsheet.  Click Here for the FY 2017-18 Senate Democratic budget spreadsheet. Click Here for House Republican budget spreadsheet.  Click Here for the Senate Democratic summary of DCNR, DEP budget.  Click Here for Senate Democratic Agriculture budget summary.

Quick Budget Bill Scorecard

Here’s a quick scorecard on all the budget-related bills now on the Governor’s desk--

--Tax Code bill-- House Bill 542 (Thomas-D- Philadelphia)-- does NOT have the harmful environmental ridersClick Here for House Fiscal Note and summary.

-- Fiscal Code bill-- House Bill 674 (sponsor withdrew) WITH $300 million in fund transfers, environmental ridersClick Here for House Fiscal Note and summary.

-- Administrative Code bill-- House Bill 118 (Kaufer-R-Luzerne)-- WITH environmental riders.  Click Here for Senate Fiscal Note and summary.

-- State-Related Universities-- Senate Bill 325 (University of Pennsylvania), Senate Bill 326 (Penn State), Senate Bill 327 (Pitt), Senate Bill 328 (Temple), Senate Bill 329 (Lincoln University)-- were signed into law Friday by Gov. Wolf.

-- Severance Tax-- NOT part of the FY 2017-18 budget package, the natural gas production severance tax bill-- House Bill 1401 (DiGirolamo-R- Bucks)-- was removed from the Table and is now on the House Calendar for action.

The Next Budget

And in a little more than three months, Gov. Wolf will present his FY 2018-19 budget proposal and we start this all over again.

Related Stories:

Analysis: Environmental Riders Never Voted On By The House Or Senate Keep Showing Up In Budget Bills, And It’s Getting Worse

State Treasurer Authorizes $1.8 Billion Line Of Credit For General Fund


AP: Budget Bills Are Ugly But Wolf Has Little Choice But To Sign

PA Budget Standoffs: July 1 Needs To Mean Something Again

Op-Ed: Budget Bills Do Not Honor Our Environmental Rights In PA, Alan Peterson, MD

Micek: Wolf Presses For Tax On Gas Drillers

Wolf Urges New Severance Tax

Op-Ed: Natural Gas Severance Tax That’s Not Worth The Price, Rep. Vitali

Op-Ed: Severance Tax Supporter Now Against It Because Of Permitting Tradeoffs, Rep. Vitali

Op-Ed: Gas Drilling Is Good For State Economy, Marcellus Shale Coalition

Editorial: When All Else Fails, Roll The Dice In Budget Mess

Delco Uses $65K For 14-Acre Open Space Parcel Funded By Act 13 Impact Fee

Wolf To Evaluate Plan To Close Budget Gap, Expand Gambling In PA

Legislature Expands Gambling, Borrows $1.5B To Balance Budget, Will Wolf Sign?

House Passes Final Budget Piece, Ball Moves To Wolf’s Court

AP: Massive Borrowing, Gambling Bills Advance In Budget Scramble

Thompson: Senate Sends Big Budget Patch To Wolf’s Desk

More Borrowing, More Gambling: How They’re Breaking Budget Impasse

Murphy: Balanced Budget is Finally Close At Hand

AP: Senate Eyes House Budget Plan That’s Short Of What It Wanted

AP: PA’s Budget Fight Will Come With Its Own Price Tag

Thompson: House Passes Fiscal Code Keeping Budget Progress On Track

[Posted: Oct. 27, 2017]


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