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Number 3
February 5, 2016

www.pacounties.org

LEGISLATIVE BULLETIN

An e-newsletter of the County Commissioners

Association of Pennsylvania

Serving Counties Since 1886

In This Issue

Counties Unveil 2016 Priorities

Gov. Wolf to Unveil FY 2016-2017 Budget Proposal

Settlement Reached on Forensic Mental Health Services

House Approves Removal of County Share Requirement

PUC Announces Lower Impact Fee for 2015 Collections

IFO Releases Updated Budget, Economic Outlook

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COUNTIES UNVEIL 2016 PRIORITIES

On Jan. 25, CCAP unveiled a list of five county government legislative priorities for 2016, led by a call to address the commonwealth budget and human services funding.

The counties' top priority highlights the significant cash flow challenges that were created by the FY 2015-2016 state budget impasse. During the impasse, counties stepped up to cover the state's funding obligations at the expense of local property taxpayers, to avoid directly impacting clients. The priority seeks to ensure that counties are never again forced into a similar situation, by putting in place mechanisms to assure that any future impasse or budget delay does not burden counties and those they serve. Counties also call on the General Assembly to restore state funding of human services programs to historical levels, including restoration of the ten percent cut to the lines within the Human Services Block Grant, which affects all 67 counties. Further, the priority calls for expanding the Human Services Block Grant to any county that wishes to participate, and opposes the "rebalancing" initiative for child welfare funding.

Revenue opportunities and tax fairness remain a priority for counties in 2016 as well, including a focus on improving the assessment system. CCAP will also be addressing comprehensive behavioral health reform and funding for county children and youth services, and seeking to maintain the shale gas impact fee and all current distributions regardless of any severance tax proposals.

More information about the counties' priorities is available at http://www.pacounties.org by clicking on "2016 Legislative Priorities" under Legislative Quick Links.

GOV. WOLF TO UNVEIL FY 2016-2017 BUDGET PROPOSAL

On Tuesday, Feb. 9, Gov. Wolf will deliver his second budget address to the General Assembly, outlining his FY 2016-2017 budget proposal.

While most of the details in the Governor's plan will not be released until the day of his budget address, on Feb. 2 he announced that he will be calling for $200 million in new funding for basic education in FY 2016-2017, as well as an additional $377 million for FY 2015-2016 beyond the $5.63 billion approved by the General Assembly in HB 1460 in December (which was line item vetoed to about $2.5 billion by Gov. Wolf). Media reports indicate that Gov. Wolf again plans to propose a severance tax on natural gas as part of his budget proposal.

At the same time, many questions remain regarding the enacted FY 2015-2016 budget as well as other budget-related legislation. In addition to reducing funding for public schools when he signing HB 1460 in late December, Gov. Wolf also exercised his line item veto to reduce funding for state prisons to about six months of funds, and cut several programs within the Department of Agriculture and other agencies. Members of both the House and Senate have introduced legislation to provide funds for the remainder of the fiscal year to many of the programs that received cuts, including the state prisons, critical access hospitals, and agricultural programs, although none of the bills were advanced while both chambers were in session the week of Jan. 25. It remains unclear how the FY 2015-2016 appropriations will be resolved.

Also outstanding are amendments to the Fiscal Code, which contains language implementing the commonwealth budget and which is traditionally approved along with the appropriations bill each year. The current bill, HB 1327, is before the Senate, and is important for counties because it contains language implementing the children and youth rebalancing initiative; while counties remain opposed to the initiative, the Fiscal Code language attempts to address issues related to statutory requirements and to counties' ability to plan for a full year of funding by creating a special process for Department of Human Services certification of the funds. Earlier versions of HB 1327 had also included state reimbursement to counties, municipalities, school districts and nonprofit organizations for recovery of interest costs incurred during the impasse, but that language is omitted in the version currently pending before the Senate.

CCAP will be providing members with information on where to view the Feb. 9 budget address as well as analysis of line items impacting county programs on CCAP's Budget News and Updates web page. In addition, a special e-edition of the Bulletin will be published on Feb. 12, containing a more detailed budget analysis.

SETTLEMENT REACHED ON FORENSIC MENTAL HEALTH SERVICES

The Department of Human Services (DHS) announced on Jan. 27 that it had reached a settlement with the American Civil Liberties Union (ACLU), regarding the ACLU's class action lawsuit challenging the amount of time individuals served by the forensic mental health system remain in jail before being transferred to a state hospital.

The forensic mental health system helps individuals declared incompetent by the court to stand trial on criminal charges, and who have been ordered to be committed to a state hospital for treatment aimed at helping them reach competency. The litigation arose over average wait times for placement at the state's two forensic hospitals that had risen to exceed 60 days, keeping these individuals in the prison setting awaiting placement for treatment. The settlement approved by the U.S. District Court requires 60 new placement options within the commonwealth within 120 days, and another 60 new placement options within 180 days, across the spectrum of treatments; these new treatment options will not include jail-based competency restoration. In addition, $1 million will be provided to create supportive housing opportunities in the city of Philadelphia, expected to produce another 50 placements. Every person currently on a waiting list or being served by the forensic system at the two state hospitals will be evaluated within 60 days to determine if they are receiving the appropriate level of care. The parties will continue to work to resolve the question of maximum wait times before an individual can be moved from a prison setting to the forensic system, and to explore options, such as mental health courts, to determine whether individuals need to be in the criminal justice system and thereby potentially further reducing wait times.

As a priority for 2016, counties have created a comprehensive behavioral health task force that will also be exploring a wide-ranging set of approaches that will assist in addressing inmates with mental health and substance abuse issues.

HOUSE APPROVES REMOVAL OF COUNTY SHARE REQUIREMENT

On Jan. 27, the PA House voted 190-0 on final passage to approve HB 1062, which would eliminate the requirement for county nursing homes to pay ten percent of the non-federal cost of services for Medicaid residents. The legislation was introduced by former Delaware County Council member Rep. Tom Killion (R-Delaware) at the request of the PA Coalition of Affiliated Healthcare and Living Communities (PACAH), a CCAP affiliate.

The county share requirement, which totals approximately $18.5 million, is unique to county-owned homes and does not apply to private facilities. By removing the county share, the bill would free up federal funds generated by county homes that could then be paid directly to the counties in an incentive payment, thereby assisting those facilities struggling with low Medicaid rates and high Medicaid populations. The change is particularly critical because deepening funding shortfalls have driven county homes to privatizing at a growing rate, even though they serve an important role for Pennsylvania's most vulnerable individuals as the only facilities required to accept Medicaid patients on day one. The bill now goes to the Senate for its consideration.

PUC ANNOUNCES LOWER IMPACT FEE FOR 2015 COLLECTIONS

In the Pennsylvania Bulletin published on Jan. 30,

the state's Public Utility Commission (PUC) announced that a lower impact fee will be in effect for fees collected on 2015 wells. Under Act 13 of 2012, the impact fee is established as a sliding scale with a duration of 15 years for each well, coupled with a schedule based on the average price of natural gas for the prior calendar year. The lower 2015 impact fee reflects the decreases in the price of natural gas. New horizontal shale wells will yield $45,300 in fees, down from $50,300 in 2014. Wells in their second year will owe $35,200, compared with $40,200 in 2014. Vertical well fees also decreased, from $10,100 for a new well in 2014 to $9,100 in 2015, and by $1,000 for a second year vertical shale well fee. The PUC further noted that shale producers drilled 785 wells last year, a 43 percent drop from 2014.

Impact fees on 2015 wells are due from drillers on April 1, 2016, so the exact effect on the overall revenue collections - and therefore on local government distributions which will occur on or about July 1 - will not be known until after that date.

IFO RELEASES UPDATED BUDGET, ECONOMIC OUTLOOK

The state's Independent Fiscal Office (IFO) has released an update to its five-year economic and budget outlook, originally provided on Dec. 9, 2015. The updates include new revenue and expenditure estimates based on the appropriations contained in House Bill 1460 as approved by the General Assembly, and generally do not incorporate the line item vetoes made by the Governor.

The IFO noted that HB 1460 reduced the short-term deficit, because changes in reimbursements have a temporary impact. However, the IFO continues to warn of a long-term structural imbalance that is projected to grow in FY 2015-2016 and FY 2016-2017, based on consequences of using one-time revenue sources in prior fiscal years, restrained revenues, and higher expenditures. Revenues for FY 2015-2016 show some growth, with collections of $2.5 billion in General Fund revenues for January, an increase of $100.8 million compared to January 2015. Fiscal year-to-date revenues were $15.9 billion, an increase of $201.8 million from the prior year.

The full report can be found on the IFO's website at www.ifo.state.pa.us.

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