Number 15

July 22, 2016

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LEGISLATIVE BULLETIN

An e-newsletter of the
County Commissioners Association of Pennsylvania

The Voice of Pennsylvania Counties Since 1886

IN THIS ISSUE

FY 2016-2017 Budget Becomes Law

Congress Approves Bill to Address Opioid Epidemic

Clean and Green Amendments

Impact Fee Information Released

U.S. House Passes Measure to Limit EPA Authority on Bay, Wotus

Voting Matters

QUICK LINKS

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Contacts

717-526-1010

FY 2016-2017 BUDGET BECOMES LAW

Governor Wolf allowed SB 1073, the commonwealth appropriations bill for the 2016-2017 fiscal year, to become law without his signature on July 11. The final budget agreement spends about $31.6 billion in state funds, representing an increase of about $1.4 billion over FY 2015-2016 but less than the $32.7 billion budget proposed by the Governor in February. A full analysis of the budget's impact on counties can be found on CCAP's Budget News and Updates page at www.pacounties.org.

While the FY 2016-2017 budget does not include an increase in the state's personal income or sales tax, as Gov. Wolf originally proposed, Act 84 of 2016 includes a $1 per-pack tax increase on cigarettes (to $2.60 per pack), an extension of the state's six percent sales tax to digital downloads, as well as higher taxes on banks and an extension of wholesale taxes to smokeless tobacco and electronic cigarettes. Earlier in June, Act 39 of 2016 had also authorized expanded sales of wine and beer across the state, expected to generate around $150 million in FY 2016-2017.

The budget fails to include a three-year phased restoration of the ten percent aggregate cut to seven line items in FY 2012-2013 which, while part of the Human Services Block Grant, impacts core services across all 67 counties; restoration was proposed by the Governor and is the counties' priority on human services funding. Although funding for county child welfare increases by about $33 million for FY 2016-2017, the budget also retains the rebalancing initiative which shifts a full quarter of funds into the following fiscal year. Fiscal code language adopted earlier in the year mitigates its effect, allowing the Department of Human Services to issue certified funding for needs-based budgeting purposes and allows dispersal of fourth quarter funds the following July, even if a budget is not in place.

Counties did see significant wins on two county priorities in amendments to the Human Services Code that were approved in Act 76 of 2016. First, the amendments will phase out the requirement that county nursing homes pay ten percent of the non-federal cost of services for Medicaid residents in their nursing homes, concurrent with the implementation of Community HealthChoices but no later than 2019. Act 76 also contains language to suspend, rather than terminate, Medicaid benefits for inmates, ensuring better continuity of treatment, access to medications and therapy services, and increased potential for avoiding future incarceration. CCAP extends its appreciation to the General Assembly for enacting these two important county priorities.

Counties also received some unexpected good news in the Fiscal Code amendments in Act 85 of 2016 - an increase in the payment in lieu of taxes (PILT) that offsets the loss of property tax revenue to local governments related to tax-exempt state park and forest lands within their borders. The Fiscal Code amendments in Act 85 increase the PILT from $1.20 to $2.00 per acre, per local government, for forest and park lands effective July 1, 2017. Payments for game lands remain at $1.20 per acre, per level of government.

CONGRESS APPROVES BILL TO ADDRESS OPIOID EPIDEMIC

In response to a growing nationwide concern, the U.S. Congress passed the Comprehensive Addiction and Recovery Act (CARA) in early July to provide support and resources to address the opioid epidemic through increased education, prevention and treatment measures. The legislation received a final vote of 92-2 in the Senate, with both Sen. Bob Casey and Sen. Pat Toomey voting in favor; in the U.S. House of Representatives, the measure won support by a 407-5 vote, with all members of the Pennsylvania delegation voting for the measure.

The legislation, which awaits the approval of the President (as of publication of this Bulletin, the bill had not yet been signed into law), authorizes additional federal grants to the Substance Abuse and Mental Health Services Administration (SAMHSA) and the states to combat opioid abuse, and further expands prescription drug monitoring programs at the state level. Other provisions of the act will allow collaboration among various groups and industries that are heavily involved in the rise of opioid use through increased monitoring and prevention measures, along with dedicated funding for programs, initiatives and additional resources to law enforcement and medical-related professionals.

This movement comes on the heels of Pennsylvania's state budget process, which allocates additional funding to address the opioid epidemic. The recently enacted FY 2016-2017 budget provides a total of $20.4 million to the Commonwealth's opioid addiction crisis - $15 million appropriated to fund Centers of Excellence with $5.4 million in federal matched dollars. The state's Department of Human Services also received an additional $3 million, three-year federal grant to fund opioid addiction treatment in rural Pennsylvania beginning Sept. 30, 2016, which will increase the number of physicians offering medication-assisted treatment throughout the rural portions of the state.

CLEAN AND GREEN AMENDMENTS

A bill amending the Pennsylvania Farmland and Forest Land Assessment Act, otherwise known as "Clean and Green," has been signed into law as Act 89 of 2016, following the unanimous approval of both the House and the Senate.

Clean and Green is a preferential assessment program that bases property taxes on use values rather than market values for eligible properties that agree to maintain their property in agricultural use, agricultural reserve or forest reserve, generally resulting in a tax reduction for landowners enrolled in the program.

The new Act 89, formerly HB 806, would instead require counties to apply the market value to a Clean and Green property in the event the use value would be higher than the market value. Further, counties will not be permitted to change their use values annually, but must maintain their base year values. Last, those counties that currently do not maintain base year values are required to freeze their use values at current levels until the next countywide reassessment.

IMPACT FEE INFORMATION RELEASED

Research exploring local government impact fee spending under Act 13 of 2012 was recently released by the Center for Rural Pennsylvania, which sponsored the project.

The study used data from usage reports submitted to the state's Public Utility Commission as well as usage information reported directly by counties and municipalities. That data was then compared to county and municipal financial data submitted annually to the Department of Community and Economic Development to analyze expenditure trends and identify impacts on local government budgets and spending patterns as a result of Act 13 funding.

Among the findings, the research shows that counties and municipalities have allocated most of the funds for capital reserve, emergency preparedness and public safety, and public infrastructure. County expenditures in the categories of general administrative, judicial, and public safety also demonstrated observable impact related to Act 13 impact fees. The full study can be found at www.rural.palegislature.us.

Relatedly, the state's Independent Fiscal Office has released a new research brief analyzing impact fee collections and the effective tax rate as levied for 2015 (collected in 2016), and concurrently providing three scenarios for projected revenues from 2016 fees (to be collected in the spring of 2017). Each of the three scenarios projects a year-over-year decline in collections, with the reductions estimated to be anywhere from $5.4 million to $56.5 million depending on the number of new spud wells and the price of natural gas. The full report can be found at www.ifo.state.pa.us.

U.S. HOUSE PASSES MEASURE TO LIMIT EPA AUTHORITY ON BAY, WOTUS

On July 14, the House of Representatives passed its version of the FY 2017 Interior, Environment and Related Agencies appropriations bill, one of the 12 annual spending bills that must be passed each year by Congress. The House bill contains provisions to prohibit the Environmental Protection Agency (EPA) from acting on its Waters of the U.S. (WOTUS) rule; while there is currently a temporary stay on the rule, the House bill would prevent the EPA from moving forward to implement, administer, or enforce the rule even if the federal court system were to lift that stay. The House Energy and Water Appropriations bill, which funds U.S. Army Corps of Engineers (Corps) programs, has a similar provision preventing the Corps from enforcing the WOTUS rule.

During floor consideration, some 131 amendments were considered to the FY 2017 Interior Bill, including an amendment approved 231-197 that was offered by Rep. Bob Goodlatte (R-Va.) to prohibit the EPA from imposing "backstop" actions on any of the six Chesapeake Bay Watershed states if the states do not meet the nutrient and sediment reduction goals set in EPA's Total Maximum Daily Load (TMDL) program. Backstop actions can include withholding of funds, or requiring more stringent permitting or greater nutrient reductions. Only Pennsylvania's agriculture and storm water programs are currently in the backstop category; last year, the EPA withheld nearly $3 million in grant money from the state, which has since been restored.

The fate of the federal appropriations process remains uncertain as both chambers recess for the party political conventions and annual summer district work period. While leaders of both chambers have expressed a desire to pass and conference together their respective Interior Bills, the President has already threatened to veto the House bill.

VOTING MATTERS

On July 15, each CCAP member was emailed a voting matters packet containing items to be considered at the Tuesday business meeting of the upcoming CCAP Annual Conference at Split Rock Resort in Carbon County. The agenda packet includes proposed policy resolutions, along with officer elections and site selection for the 2021 Annual Conference. The resolutions will be deliberated during the conference and then submitted by electronic ballot to the full CCAP membership within 10 days of the conclusion of the Conference for final adoption.

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