State Roundup: Future Funding, Legislation Come Into Focus
Gov. Tom Corbett signed the current budget less than two months ago, but the administration already is looking ahead to 2013-14.
By PA Independent Staff
HARRISBURG — Pennsylvania may be fresh into a new fiscal year, but heads are already turning toward next year and beyond.
The administration warned state agencies about keeping budgets tight in 2013-2014, advising them against planning on state aid to fill in any gaps in federal funds.
Some are looking at what legislative actions could occur in the next session. A committee designed to look at property tax reform will pull together recommendations this fall, and a new contract with transit employees in Pittsburgh’s Port Authority could be the start of long-term transportation funding overhauls.
Meanwhile, a commission on manufacturing is pushing for decreased corporate taxes and more training efforts to help boost the job market, as the unemployment rate is projected to hover above 7 percent.
Annual budget guidelines distributed to state agencies warn that budget planning for 2013-14 should be predicated on the fact that Pennsylvania’s economy is still in a period of recovery from the Great Recession.
The guidelines, distributed by the Corbett administration, spell out the fiscal challenges facing Pennsylvania and warns that government programs cannot count on the state to replace declining federal dollars.
Though fiscal 2012-13 is less than 2 months old, the recently published administrative circular is looking ahead to expected cost increases in next year’s budget, forcing many parts of state government to tighten their belts even further.
Pension costs are projected to climb by about $600 million next year, from $1.6 billion in the current budget to more than $2.2 billion. That’s part of an expected $1.7 billion increase in mandatory spending for 2013-14 on pensions, debt service, welfare payments and corrections costs, according to projections from the state’s Independent Fiscal Office, which is similar to the federal Congressional Budget Office.
Despite some positive signs in the first half of the year, the state economy seems to have stumbled during the summer, as unemployment in Pennsylvania climbed from 7.4 percent in May to 7.9 percent in July.
Libertarian Party presidential nominee and former New Mexico Gov. Gary Johnson could be knocked off the ballot in Pennsylvania by the Republican Party.
Republican voters acting on behalf of the state GOP this week officially challenged the signatures submitted by Johnson, who is seeking a place on the November ballot with major party candidates Barack Obama and presumptive GOP nominee Mitt Romney.
To qualify for the ballot in Pennsylvania, the major parties have to submit only 2,000 signatures, but third-party candidates must collect more than 20,000 this year.
Ron Nielson, senior adviser for the Johnson campaign, told PA Independent on Wednesday that the campaign submitted more than 49,000 signatures — more than twice the amount required to gain access to the ballot.
The process is fundamentally unfair, and the major parties have plenty of resources to go to war against candidates they are concerned may slice into their share of the vote.
“The two major parties are preventing democracy from taking place in Pennsylvania,” said Robert Small, facilitator for the Pennsylvania Ballot Access Coalition, which fights for the equal access for all parties. Small is a registered member of the Green Party.
This week, Amalgamated Transit Union Local 85, the union for Port Authority employees, accepted a new four-year contract as part of an agreement with state and local government officials to address an immediate $60 million funding gap.
The state made a $30 million commitment depending upon the union cutting its costs, state officials said.
The contract includes $15 million in annual savings through a two-year wage freeze, increased pension contributions and other benefit concessions.
In addition to state funding, the rest of this year’s Port Authority budget gap will be met through increased pension contributions from nonunion Port Authority employees, a recent fare hike and an extra $4.5 million from Allegheny County.
Dennis Buterbaugh, spokesman for state Department of Transportation, said the new union contract and funding arrangement gives the state time to figure out “a permanent funding fix” for the Port Authority, one that addresses long-term costs.
How the state will come up with the $30 million for this year is still being worked out, but at least $10 million will come from a reserve fund, Buterbaugh said. The rest could come through PennDOT projects coming in under bid, but it’s “still being formulated” where the funding will come from, he said.
Before the agreement was reached, the Port Authority faced a 35 percent cut to transit service by September. That would’ve resulted in about 560 layoffs.
If Pennsylvania reduced its 9.99 percent corporate net income tax — the highest in the nation — the state would see a resurgence in the manufacturing sector.
The governor’s Manufacturing Advisory Council made that recommendation among at least 10 others in its final report released Tuesday to Gov. Tom Corbett. The council consisted of members in the public and private sector appointed by the governor.
Among the suggestions were:
- Advocating for more more tax-free investment accounts;
- Pushing for tax credits to aid research and development;
- Focusing on job and technical training, as a growing scarcity of skilled employees is the top concern among Pennsylvania manufacturers.
A pair of exemptions in Pennsylvania’s open records law allows the General Assembly to block requests for records that reflect the “internal deliberative processes” used in the crafting of any budget, legislative proposal or amendment.
Members of the General Assembly and their staffs also are exempt from disclosing communication that flows into and out of their taxpayer-funded offices, even though all other state and local public officials are obliged to do so.
Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi, R-Chester, who sponsored the 2008 bill that created the state’s open records law and the Office of Open Records, said the confidentiality provision resulted from many concerns at the time the law was passed.
“It is widely believed that members of the public do not expect their communications with members of the General Assembly to be made available, and that they should be afforded this level of confidentiality,” he wrote in an email Monday.
Diana Lopez, senior editor for Sunshine Review, a national pro-transparency nonprofit, said Pennsylvania’s blanket ban on correspondence can keep residents in the dark about issues that would be considered public in other states.
“The presumption should be on openness,” Lopez said. “The burden of proof to keep something secret should fall on the government.”
Once again, lawmakers are gearing up to address property tax reform once again.
The new House Select Committee on Property Tax Reform met Monday to hear proposals on property tax reform that lawmakers made this past session.
The Independent Fiscal Office will provide a new analysis on revenue streams, which the committee will hear in September.
Committee chairman state Rep. Tom Quigley, R-Montgomery, said the IFO analysis combined with past research could yield new plans. He said the goal is to get legislation in front of the new session of the General Assembly come January.
“Even though we have this short window to work in, I think there’s been so much research and so many other studies that have been done, that we can use a lot of that material and just try to work with it in the right way,” he said.
Attorneys for the receiver and the fiscally struggling city of Harrisburg argued the case in Commonwealth Court on Thursday on the constitutionality of an increase to the city’s earned income tax.
The city’s receiver, Maj. Gen. William Lynch, filed a petition with the Commonwealth Court earlier this summer over the increase, after city officials refused to pass a 1 percent tax increase, which would bring the total earned income tax to 2 percent.
Increasing the city’s earned income tax was a recommendation in the city’s recovery plan that the Commonwealth Court approved in March. Attorneys for the receiver argue that the tax is a necessary part of moving forward with the plan.
Attorneys for the city said it’s unconstitutional to allow an agency, like the Office of Receiver, to will a governing body to vote a certain way.
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