HOUSE CONTINUES 911 DISCUSSION

On March 18, CCAP Executive Director Doug Hill testified before the House Veterans Affairs and Emergency Preparedness Committee on 911 services system and reform, the Association's top legislative priority for 2015. The current draft represents more than a year of work between CCAP and other stakeholders, and meets the three primary objectives: Improving system administration, sorting governance mechanisms to respect counties' role as providers while balancing statewide coordination, and working toward a sustainable and equitable financing structure. 

CCAP's remarks before the committee focused on system funding and the rationale behind the draft's proposed monthly surcharge of $2. Although the intent of the original law was for the subscriber fee to fully fund all eligible costs, the stagnant fee structure currently in place, a stagnant market against which the fee is assessed, and unanticipated costs to update systems to handle new technologies mean that counties are now relying on a significant and growing backfill of local property tax dollars to keep 911 systems operational - some $103.7 million in 2014, nearly 36 percent of total expenditures, and not including disallowed costs such as bricks-and-mortar, a portion of salaries and training and some overhead. Hill noted that counties have been good stewards of the existing fee, and that any lesser surcharge than $2 will have negative consequences on counties' ability to sustain the system they have built over the past 25 years, and will impair counties' ability to move forward with necessary investment in Next Generation 911 technologies that are on the horizon.

Further, Hill discussed the cost savings and system efficiencies already provided by the county-based system, including projects underway to deploy common broadband backbones among groups of counties. The current draft of the 911 legislation would provide a number of reforms to further promote system efficiencies.

GOV. WOLF PRESENTS ADDITIONAL DETAILS ON TAX PROPOSALS

Legislation outlining the implementation of Gov. Wolf's FY 2015-2016 budget proposal has been released, providing additional details about changes being recommended to the state's tax structure. While the Governor has called for increases to several different statewide taxes, those increases are largely directed to specific purposes.

The Governor proposes to increase the personal income tax from 3.07 to 3.7 percent, to be dedicated to school property tax and rent relief. The sales tax would also increase, from six to 6.6 percent, and the base on which the tax is levied would also be expanded to include most goods and services. Items such as food, clothing and prescription drugs would continue to be exempt. Sales tax revenues would be transferred to the Public School Retirement Fund to help offset the unfunded liability of the school retirement system. The cigarette tax would be increased by $1 per pack, and taxes would be imposed on all other tobacco products, including e-cigarettes.

As previously reported, Gov. Wolf's severance tax proposal calls for a five percent tax on the wellhead price, plus 4.7 cents per thousand cubic feet (Mcf) of volume, but sets the minimum value of $2.97 per Mcf for all natural gas produced in the state. Starting with the first full budget year of implementation, the bulk of the severance tax revenues would fund the Education Reinvestment Act, with a four-year goal to restore overall basic education funding by $2 billion. Several distributions would come off the top first, however, including $225 million to fund the equivalent of the impact fee (which would end under the Governor's proposal) each year. The distribution formula would be generally the same as under Act 13, including a little more than $123 million for impacted counties and municipalities, $8 million to conservation districts, $12.5 million to all counties for open space purposes (retaining the minimum $25,000 for each county) and $20.5 million to all counties for at-risk bridges (retaining the minimum $40,000 for each county). While it appears this is a flat annual amount that would not change as the industry changes, as does the current impact fee, CCAP is seeking clarification on language in the draft legislation.

BUDGET HEARINGS BEGIN  

The House and Senate Appropriations Committees commenced a three-week series of budget hearings on March 9. Budget hearings afford an opportunity for state agencies to provide detail on the Governor's proposed FY 2015-2016 commonwealth budget. Both the House and Senate also heard from the state's Independent Fiscal Office Director Matthew Knittel, who told committee members overall he is optimistic about the state's economic outlook. The IFO's preliminary estimate for the General Fund revenue growth rate is 1.3 percent, compared to the administration's projection of 1.5 percent. The Senate also heard from Budget Secretary Randy Albright, who said the administration is being cautious with its revenue projections, but may consider increasing their revenue projections if upcoming months' collections remain positive.

Several items of importance to counties have been discussed during the hearings to date. In particular, Department of Drug and Alcohol Programs (DDAP) acting secretary Gary Tennis called for a multi-pronged solution to the state's drug and alcohol issues. He told the committees that the prescription drug monitoring system established by Act 191 of 2014 is in the beginning phase; the Governor has proposed adding $2.15 million specifically for this system, which was part of CCAP's 2014 priority to address the substance abuse and overdose crisis.

The proposed FY 2015-2016 budget also includes $5 million to provide additional services to address heroin and opioid addiction, which Tennis indicated would be targeted toward those individuals who will get better only in residential treatment. Tennis also mentioned a Department of Human Services (DHS) program being developed to make sure offenders are enrolled in Medicaid before they come out of county jail, and which Sen. Pat Vance (R-Cumberland) noted she is working on legislation to address. Assuring efficient restoration of benefits post-release is part of CCAP's 2015 priority to address inmates with mental health and substance abuse issues.

SENATE JOINT HEARING ON BENEFITS OF IMPACT FEE 

On March 3, the Senate Local Government and Senate Environmental Resources and Energy committees held a joint hearing to receive testimony from local governments on the benefit of the shale gas impact fee under Act 13 of 2012. One of CCAP's top priorities for 2015 is maintenance of the impact fee.

COUNTY PENSION COLA BILL MOVES FORWARD 

On Feb. 25, the Senate Finance Committee unanimously reported SB 129, sponsored by Sen. Sean Wiley (D-Erie), which clarifies language in the County Pension Law to allow counties to grant a limited cost-of-living adjustment (COLA), keyed to just the most recent year. The vague language of current law, which obligates counties at least once every three years to examine whether to grant a COLA, has led to interpretation that if a COLA is applied it is to be retroactive to the last time a COLA was granted. For most counties, the COLA is infrequently granted, and so going back to the last COLA and compounding forward can yield an unsupportable increase in the benefit. The limited COLA under SB 129 would instead allow a county that has fund capacity to grant much-needed adjustments to monthly benefits without the adjustments being excessive and without the adjustments imperiling the solvency of the fund.