A select committee to investigate and review the relationship between mandates and current sources of school district and local government tax revenue held two hearings the week of Sept. 17 to begin gathering information from stakeholders. A prior hearing took testimony from lawmakers who had introduced school property tax reform legislation.

On Sept. 17 CCAP Executive Director Douglas Hill testified to the committee on the role of mandates in driving property tax rates, as well as solutions for alternate tax bases that have been advanced by county officials. He noted several structural and procedural mandates which add unnecessary cost and which, if changed, could result in overall savings to local budgets and ultimately to taxpayers. Recently, progress was made in addressing some issues, such as the changes to inmate medical rates and allowing counties the option to abolish the office of jury commissioner.

He also commented on the interrelationship between the commonwealth budget and county service delivery, and noted that recent legislation creating a pilot block grant for some human services programs, coupled with changes in timing of commonwealth payments and consolidation of planning and financial reporting, will reduce administrative overhead and allow counties to devote more of scarce available dollars to services.

Hill said that counties have long advocated a diversification of their tax base to include options for a local sales tax, earned income tax or personal income tax, but indicated that there is still a role for the property tax in some communities where local conditions make it more equitable. To that end, the underlying issues of assessment and tax collection should also be addressed as part of the property tax reform discussions. CCAP's full testimony can be found at www.pacounties.org by clicking on Government Relations, then Testimony and Advocacy.

The committee also heard from Ron Grutza, testifying on behalf of the PA State Association of Boroughs, and Mary Ann Nardone, of the Legislative Budget and Finance Committee (LBFC). Nardone discussed the results of an LBFC report performed regarding property tax assessment reform. The committee is scheduled to hold additional hearings on Sept. 24 and Oct. 15. A final report is due by November 30, 2012.

The House Children and Youth Committee met on Sept. 13 to discuss legislation intended to increase family engagement in children and youth services.

With discussion of the approaching "fiscal cliff" of across-the-board funding sequestration if Congress does not reach compromise budget reductions under the Federal Budget Control Act, NACo has undertaken a review of the potential effects of sequestration on county programs.

The basis for the review is the Office of Management and Budget (OMB) report regarding the Sequestration Transparency Act of 2012, as required by the Budget Control Act of 2011.  The 10 page report, accompanied by 384 pages of appendices, details how budget reductions would be made across 1,200 budget accounts if sequestration is implemented after January 2, 2013.  In brief, the report calls for the sequestration of 9.4 percent in non-exempt defense discretionary spending and an 8.2 percent reduction in non-exempt nondefense discretionary funding.  It also imposes two percent cuts to Medicare, 7.6 percent to other non-exempt nondefense mandatory programs, and a ten percent cut to non-exempt defense mandatory programs.

An update to the report shows the effect on sequestration under a separate discretionary sequester, invoked if Congress exceeds spending beyond certain defined caps. Although none have been enacted to date, the report cautions that action in the House, through mid-August, would require $6.6 billion in additional cuts while Senate action would require $0.4 billion.

The reports can be viewed by searching sequestration at www.whitehouse.gov. NACo will be issuing further analysis in the coming weeks.