PA Senate Appropriations Committee State Budget Hearings

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Budget Hearings Schedule

Monday, March 8

10 a.m. Independent Fiscal Office
2 p.m. Department of Revenue/Lottery
Key Points

Tuesday, March 9

10 a.m. Department of Conservation & Natural Resources
Key Points

Wednesday, March 10

10 a.m. Department of Human Services
1:30 p.m. Department of Human Services continued
Key Points

Thursday, March 11

10 a.m. Department of Environmental Protection
1:30 p.m. Department of State
Key Points

Thursday March 18

10 a.m. Department of Education
1:30 p.m. Department of Education continued
3 p.m. PA State System of Higher Education
Key Points

Monday, March 22

10 a.m. Department of Corrections/Board of Probation & Parole
2 p.m. Department of Community & Economic Development
Key Points

Tuesday, April 6

10 a.m. State-Related Universities
1:30 p.m. Dept. of Military & Veterans Affairs
3 p.m. Pennsylvania Treasury Department
Key Points

Wednesday, April 7

10 a.m. PA Liquor Control Board
1 p.m. Office of Attorney General
3 p.m. Office of Auditor General
Key Points

Thursday, April 8

10 a.m. Department of Labor & Industry
2 p.m. Department of Agriculture
Key Points

Wednesday, April 21

2 p.m. Department of Transportation
Key Points

Thursday, April 22

10 a.m. Department of Health
2 p.m. Budget Secretary/Governor’s Executive Office & Department of General Services
Key Points

Hearing Replays and Highlights

Dept. of Revenue/Lottery

Department of Revenue/Lottery

Revenue Secretary Dan Hassell faced several questions about the $950 million difference in revenue estimates by the Administration and the Independent Fiscal Office, but adamantly denied that the Governor intentionally “lowballed” his estimates to prop up his tax increase proposals.

Senate Republicans remain concerned about the Governor’s proposal to impose a progressive tax system in direct violation of the Pennsylvania Constitution’s Uniformity Clause, which allows “poverty provisions” for PIT. Secretary Hassell defended the fact that a family of four earning $84,000 would be considered to be in “poverty” under the Governor’s proposal — even though that is $20,000 over the state median income of $62,000.

Senate Republicans and Department officials clashed on the Governor’s Shale Extraction Tax proposal and the impact it would have on the industry and the state’s economy. Department officials maintain the tax will raise $300 million, even as they noted the dramatic decrease in revenues from the existing impact fee — from $251 million in 2018 (paid in 2019) to $200 million in 2019 (paid in 2020). Under questioning, Secretary Hassell admitted that he is unaware of any business or industry in Pennsylvania that has paid more to the state under a special fee.

Along similar lines, Secretary Hassell claimed to be unaware of the “carbon tax” that would be imposed under the Governor’s edict that Pennsylvania join the Regional Greenhouse Gas Initiative.

On the Governor’s proposal to legalize recreational marijuana, Secretary Hassell acknowledged that the associated tax and banking issues would be more significant than those posed by the current medical cannabis marketplace. However, he added that he believed the Governor’s proposal to be more about criminal justice reform than revenue generation.

Independent Fiscal Office

Independent Fiscal office

The COVID-19 pandemic had a devastating impact on the state’s economy, workers and families, according to IFO Director Matt Knittel and Deputy Director Brenda Warburton.  Overall, the state lost about 470,000 jobs in a variety of fields — ranging from service and hospitality industries to positions in higher education — with younger workers (ages 14 to 24) displaced at higher rates than all others.  Knittel said the IFO projects that it will likely take six years for the state to recoup those 470,000 jobs. 

With the state struggling to revive its economy and stem job losses, Senate Republicans hammered the Governor’s proposed 46.3 percent increase in the Personal Income Tax. The IFO is currently studying the impact of the Governor’s proposal on the 850,000 business owners who pay that tax. Knittel expects to have the reported completed by early April.

He declined to offer his opinion on whether the Governor’s radical expansion of the tax forgiveness program and a liberal interpretation of “poverty” violate the uniformity clause of the state Constitution. However, Knittel said the changes – if enacted — would increase the program from $250 million to $2.8 billion.

While avoiding specific references to the Governor’s various tax proposals, Knittel stressed that taxes rates impact decisions made by business when they consider relocation and that “higher taxes are not conductive to economic growth.”

DCNR

DCNR

Senate Republicans questioned Department of Conservation and Natural Resources (DCNR) Secretary Cindy Dunn about issues surrounding Pennsylvania’s parks and open space at Tuesday’s Senate Appropriations Committee hearing on the proposed state budget.

DCNR Blocks Natural Gas Development

Members urged the department to open access to natural gas land-locked leases that have been turned back.  Senate Environmental Resources and Energy Chair Gene Yaw (R-23) estimated that DCNR is sitting on 500,000 acres that could be drilled without surface disturbance and questioned why that land cannot be leased.

Senate Republicans emphasized that Pennsylvania cannot have clean energy, such as solar and wind power, without mining and fossil fuels.  They said that point needs to be made to ensure that Pennsylvania has a safe energy grid.

Expanding Broadband to Rural Areas

Stressing the need to provide high-speed internet to rural areas and close the digital divide, Senate Communications and Technology Committee Kristin Phillips-Hill (R-28) urged the Administration to repeal its ban on broadband infrastructure on state game lands.  As Chair of the Senate Communications and Technology Committee, she noted that new technology has made it easier to integrate that technology, which is crucial to expand broadband service to all areas of the state.

Senate Republicans also pressed for installing more industrial solar panels on state park lands, rather than locating them on prime farmland and sought assurances that funds from the registration, certification and enforcement of ATVs go back to grants and programs for all-terrain vehicles.

Fiscal Responsibility

With revenues from the Oil and Gas lease funds decreasing and given the structural deficit the Commonwealth is facing, Senator Pat Browne, Chairman of the Senate Appropriations Committee, urged DCNR to become more self-sustaining and less reliant on General Fund revenues.

Department of Human Services

 

 

Department of Human Services

Senate Republicans questioned Department of Human Services (DHS) Secretary Teresa Miller about the numerous ways the pandemic and changing demographics will affect the delivery of services and costs to taxpayers. Lawmakers also urged the Secretary to use funding from the new federal stimulus for one-time costs – not to backfill programs that will increase costs to taxpayers when that funding disappears.

Human Services Costs to Taxpayers Continue to Rise

Governor Wolf’s budget would increase spending for DHS by nearly $760 million next year. Secretary Miller said supplemental spending for her department increased by more than $900 million in the current year’s budget. Senate Republicans raised concerns about these cost increases and the effect of these expenses on other parts of the budget.

Ensuring Efficiency with Community HealthChoices program

The Community HealthChoices program was implemented to allow our older Pennsylvanians the opportunity to remain in their homes and their communities instead of having to move to a long-term care facility, while still receiving the assistance they required. Members of the Appropriations Committee called on the Secretary to ensure that the program operates efficiently and effectively and that only individuals that meet the needs of this program are receiving these services.

Moving Able-Bodied Medicaid Recipients to Workforce

Despite Governor Wolf’s vetoes of legislation to require able-bodied Medicaid recipients to meet commonsense work requirements in order to continue receiving benefits, Secretary Miller said that she hoped to see 100 percent of these individuals find employment.

Department of Environmental Protection

 

Department of Environmental Protection

Senators Strongly Oppose RGGI, Criticize Lack of Communication, Engagement

The Administration’s plan to require Pennsylvania to join the Regional Greenhouse Gas Initiative (RGGI) drew strong opposition during today’s Senate Appropriations Hearing on the Department of Environmental Protection’s (DEP) proposed budget.

Senate Appropriations Committee Chair Pat Browne (R-16) strongly urged the Department and Administration to better engage with local communities, elected officials and economic development boards that will be most significantly impacted by the Commonwealth joining RGGI.

Senator Gene Yaw (R-23), chair of the Senate Environmental Resources and Energy Committee, questioned how the department can conclude that the Regional Greenhouse Gas Initiative (RGGI) has support, given the bipartisan opposition by the legislature and other groups and the $300 million price tag. 

RGGI Will Cost Jobs, Devastate Communities

Senator Joe Pittman (R-41) told DEP Secretary Patrick McDonnell that implementation of RGGI will shut power plants down and have a devastating economic impact on jobs and communities, making it more difficult to fund solar power, wind power and other energy initiatives. 

Department of State

 

Department of State

Critical Election System Upgrades

The proposed budget includes a $4.5 million increase for the Statewide Uniform Registry of Electors (SURE), including $2.3 million for continued system upgrades to assist in election modernization. Members sought assurances the upgrades would be completed on time and be effective, unlike several other IT projects undertaken by the administration.

Ensuring an Accurate Election Audit

Acting Secretary Veronica Degraffenreid was directed to provide details on the use of risk-limiting audits — a method of ensuring that election results match voter selections reflected on paper ballots. Information requested includes the exact audit parameters and other factors that would influence the accuracy of the audit.

Reimbursing Counties for Voting Machines

Under the Voting Machine Debt Service Act passed by the General Assembly in 2019, a total of $90 million of financing was available for counties to purchase new voting equipment in 2020. The hearing included discussion of the total amount of grant funding requested by the counties and how much has been reimbursed to the counties to date.

Bureau of Professional and Occupational Affairs Delays

The performance of the department’s Bureau of Professional and Occupational Affairs was discussed, including the fact that member constituents seeking professional licenses report long delays. Given this, the department’s proposed $1.4 million cut to bureau operations was questioned.

Department of Education

 

 

Department of Education

Return to In-Person Instruction is Essential for Students

Acting Secretary Noe Ortega pledged again to continue working to return students to in-person instruction as safely as possible and as soon as possible. Less than 31 percent of schools are currently conducting classes fully online. A Senate hearing earlier this month included testimony from teachers, superintendents, students, parents and other key stakeholders who highlighted the need to get kids back in the classroom. Senate Republicans also raised concerns about the lasting impacts of continued learning disruptions on vulnerable populations during COVID-19.

Using Federal Stimulus Funding Wisely

Senators asked how the influx of new, one-time federal funds can be used responsibly by school districts to ensure new funding gaps are not created in future budgets. They stressed the need for the department to work with the General Assembly to ensure that the $10.9 billion in federal stimulus for education is used for one-time costs – such as capital projects and lead abatement – not recurring costs that will leave school districts with future holes in their budgets.

Providing Fair Funding for Schools

Senate Appropriations Committee Chair Pat Browne (R-16) questioned the Wolf Administration’s plan to completely change the platform by which we distribute education dollars to school districts. Senators said the governor’s plan disregards the factors and reasons developed by a the bi-partisan, bi-cameral Basic Education Funding Commission that based its formula on testimony and input from experts in the education field. The plan was passed unanimously by both the Senate and House of Representatives and signed into law by the Governor.

State System of Higher Education

 

State System of Higher Education

During a public hearing on the Pennsylvania State System of Higher Education (PASSHE), members of the Senate Appropriations Committee questioned Chancellor Daniel Greenstein if the $244.5 million in federal stimulus funds will support the long-term goal of affordability and fiscal accountability. Greenstein also fielded questions on whether dual enrollment would benefit potential college students, graduation rates, and the introduction of new programs to meet workforce development needs.

Plan to Redesign PASSHE Remains on Track

PASSHE is continuing to make progress on its system redesign plans and expects to present its proposal next month, with phased implementation set for fall of 2022. The plan to unite several universities within geographic regions – which was made possible by legislation championed by Senators Scott Martin (R-13) and Tommy Tomlinson (R-6) – is designed to better meet the needs of students and reduce the cost of a college degree. However, a number of Senators raised frustrations that many overperforming universities are being penalized as more resources go to underperforming schools. They were also concerned about declining enrollments.

Department of Corrections/Probation & Parole

 

Department of Corrections

Corrections, along with Education and Human Services, make up 85 percent of the state budget. Senate Republicans continue to look for ways to reduce prison facility costs without compromising public safety.

The number of inmates were reduced by more than 6,000 over the past year, which is the largest drop in Pennsylvania history, with an anticipated further reduction of 2,000 inmates next year. Another cost-saving move would be statutory consolidation of the Department of Corrections and the Board of Probation and Parole, which would be authorized by Senate Bill 411.

Dealing with the pandemic has driven many Corrections costs. Secretary John Wetzel said more than $58 million in overtime costs directly related to COVID-19 will be covered by funding from FEMA.

DCED

 

Department of Community and Economic Development 

New Manufacturing Tax Credit Will Spur Job Growth

Senators noted the importance of properly implementing the Local Resource Manufacturing Tax Credit program, which was created by the General Assembly last year to provide incentives for manufacturers to invest in Pennsylvania communities. The program is expected to help create thousands of family-sustaining jobs in the years to come.

Message Undermines Tax Credit Evaluation of Independent Fiscal Office

Senate Appropriations Committee Chairman Pat Browne (R-16) expressed frustration that the Administration is not presenting in its documents a fair picture of the financial and economic benefits of various tax credit programs as evaluated by the Independent Fiscal Office’s (IFO) performance-based budget review and report developed for Performance-Based Budget Board, which found that there are some benefits, but also some major costs to these tax credit programs which produce low-to-no return on their investment to the Commonwealth’s revenue capacity. The discrepancy between the department’s assessment of these tax credit programs and the ones performed by the IFO, whose review of these programs was required through legislation signed into law, creates a mixed message on the actual value of the programs.

Broadband Funding Cuts Hurt Rural PA

Governor Wolf’s budget eliminated funding for a key program created last year to support broadband deployment in unserved and underserved communities. Senator Kristin Phillips-Hill (R-28) pointed out that broadband was barely mentioned in supporting documents on DCED. Senators raised concerns about the department’s and Administration’s commitment to promoting broadband in rural areas, stressing that it needs to be a funding priority.

Helping Communities Survive

Stressing that many communities are struggling to survive, particularly during the pandemic, senators raised concerns about the effectiveness of the department’s programs to aid areas where large employers have closed, and municipalities have been declared financially distressed under Act 47. They also emphasized that the governor’s plan to prematurely close power plants would devastate many communities in Pennsylvania.

State Facility Closure Transition Program

The FY 2021-22 budget eliminates the $5 million program included in the current year’s

budget to assist municipalities with the permanent closure of a state facility. Committee members questioned the thinking that the transition program has served its purpose in just one year.

State Related Universities

State-Related Universities

Lowering Costs and Making College More Affordable

Republican Appropriation Committee members questioned the leaders of Penn State University, Temple University, the University of Pittsburgh and Lincoln University on what they were doing to contain costs and lower the financial burden for students. Helping students graduate in four years is one way the schools are trying to lower the overall tuition cost.

College Students Need Reliable Broadband Access

Students relied heavily on internet access for learning during the pandemic, and Senate Communications and Technology Committee Chair Kristen Phillips-Hill (R-28) sought assurances that students had reliable broadband. Temple University President Richard Englert said that if students had internet access problems at home that the school provided students use of facilities on campus to access the internet.

Department of Military and Veterans Affairs

Department of Military and Veterans Affairs

Impact of COVID-19 on DMVA Work

Responding to questions about the impact of the COVID-19 pandemic on DMVA’s core missions, Acting Adjutant General (Maj. Gen.) Mark Schindler said the National Guard has adapted, maintained staffing levels, and is continuing to fulfill its mission to the Commonwealth and nation.

COVID-19 severely impacted the DMVA’s six veterans’ homes and the Department’s role in addressing the pandemic is being reviewed. Currently, 92 percent of the residents and 51 percent of staff have been vaccinated.

PA Guard Members Serve Globally and Nationally

Currently, about 800 Army National Guard members are serving in the Middle East and 70 in eastern Europe with 760 members to be deployed over the next six months. Guard members were deployed to Washington D.C. in January, but all have since returned. In a support role in the Commonwealth, the National Guard staffed COVID testing sites, supported vaccination clinics for teachers, and is supporting regional vaccination sites, mainly in the Philadelphia region.  

Improving Services for PA Veterans

DMVA plans to expand its outreach efforts for veterans and improve the coordination of the various programs that serve their needs. Specifically, Republican Senators questioned efforts to address and care for homeless and at-risk veterans, the lack of enough Veteran Service Officers, job placement programs, and treatment of PTSD and suicide prevention.

Finally, questions were asked during the hearing if DMVA is looking at ways to reduce the need for veterans to have to relocate to long-term living veterans homes by looking at community-based health care options that would allow our veterans to receive the assistance and care they need in their own homes and communities.

Pennsylvania Treasury

Pennsylvania Treasury

Pennsylvania Treasurer Stacy Garrity offered an update on the state’s financial condition and the status of programs under the department’s purview, including Unclaimed Property, Keystone Scholars, PA ABLE and PA 529.

No New Short-term Borrowing Anticipated

Thanks in large part to the fiscally responsible budgeting advocated by Senate Republicans over the past decade, Treasurer Garrity said that the state should not have a need for short-term borrowing to meet the state’s financial obligations.

PA ABLE Program Leads the Nation

The state’s PA ABLE program benefitting disabled Pennsylvanians is among the strongest in the nation, making up approximately one-third of all funding among the states with similar programs.

Transparency Portal 

Senator Phillips-Hill inquired with the Treasurer as to her interest and ability, in addition to contracts, to publish documentation on grant awards by the administration to ascertain performance against state goals of the respective grant. The Treasurer confirmed her interest in working on legislation that would allow for this action.

In the Treasurer’s interest in expanding the scope of the office’s transparency portal, Chairman Pat Browne (R-16) asked for the Treasurer’s cooperation in ensuring that the reporting of financial information not only represents cash receipts and expenditures and cash on hand in Commonwealth funds, but also commitments made that have not been expended yet so that taxpayers have a full and accurate picture of funds available to meet other public obligations. These reforms of the portal would be consistent with actions by the General Assembly to report revenue and expenditures in the accounts under its control in a fully transparent, accurate format in conformity with Generally Accepted Accounting Principles.