GOVERNOR RELEASES FY 2015-2016 BUDGET PROPOSAL

On Tuesday, March 3, Governor Wolf delivered his first budget address, announcing his proposal for FY 2015-2016 before a joint session of the House and Senate. His overall spend of $31.6 billion represents an increase of more than $2.5 billion, 8.7 percent over the FY 2014-2015 budget. The increased funding is largely directed toward basic and higher education, coupled with offsets in the school property tax. Funds are generated by enactment of a severance tax on natural gas, an increase in the income tax from 3.07 percent to 3.7 percent, a higher sales tax, from six percent to 6.6 percent coupled with a broader base, and applying new taxes to tobacco products. Cuts are proposed in corporate taxes, although including an expansion of the base.

The severance tax proposal calls for a five percent severance tax plus 4.7 cents per thousand cubic feet of volume. It is expected to generate more than $1 billion annually once fully implemented in FY 2016-2017. Starting with the first full budget year of implementation, $225 million is used to fund the equivalent of the impact fee each year, apparently on the same distribution as current law. Based on available budget materials, it appears this is a flat annual amount and would not change with the growth of the industry as does the current impact fee. One of CCAP's top priorities for 2015 is maintenance of the shale gas impact fee, and counties insist any shift to a severance tax carve out the equivalent of the current impact fee, with the ability to grow as the industry grows and with the same distribution to impacted local governments as well as all counties through the Legacy Fund and to conservation districts and state agencies.

For counties, FY 2015-2016 budget highlights include phased restoration of the Human Services Block Grant lines, with a $28 million (3.3 percent) increase proposed for FY 2015-2016 to begin a three-year restoration of the 10 percent cut from FY 2012-2013, consistent with counties' priority on human services funding. That priority also calls for expansion of the block grant beyond the current 30 counties; Gov. Wolf did not propose an expansion. The budget proposal also includes nominal increases across most other human services lines. The proposal recognizes the need to continue to provide tools to address the overdose crisis, another CCAP priority, with $5 million in drug and alcohol base funds and $2.5 million in Behavioral Health Services Initiative funds added specifically to address heroin and opioid addiction. Another $2.1 million is added to implement the prescription drug monitoring program created by Act 191 of 2014.

CCAP has a number of budget resources on its commonwealth budget web page, including a spreadsheet with the Governor's proposed funding levels for county line items as well as links to budget resources from the Governor and legislative caucuses. Highlights on line items of interest to counties follow.

AGRICULTURE AND THE ENVIRONMENT

The Governor proposed a $2.9 million increase for the State Food Purchase Program, an almost 17 percent increase from the current fiscal year. County fairs are proposed to be level funded at $3 million, and the Agriculture College Land Scrip Fund, which includes revenues for Penn State Extension, is also proposed to receive level funding at $46.2 million. Funding for the state's farmland preservation program was recommended to increase by $2.5 million; the State Farmland Preservation Board set the 2015 state funding threshold for farmland preservation at $30 million at its Feb. 12 meeting.

ALCOHOL, TOBACCO AND OTHER DRUGS 

The Governor's proposal calls for a $5 million increase in drug and alcohol base funds specifically for initiatives to address the overdose epidemic, including development of a funding mechanism making naloxone and evidence-based treatment more readily available throughout the state. Funding levels for Act 152 services are contained in the outpatient Medical Assistance line item, but the allocation was not available at press time. The proposal also begins to restore funds to Behavioral Health Services Initiative (BHSI) funding with a $1.6 million increase, and includes an additional $2.5 million within the BHSI line specifically to address heroin and opioid addiction. The Department of Health budget also includes $2.1 million to operationalize the prescription monitoring program and database established during the last legislative session.

CHILD WELFARE 

The level of state funding in the Governor's proposed budget for county child protective services has been increased by $40 million over the FY 2014-2015 budget. This will assist in implementing the numerous changes to the Child Protective Services Law recently enacted, as well as other service increases. The budget proposal also includes an increase of $5 million for the development of the state's child welfare information system. Many of the community-based programs that assist in supporting families, such as the Children's Justice Act, the Nurse Family Partnership and family centers are proposed to be level funded. Children's advocacy centers are proposed to see a nearly $500,000 increase from a restricted account administered by the Pennsylvania Commission on Crime and Delinquency. 

COMMUNITY AND ECONOMIC DEVELOPMENT 

The Governor's proposal calls for a nominal funding increase for the Center for Local Government Services to $8.5 million. The Municipal Assistance Program, which funds shared service, community planning and flood plain management activities for local governments, is level funded at $642,000. Funding for tourism marketing decreases by $3 million, and marketing to attract businesses increases by $1 million. The Office of Open Records sees a boost of nearly $140,000 in the proposed budget. 

HOMELESS ASSISTANCE PROGRAM 

Funding to provide temporary shelter to homeless individuals and rental assistance to those in danger of becoming homeless is proposed to increase by $20.2 million, which includes $1 million specifically directed to combat homelessness experienced by veterans. The remaining increase is the first of a three-year restoration of the FY 2012-2013 ten percent funding cut to the Human Services Block Grant lines. 

HUMAN SERVICES DEVELOPMENT FUND 

HSDF is proposed to be funded at nearly $14 million, an increase of almost $500,000 as part of a proposed three-year restoration of the ten percent cut that occurred in FY 2012-2013. This funding allows counties to use dollars not only where they are most needed, but where they can best reduce costs to human services programs in the long run. 

JUDICIARY 

The Governor's budget request maintains levels of funding from FY 2014-2015 for most judicial line items that impact counties, including court cost reimbursement. Adult probation is slated for a $2.4 million increase to $18.6 million, while intermediate punishment treatment programs and juvenile probation are recommended for level funding. There is no direct allocation for district attorney salary reimbursement, but concurrent with budget action in 2009, a permanent court fee surcharge was imposed to raise funds for the commonwealth share, and the reimbursement is gradually catching up. Still, counties support the addition of a line item in the FY 2015-2016 budget that is sufficient to bring all payments to all 64 eligible counties current. 

JUVENILE DETENTION 

Funding levels for juvenile detention are unavailable at press time, and the Department of Human Services will provide a breakdown within the next few weeks. While secure detention utilization continues to decrease and overall system costs appear to decrease due to lower overall demand, the investment per child for moderate and high-risk offenders will need to increase as providers intensify services which are more likely to result in reduced recidivism (future victimization) and ultimately reduced long-term costs. 

LIBRARIES 

In the Department of Education, the public library subsidy is proposed to receive level funding of $53.5 million. 

LONG-TERM CARE 

Medicaid payment rates for nursing homes are proposed to remain at current levels in the FY 2015-2016 budget proposal. Years of stagnant rates followed by two years of nominal increases have resulted in a wide gap between the cost of caring for Medicaid patients in nursing homes and the amount reimbursed. This gap will only continue to grow unless additional funding is provided to increase Medicaid rates in FY 2015-2016.

Proposed state funds of $346.9 million for home and community-based services (including lottery funds of $105.7 million) and federal funds of $386.1 million represent a significant increase for FY 2015-2016. In addition, long-term care managed care (the LIFE program) is proposed at about $221.5 million in state and federal funds, a small increase from FY 2014-2015. 

MEDICAL ASSISTANCE TRANSPORTATION PROGRAM 

While the Governor's proposed level of state funding for MATP of $63.3 million is relatively flat, when combined with federal match funds of $74.2 million the total funding increase for MATP is nearly six percent. CCAP will continue to monitor the program to assure the funding allocation is adequate to cover program costs, especially as it relates to the transition to an expanded Medicaid program as recently announced by Gov. Wolf. 

MENTAL HEALTH AND INTELLECTUAL DISABILITIES, EARLY INTERVENTION AND AUTISM 

Funding for county mental health and intellectual disability services received a partial restoration (3.3 percent, as part of a proposed three-year increase) of the ten percent cut imposed in FY 2012-2013. The proposed budget includes funding for 1,050 individuals to receive community waiver services, and county community base funds for intellectual disability include $500,000 for competitive employment opportunities that is intended to draw an additional $1.5 million from the state Department of Labor and Industry. Another $4.7 million for community services is provided to enable 90 individuals to be discharged from state hospitals into community services. The autism waiver funds are proposed to increase by $372,000 and would give programs the ability to serve 50 additional adults.

HUMAN SERVICES BLOCK GRANT 

While the proposal includes funding for first year restoration of FY 2012-2013 cuts, it does not include counties' priority on expansion of the block grant to any willing county beyond the 30 counties now in the program. 

TRANSPORTATION 

The FY 2015-2016 budget proposal reflects the second-year transportation funding increases under Act 89 of 2013, including a $145 million increase in mass transit funding from FY 2014-2015, and an increase from $97 million to $138 million in multimodal funds. The county and forestry bridge millage yields an additional $4.87 million for FY 2015-2016, bringing the total to $21.9 million, and the special $5 million bridge allocation retained from Act 44 remains unchanged.