Number 10
May 13, 2016

www.pacounties.org

LEGISLATIVE BULLETIN

An e-newsletter of the County Commissioners

Association of Pennsylvania

The Voice of Pennsylvania Counties Since 1886

In This Issue

CCAP Releases Summary of Impasse Impacts on Counties

County Officials Discuss Budget Priorities

IFO Releases Initial Revenue Estimate

Senate Panel Advances Clarification on Service Contracts

Protection of 911 Information

Sheriff's Fee Modernization Passes Committee

Congressional Municipal Finance Caucus Created

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CCAP RELEASES SUMMARY OF IMPASSE IMPACTS ON COUNTIES

A CCAP survey of how counties weathered the FY 2015-2016 state budget impasse shows that millions of local taxpayer dollars were used to maintain critical services.

The recently released survey indicates that counties put up an average of $12 million in local funds to continue to provide services for their residents, such as mental health, intellectual disabilities and children and youth services, despite not receiving money owed to them from the state until well over six months into the fiscal year. These funds represent on average 20 percent of counties' operating budgets. Nearly three-quarters of counties drew down on their reserves - a few completely - and almost one third had to borrow funds, incurring bank fees and interest payments. Even with those measures, half of the counties also had to delay payments to providers and other vendors, and delay other expenditures and capital projects.

As their top priority for 2016, counties are asking the General Assembly to approve an appropriately funded FY 2016-2017 state budget, on a timely basis, so that counties and those they serve are not forced to bear the costs and burden of another impasse or of underfunded services.

Equally important is addressing the historic pattern of underfunding across human services line items that counties provide on behalf of the state. Without appropriate levels of funding from the state and federal government, counties will be faced with the difficult choice either to curtail vital services for the commonwealth's most vulnerable citizens or to increase local property taxes, a choice no county wants to face.

Another impasse, or lack of sufficient funding, in FY 2016-2017 would trigger a compounding effect. Counties with depleted reserves will have to borrow sooner, and most likely borrow larger amounts, incurring more fees and higher interest payments and at the same time negatively impacting the delivery of needed services. Other contingency plans such as reducing services and staff, delaying or completely stopping provider payments, or in extreme cases, shutting down some county operations to the bare necessities, become more and more likely the longer an impasse goes on.

The General Assembly has begun to move HB 1999, a legislative vehicle for the final FY 2016-2017 budget; it is a vehicle only and does not reflect any budget proposal at this time. While several House members offered amendments on specific line items of individual interest, the sponsors withdrew them from consideration before any votes were taken, and the bill has been re-referred to the House Appropriations Committee for additional fiscal review.

Additional information about the impacts of the FY 2015-2016 impasse and county priorities for the FY 2016-2017 budget can be found on CCAP's Budget News and Updates web page.

COUNTY OFFICIALS DISCUSS BUDGET PRIORITIES

Berks County Commissioner Christian Leinbach and Dauphin County Commissioner George Hartwick appeared before the Pennsylvania Business Council on May 9 as part of the Council's Mandatory Monday Briefing.

The commissioners discussed the county response to the FY 2015-2016 state budget impasse, noting that budget difficulties at both the state and federal levels are ultimately felt at the county level, given that the majority of county budgets come from state and federal funding sources that are out of counties' control. The costs incurred by counties, such as the loss of investment income, bank fees and interest payments, will have to be carried by local property taxpayers. In addition, Hartwick noted that measures must be put in place to assure that counties are not put in the same position as last year in dealing with a state budget impasse, emphasizing that there should never be a situation when counties cannot continue to provide critical services.

Leinbach pointed out that there are often misunderstandings about the services counties provide, explaining that counties are in charge of human services programs, not those traditionally discussed as welfare services, and he suggested that counties need to be consulted about potential impacts before new state laws are passed.

IFO RELEASES INITIAL REVENUE ESTIMATE

On May 3, the state's Independent Fiscal Office (IFO) released the initial revenue projections for FY 2016-2017 and updated estimates for FY 2015-2016, as required by statute to assist the General Assembly's budget deliberations.

The IFO's revised revenue estimate for the current fiscal year (FY 2015-2016) is $31.02 billion, an increase of $300 million from the original estimate issued at the beginning of the fiscal year. The projected increase is due to higher than anticipated revenue collections from unclaimed property, strong receipts from smaller revenue sources and certain transfers from special funds. Meanwhile, the General Fund's three largest revenue sources, including personal income, sales and use tax, and corporate net income taxes, are largely meeting expectations.

For FY 2016-2017, the IFO estimated that General Fund revenues are expected to be $31.59 billion, a $564 million (1.8 percent) increase over the current fiscal year. Compared to the Governor's Executive Budget, the IFO projections are $150 million higher for FY 2015-2016 and $186 million lower for FY 2016-2017, making the IFO's two-year estimates $36 million less than the Administration's. However, all estimates exclude impacts of any proposed statutory changes. IFO Director Matthew Knittel noted the state's economic growth will remain modest in the next fiscal year and revenues will continue to improve, but will be offset by non-recurring revenues received in the previous fiscal year and several other factors. In its five-year outlook presented in January, the IFO estimated that the state could face a revenue shortfall of roughly $1.86 billion for the 2016-2017 fiscal year, slightly higher than the $1.4 billion estimated by House and Senate Republican leaders but less than the $2.2 billion projected by the Governor's Budget Office.

The full IFO report and presentation can be found at www.ifo.state.pa.us.

SENATE PANEL ADVANCES CLARIFICATION ON SERVICE CONTRACTS

The Senate Local Government Committee recently gave its unanimous approval to House Bill 902, introduced by Rep. Chris Ross (R-Chester). The bill provides that if no bids are received for a contract for services after two advertisements, a local government could negotiate a contract to obtain the services advertised, similar to the process in current law covering contracts or purchases of goods and properties where bids are required but not received. The legislation also requires that the terms of any negotiated contract for services must be publicly announced at a meeting of the governing body before it is executed. Clarification of the statute will assist local governments in assuring they can take steps to complete necessary projects if no bids for services are received, while still maintaining appropriate standards of transparency. House Bill 902 now goes to the full Senate for consideration.

PROTECTION OF 911 INFORMATION

Legislation to offer protections for individual information related to 911 calls has been approved by the Senate by a 48-1 vote. House Bill 1310, introduced by Rep. Maria Donatucci (D-Philadelphia), would prohibit county 911 centers from releasing a record containing identifying information of a 911 caller. An amendment offered by Sen. Randy Vulakovich (R-Allegheny) on the Senate floor also prohibits release of identifying information of a victim or witness, which includes the name, phone number and home address of that individual. Information on the location of the incident - unless it is the address of the caller, victim or witness or would compromise one of those individual's identity - as well as street block identifiers, cross streets or mile markers nearest the incident would be open for release. CCAP noted in a support memo that the primary public interest is in determining whether counties are adequately and promptly providing 911 service, which is satisfied by the requirements in the legislation. House Bill 1310 as amended now goes back to the House for a concurrence vote.

SHERIFF'S FEE MODERNIZATION PASSES COMMITTEE

Legislation to modernize the Sheriff's Fee Act has been reported by the Senate Judiciary Committee. Sheriff's fees under the Act have not been updated since 1995, and SB 1160, sponsored by Sen. Richard Alloway (R-Franklin), would bring them up to current year levels. The bill also incorporates several fees currently found in the Sheriff and Deputy Sheriffs Education and Training Act and fees paid by applicants for firearms licenses under Title 18. The Committee adopted two amendments to the bill, both offered by Sen. Alloway, to allow county sheriffs to collect an additional $5 fee on transactions to be used exclusively for technology updates in the sheriff's office and to exempt retired military from the license to carry renewal fee. Senate Bill 1160 received the unanimous approval of the Committee with those amendments, and the bill now goes to the Senate floor for consideration.

CONGRESSIONAL MUNICIPAL FINANCE CAUCUS CREATED

Congressmen Randy Hultgren (R-IL) and Dutch Ruppersberger (D-MD) are co-chairing a newly created congressional caucus focused on municipal finance, which will work to protect local governments' ability to independently finance key projects, including use of tax-exempt municipal bonds, and advocate for policies to enhance their access to capital markets. Tax-exempt bonds are a critical tool for budgeting and financing investments in key infrastructure and facilities. Changes proposed in recent years to the tax-exempt status of municipal bonds would increase borrowing costs for counties, restricting their ability to independently finance key public infrastructure projects and ultimately shifting the burden onto local taxpayers.

NACo is encouraging counties to contact their U.S. House members to ask for their continued support of this critical financing tool by joining the Municipal Finance Caucus. A sample letter can be found on CCAP's Legislative Action Center under Federal Government.

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