Capital Watch July 2014 : Page 1

C APITAL W ATCH CAPITALWATCHPA.com ANNIVERSA 7TH YEAR RY VOL. 7 NO. 6 JULY 2014 INSIDE Auditor General warns state’s horse racing industry in jeopardy PAGE 4 Lobbying tally tops $500M in Pennsylvania PAGE 8 Tax the frackers? PAGE 10 Philly cigarette tax option faces uncertain future PAGE 12 Harrisburg City Council passes new zoning ordinance PAGE 13 Gov. Corbett finally signs budget; vetoes legislative funding As Capital Watch goes to press, Gov. Tom Corbett has just announced that he had signed the budget given to him, but at the same time used his line-item veto to cut millions of dollars from the Legislature’s budget. He also urged lawmakers to make a new effort to address pensions for newly hired teachers and state workers. At a July 10 capitol press con-ference, Gov. Corbett announced that he cut $65 million from law-makers’ budget and $7.2 mil-lion from projects designated by the Legislature, noting that the proposal sent to him last week increased the General Assembly’s own $320 million budget by 2 percent and included $5 million for parking. Legislators left Harrisburg with unfinished business,” Gov. Cor-bett said. “They need to come back and enact pension reform.” The Governor said he does not want to see school districts raising property taxes to cover pension obligations. “They filled the budget with discretionary spending and then refused to deal with the biggest fiscal challenge facing Pennsylva-nia,” said Gov. Corbett. The Governor did not call a special legislative session to deal with pension reform, stating that all options were on the table. As Pennsylvania awaits for more news on the budget, the following article seeks to com-pare House Bill 2328 to the Governor’s proposed February budget, particularly the policy priorities emphasized by Gov. Corbett when he unveiled his spending plan. The article will concentrate on how a $29.1 billion spending plan that won majorities in both the state House and Senate on only Republican votes – stack Capital Watch goes digital Capital Watch is now available in digital format. What does this mean to you? Really nothing. You will continue to receive the same quality news and opinions about what’s happening in Pennsylvania state government you have come to expect from us, all in a package that is completely portable. Our coverage will not change, only the format. Just send your email address to Capital Watch Editor Jackie Goodwin at goodwinpin@comcast.net and let us know that you want to receive your copy digitally. Each month Capital Watch will arrive in your e-mail automatically. Just click the link to either download the latest edition, or to view it entirely online. Happy reading! up against the $29.4 billion budget (other than the obvious $300 million difference in overall spending) proposed by Corbett in February? EDUCATION Gov. Corbett made education funding the centerpiece of his proposed $29.4 billion budget in February, but when lawmakers had to figure out a way to make up for a more than $1.4 billion revenue shortfall – the 2013-14 and 2014-15 fiscal years combined – something had to give. Gov. Corbett’s “Ready to Learn” block grant program has been trimmed back to a $200 mil-lion program, with $100 million – coming from the Accountability Block Grant program -of that to be distributed in the same man-ner as the 2013-14 Accountability Block Grant. Of the additional $100 million, $92 million will be distributed to public schools through a new fund-ing formula that calculates pay-ments based upon a base amount, student count, aid ratio and other factors. The state Fiscal Code leg-islation allows school districts to deduct these funding increases from the calculation for payment of charter school student tuition. The other $8 million will be distributed to charter schools through the same formula used for the $92 million for the public schools. The Governor did get in HB2328 the $20 million increase he proposed for special education funding, with the majority of that funding – all but $200,000 – to be distributed to school districts using a new formula – included in the state Fiscal Code bill-based upon student cost, relative district wealth and other factors. The other $200,000 is kept for extraor-dinary special education costs in districts and charter schools. Gov. Corbett’s desire to bump up funding for early childhood education, with Pennsylvania Pre-K Counts getting an increase of $10 million, likewise survived in HB2328. Also remaining intact is the governor’s $4.6 mil-lion increase for Pennsylvania assessment tests. The same could not be said for some of the Governor’s other proposals: • The $10 million Gov. Corbett proposed for Hybrid Learning Grants was removed entirely, as was the $350,000 he proposed to revive the Governor’s Schools of Academic Excellence; • Those who benefit from Career and Technical Education Equipment Grants got some good news as HB2328 restores the $3 mil-lion the Governor cut in his February proposal; • But approved private schools for special education took a $3 million hit in HB2328, com-pared to the flat funding pro-posed by Gov. Corbett; and • Public school libraries will continued on page 3 Capitolwire com a service of GovNetPA, Inc. PRSRT STD U.S.POSTAGE PAID PERMIT 280 LANC., PA 17604 Pennsylvania’s #1 Online Source for Political, Legislative and Public Policy News For a free trial subscription, please visit our web site at www.capitolwire.com.

Gov. Corbett finally signs budget; vetoes legislative funding

As Capital Watch goes to press, Gov. Tom Corbett has just announced that he had signed the budget given to him, but at the same time used his line-item veto to cut millions of dollars from the Legislature’s budget. He also urged lawmakers to make a new effort to address pensions for newly hired teachers and state workers.

At a July 10 capitol press conference, Gov. Corbett announced that he cut $65 million from lawmakers’ budget and $7.2 million from projects designated by the Legislature, noting that the proposal sent to him last week increased the General Assembly’s own $320 million budget by 2 percent and included $5 million for parking.

Legislators left Harrisburg with unfinished business,” Gov. Corbett said. “They need to come back and enact pension reform.”

The Governor said he does not want to see school districts raising property taxes to cover pension obligations.

“They filled the budget with discretionary spending and then refused to deal with the biggest fiscal challenge facing Pennsylvania,” said Gov. Corbett.

The Governor did not call a special legislative session to deal with pension reform, stating that all options were on the table.

As Pennsylvania awaits for more news on the budget, the following article seeks to compare House Bill 2328 to the Governor’s proposed February budget, particularly the policy priorities emphasized by Gov. Corbett when he unveiled his spending plan.

The article will concentrate on how a $29.1 billion spending plan that won majorities in both the state House and Senate on only Republican votes – stack up against the $29.4 billion budget (other than the obvious $300 million difference in overall spending) proposed by Corbett in February?

EDUCATION
Gov. Corbett made education funding the centerpiece of his proposed $29.4 billion budget in February, but when lawmakers had to figure out a way to make up for a more than $1.4 billion revenue shortfall – the 2013-14 and 2014-15 fiscal years combined – something had to give.

Gov. Corbett’s “Ready to Learn” block grant program has been trimmed back to a $200 million program, with $100 million – coming from the Accountability Block Grant program - of that to be distributed in the same manner as the 2013-14 Accountability Block Grant.

Of the additional $100 million, $92 million will be distributed to public schools through a new funding formula that calculates payments based upon a base amount, student count, aid ratio and other factors. The state Fiscal Code legislation allows school districts to deduct these funding increases from the calculation for payment of charter school student tuition. The other $8 million will be distributed to charter schools through the same formula used for the $92 million for the public schools.

The Governor did get in HB2328 the $20 million increase he proposed for special education funding, with the majority of that funding – all but $200,000 – to be distributed to school districts using a new formula – included in the state Fiscal Code bill- based upon student cost, relative district wealth and other factors. The other $200,000 is kept for extraordinary special education costs in districts and charter schools.

Gov. Corbett’s desire to bump up funding for early childhood education, with Pennsylvania Pre-K Counts getting an increase of $10 million, likewise survived in HB2328. Also remaining intact is the governor’s $4.6 million increase for Pennsylvania assessment tests.

The same could not be said for some of the Governor’s other proposals:
• The $10 million Gov. Corbett proposed for Hybrid Learning Grants was removed entirely, as was the $350,000 he proposed to revive the Governor’s Schools of Academic Excellence;
• Those who benefit from Career and Technical Education Equipment Grants got some good news as HB2328 restores the $3 million the Governor cut in his February proposal;
• But approved private schools for special education took a $3 million hit in HB2328, compared to the flat funding proposed by Gov. Corbett; and
• Public school libraries will have to live with flat funding in 2014-15, not the $500,000 increase Gov. Corbett had sought in February, although library access funds wouldn’t be cut by $250,000, in HB2328, as originally proposed by the governor.

There were also changes to some of Gov. Corbett’s postsecondary education funding plans, although his plans weren’t all that extensive.

The new policy the Governor wanted to implement as part of the 2014-15 budget was a $25 million “Ready to Succeed” scholarship program. The program would provide up to $2,000 to eligible students, who demonstrate academic merit and whose families earn up to $110,000, to apply to the costs of earning a two- or fouryear degree. HB2328 only authorizes $5 million for the scholarship program.

Gov. Corbett had proposed flat-funding all of the state-related universities, the State System of Higher Education institutions, the state’s community colleges, the Pennsylvania Higher Education Association (other than the “Ready to Succeed” program) and Thaddeus Stevens College of Technology.

State lawmakers tweaked those proposals in HB2328:
• Community colleges receive an additional $3.5 million and their capital funding remains the same as 2013-14 (not the $1 million cut proposed by the governor);
• The Pennsylvania College of Technology, which is affiliated with Penn State University, will get a $2 million increase;
• Thaddeus Stevens College of Technology will get $2 million in additional funding;
• Penn State University, the University of Pittsburgh, Temple University, Lincoln University, the State System of Higher Education, PHEAA and institutional assistance grants for private schools remain level-funded;
• Funding for regional community college services is increased by $1.2 million to support a new rural regional community college that provides two-year postsecondary education and workforce development (included in the state Fiscal Code).

And while not entirely education-related, the governor’s plan to fund the state’s public pensions (with the school employees’ pension system the far greater funding responsibility – approximately $1.48 billion) appears to remain largely in place. However his “tapering of the collars” proposal was scrapped, meaning HB2328 had to come up with the $170 million Corbett planned to reduce the state’s combined pension payments in 2014-15 (which also include a $225 million transfer of private equity investments and cash reserves from the Tobacco Settlement Fund and the Health Venture Investment Account to Public School Employees’ Retirement System – although some question the true value of the investments – and approximately $80 million in savings from eliminating the charter school “pension double-dip”).

ECONOMIC DEVELOPMENT AND JOB CREATION
The Governor’s proposal increased Pennsylvania First funding from $37.8 million to $42.5 million—with the WEDnetPA Job Training program receiving a $2 million boost, on top of an additional $3 million for what the administration describes as a base jobs training program.

Gov. Corbett proposed boosting marketing for tourism and business by $1.25 million and $1.1 million, respectively, but both line items lost out in budget negotiations with the business side losing $1.4 million alone. The Legislature cut another $171,000 from tourism marketing, too.

World Trade PA suffered a $1.5 million cut, despite the governor’s request for a $600,000 increase to the program. Discovered in PA, Developed in PA — a program Gov. Corbett wanted to see flat-funded in the 2013-14 fiscal year — fared worse, losing half of its $9.9 million budget.

HUMAN SERVICES
With regard to human services, the Governor didn’t get all that he wanted, but he didn’t strike out on his priorities.

Overall, the Governor’s February budget proposal included a 3.9-percent increase for the state Department of Public Welfare and a 0.4-percent reduction of the Department of Health’s budget. HB2328 increases the Health Department’s budget by 2 percent and the Department of Public Welfare’s budget by 1.1 percent, although a significant amount of the difference between the governor’s plan and HB2328 for the DPW is due to Tobacco Settlement Fund and the Lottery Fund transfers.

HB2328 ends up spending a larger total on services to persons with disabilities than that requested by the governor in February - $255.1 million compared to $253.1 million - however, due to supplemental appropriations, the starting point in the governor’s February budget was increased, from $225.4 million in February to $233.1 million in June. So instead of a $27.7 million increase in that line item, the increase is $22 million.

Autism and intervention services got a bit more than requested by the governor in his budget proposal – a nearly $2.7 million increase versus a $2.1 million hike – while attendant care waiver services will see a larger overall appropriation than that sought by Gov. Corbett - $122.8 million versus $122 million - but, again, due to 2013-14 supplemental appropriations, the increase appears smaller than that sought by the governor, $6.7 million instead of nearly $9 million.

HB2328 contains $14.1 million from the Pennsylvania Lottery (of a total of $130 million shifted from the Lottery Fund for Medicaid Home and Community-Based Waiver services) for the Department of Public Welfare to expand home and community-based services to an additional 2,468 seniors.

The administration had also planned on spending an additional $4 million – which would push total spending to $8 million – for the Department of Health’s Community-Based Health Care program. However, HB2328 appropriates an additional $2 million, not $4 million, to help fund new community health care centers and clinics to increase access to preventative primary care services for the uninsured in medically-underserved areas of the state.

Also to address underserved areas, the governor had proposed an additional $4 million to recruit and retain health care professionals in rural and underserved areas. The administration estimated that new funding would support an additional 70 awards to physicians, dentists and other practitioners who commit to work in rural and underserved areas, as well as 12 additional residency slots for medical school graduates to address primary care service shortages in these areas. In the end, HB2328 appropriated an additional $1 million.

PUBLIC SAFETY
A few law enforcement-related budget lines in the 2014-15 general appropriations budget appear to skew the totals listed. When the Senate passed the spending plan back to the House, available funding from the 2013- 14 fiscal year for certain lines – Corrections, State Police and the Commission on Crime and Delinquency – changed from the original spending plan they received from the House GOP, which used the same available dollars as Gov. Corbett’s Budget Office. The changes were explained by legislative staff to be the result of supplemental appropriations, as noted above.

For instance, Gov. Corbett requested in February $13.7 million to fund four new State Police classes to train 350 troopers. The final spending plan shows Corbett getting about $1 million more. However, comparing the final spending number to the 2013-14 available funds used by Corbett and the House GOP, the final appropriation is actually $13.2 million – $500,000 short of the total Corbett sought.

Spending for the Department of Corrections also appears reoriented. Using the final approved spending plan, the department’s overall total shows an increase of $61.2 million for the 2014-15 year to bring the department’s total to $2.06 billion.

Read the full article at http://bt.e-ditionsbyfry.com/article/Gov.+Corbett+finally+signs+budget%3B+vetoes+legislative+funding/1760274/217367/article.html.

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