From Second and State: Week of June 30 – July 4, 2014

by Buchanan Ingersoll & Rooney PC

This may be a “Week Ahead” edition, but it is really all about the hours leading up until midnight tonight. The back and forth of budget negotiations over the weekend have turned the corner into the final hours before the state’s constitutional deadline tonight. Things are changing moment to moment, but we wanted to provide you with a quick recap of the weekend developments.

You may recall that a House-generated budget bill, H.B. 2328, cleared the House last week and was sent over to the upper Chamber. While the Senate had introduced its own budget bill, the House version was adopted as the legislative vehicle leaders will use to finalize the agreed-upon numbers. The Senate Appropriations Committee amended the House bill in committee Sunday evening to include the line items necessary to enact the final budget. It will be reported to the floor, put up for a vote one last time in the Senate and shipped back to the House for a concurrence vote. The Senate is expected to reconvene today, Monday, June 30, at 1 p.m., as is the House. If all goes according to plan, the House will be able to vote on it sometime this evening, and the governor will sign it before midnight.

The billion-dollar question of this budget cycle has been whether or not new taxes, including a severance tax, could be used to fill the $1.4 billion budget deficit. Over the weekend, Senate Majority Leader Dominic Pileggi (R-Delaware) said that discussions were centered on revenues that did not include new taxes, and House Speaker Sam Smith (R-Punxsutawney) said that a severance tax was no longer part of the active conversation, calling such a tax “conceivable, but not likely” because of a lack of votes in the House and Senate. At this point, it looks like the final agreement that cobbles together one-time revenue sources and a negotiated revenues projection. As you read this blog, we are digesting the line items passed through Senate Appropriations, but if you can’t wait, here are the documents passed on through Twitter by Sen. Pileggi:  Line items:  Balance sheet: 

The remaining question for the week is whether the legislature will take up pension reform, and as time wears on, it looks less and less likely. You might remember that Gov. Tom Corbett said that he would not support any new taxes unless the legislature also adequately addressed pension reform and sent him some form of liquor privatization. Late last week, it became apparent that the magical 102 votes needed to win in the House for either policy initiative failed to materialize among the Republican majority. Over the weekend, leaders tried to cobble together votes with a horse-trade of sorts among some Democrats – public pension reform for a Mayor Nutter-supported Philadelphia cigarette tax to help fund the city’s financially challenged schools. That also appeared to backfire with significant Democrat push back.

Keep in mind, this news may very well be stale by the time your read it, so for the most up-to-date information, be sure to follow us on Twitter at @BuchananGov and our blog at

Bills on the Governor’s Desk

It hasn’t been all budget, all the time these last few weeks. Several bills have made it to the governor’s desk and are awaiting signature including:

H.B. 43 (Harper, R-Montgomery), which amends the Volunteer Health Services Act – expanding it to include psychiatrist, psychologist and counselors for military personnel and their families to obtain a volunteer license so that they may provide free mental health services via “Give an Hour” program.

H.B. 1429 (Keller, R-Perry) to address the issue of powers of attorney.

S.B. 874 (Vance, R-Cumberland), which amends the Public School Code in community colleges, to further provide for financial program and reimbursement of payments for Harrisburg Area Community College.

S.B. 1287 (Yaw, R-Lycoming), which updates the ATV definition to allow for titling and registration of ATV vehicles, an increase in weight for class 1 ATV and the use of innovative airless tires. Under the current statutory definition of ATVs, some newer vehicles cannot be titled, registered or used in Pennsylvania.

H.B. 1574 and H.B. 1575 (Killion, R-Delaware) to allow more flexibility to HMO’s business organizational structure, including permitting an HMO that is organized by one or more corporations to operate as an LLC.

H.B. 1090 (Youngblood, D-Philadelphia) to update Pennsylvania’s Safe Haven Law to allow for police stations, in addition to hospitals, to be considered safe havens for infants dropped off by parents who are unable to care for them.

Committee Hearings

There is not much on the schedule, except for a few meetings that have been scheduled in case they are needed as part of the budget process. In the Senate, the Appropriations Committee will consider H.B. 278, the Fiscal Code bill (see blog dated June 27), sometime Monday. The technical term is “Off the Floor,” which means the chair may call the meeting at the convenience of its members.

The House Aging and Youth Committee will meet at 10 a.m. Monday to continue an informational meeting last week on the Front Porch Project, a program run by the Family Support Alliance related to awareness regarding child abuse. Also on Monday, the House Agricultural Committee will meet to consider bills related to the dog law and Milk Marketing Board. Right now, we expect the legislative committee schedule to pick up again starting July 9.

In Case You Missed It – Blog Posts You’ll Want to See

Every week, we have the ability to impart information to you fast through fabulous social media channels like Twitter and blogging. We recognize, however that not all of you are able to get to those posts as they happen and that sometimes, by the time you get there, the timeliness has passed. However, there are posts that have staying power! So, as we round the corner into what we hope will be the final session week before summer recess, here is what we didn’t want you to miss:

What’s all the Fuss about the Fiscal Code? (First posted June 27, 2014)

As of the last few years, if you’ve been following the enactment of the state budget, you’ve likely noticed that the General Appropriations bill and a “Fiscal Code bill” seem to go hand in hand. But why? What’s all the fuss about the Fiscal Code?

The commonwealth’s Fiscal Code was originally enacted in 1929. Its general scope is to define the powers and duties of the various departments, boards, commissions and row offices as to the collection of taxes and money due to the commonwealth, as well as disbursement of commonwealth funds.

Until 2006, the provisions of the Fiscal Code were not specific to how money could be spent in any particular fiscal year; they governed the practice of collecting and spending money generally. However, starting in 2005, the courts issued a series of decisions that changed how the legislature uses the Fiscal Code.

Article III, section 11 of the PA Constitution provides that the GA bill shall contain “nothing but appropriations for the executive, legislative and judicial departments of the commonwealth, for public debt and for public schools.” Until 2005, if there were strings attached to a line item indicating how the money could be spent or divvied up or directed, that language would appear in the General Appropriations bill. A series of cases challenged this practice in 2005 and 2006 based on the above constitutional provision, with the court ultimately ruling that “language directing substantive procedures” to be followed by a department has no real place in the General Appropriations bill.

Since substantive language could no longer be added to the General Appropriations bill, the General Assembly needed somewhere to house the legislative jargon, which can best be described as the instructions to the budget.  The Fiscal Code, already on the books for nearly a century, seemed to be the most logical place to put it. Since 2006, an additional article for each fiscal year has appeared in the code containing provisions related to budget implementation for that fiscal year.

The language of the Fiscal Code is often as contentious as the numbers in the General Appropriations bill. Everyone on each side of every issue not only has a stake in how much money their project, department or program receives, but in any directive related to that money. So far, the same seems to be holding true, but since no budget implementation language for 2014-2015 has been added to any Fiscal Code vehicle so far, it’s hard to say for sure. Check back soon; once it is revealed, we’ll provide an overview of its contents.

Budget Buzz (First posted June 26, 2014)

With only a few days left until the end of the commonwealth’s fiscal year, all eyes in Harrisburg are on the state’s yet-to-be-enacted 2014-2015 spending plan. This week, the House of Representatives sent the budget vehicle, H.B. 2328 (Adolph, R-Delaware) to the Senate for consideration, where it is likely to be reported from the Appropriations Committee and taken up for consideration at any time. The Senate is now in control of the bill and poised to amend it. And while it’s hard to say at this point what is in the budget, here’s what some members are saying about the budget:

Rep. Brad Roe (R- Crawford)

“Approximately $6 out of every $10 in new spending will be used to support education.

“This would be the fourth budget in a row to set a new state record for state tax dollars that are spent on education.”

Rep. Kerry Benninghoff (R-Centre/Mifflin)

“We have taken a step in the process by passing a budget bill that reflects our priorities.

“The next step is for the Senate to adopt a budget bill that reflects its concerns. Once that happens, we will have to look at any differences between the House and Senate versions of the budget and find a way to work out a final bill that meets the needs of Pennsylvanians.”

Rep. Todd Rock (R-Franklin)

“Though I have concerns with the additional revenue in this spending plan, I voted in favor of the House budget proposal for two reasons: it would not raise taxes, and it would increase funding to local school districts.”

Rep. RoseMarie Swanger (R-Lebanon)

“I am extraordinarily pleased with the budget proposal we passed this evening. Not only would it keep increases in state spending below the rate of inflation in accordance with the Taxpayer Bill of Rights (TABOR), it would bring our state’s ledger books into balance without tax increases. Additionally, this budget would increase education funding to local school districts to assist them with their growing pension obligations. This is an astounding feat, given our challenging economic climate and shortfalls in tax collections. I congratulate the House Appropriations Committee members and their staff, who crafted this bill, for a job well done.”

Rep. Pam Delissio (D-Montgomery/Philadelphia)

“‘This budget scratches for every nickel,’ stated a colleague during budget debate on the House floor today. I could not disagree more. We have not broken a sweat to improve the revenue side of this budget this year or any of the previous three budget cycles.

“Education funding and human services funding remain at great risk in the budget that the House passed today.

“This budget will be amended in the Senate and will come back to the House on concurrence, and I look forward to continuing to work to include the priorities of the citizens of the 194th Legislative District.”

Rep. Stephen Bloom (R-Cumberland)

“The House’s 2014-15 budget plan represents the kind of responsible, commonsense fiscal choices for which I have consistently fought. For the fourth consecutive year, total state spending falls under the Taxpayer Bill of Rights (TABOR) benchmark growth rate — in other words, we’re spending fewer taxpayer dollars compared to inflation and population growth.

“While this budget responsibly funds the core functions of government and even provides modest increases for education and the intellectually disabled, we are not sticking Pennsylvania taxpayers with even a dime of tax hikes or new taxes. I am committed to not reaching any deeper into the pockets of the hard-working taxpayers I represent, so I am pleased the plan we passed today honors that commitment. Even in the face of an impending deficit, this budget plan supports essential services without placing an additional burden on the backs of Pennsylvania taxpayers.”

Rep. Jaret Gibbons (D-Lawrence/Butler/Beaver)

“As it has been in the past, three budgets from Gov. Corbett and Republicans in the legislature, education is once again underfunded, specifically higher education.

“We simply cannot continue to flat-fund our postsecondary education system. We are, in effect, flat-funding our children’s future and Pennsylvania’s ability to compete in a global economy.

“Funding for our college and universities, which is sadly a level of education that is becoming increasingly harder for our middle-class families to attain, does not receive an increase in this budget proposal.

“Tuition rates continue to increase at public universities and community colleges, which are the cornerstones of education for many Pennsylvanians. We must be committed to making meaningful restorations of the cuts these institutions have seen.”

Sen. Sean Wiley (D- Erie)

“The House proposal, at this rate, removes nearly every tax credit program out there.

“Throughout the Governor’s term in office, he has been downsizing economic development, refocusing whatever resources are available and taking away tools that small businesses and businesses in general use to create jobs.

“The Senate needs to step up, look at these proposals and make sure the tax credits are restored. We must continue to look for other revenue and cost-saving opportunities that support rather than hinder the development and sustainability of our small businesses.

“I think it’s safe to say that this is not really a serious attempt to resolve our budget dilemma. What it is, is a radical manifesto filled with nonsensical ideas that will be promptly discredited by me and my colleagues in the Senate. We simply do not have time for this kind of grandstanding.”

Rep. Curtis Thomas (D-Philadelphia)

“We have five days left before the fiscal year ends to pass an on-time budget. We have five days left to deal with a massive deficit of over a billion dollars, and instead of talking about solutions, we waste time with conversations about supposed reforms that offer no short-term cost savings.

“With the time that we have left, the real conversation we should be having is about our priorities. We have five days left to decide whether we are going to give corporations and special interest groups another free ride or help those who need it most.”

Rep. Mike Sturla (D-Lancaster)

“Four years ago, Gov. Corbett proposed his first state budget and likened it to a belt-tightening family sitting around the kitchen table making decisions on where to save and where to spend. Simply put: this House Republican budget plan is based on either delaying paying the bills or simply not paying the bills at all. Not many Pennsylvania families can balance their budgets in that way.”

Rep. Matt Baker (R-Bradford/Tioga)

“During these times of great economic and budgetary challenges, moving this bill forward is difficult but important to fulfill our constitutional duty of passing a balanced and on-time budget.

“Three-fourths of the state budget is committed to health and human services ($11.2 billion) and education ($11.1 billion), which have always been our top priority.

“Just last month, Pennsylvania’s unemployment rate dropped to 5.6 percent, the lowest rate since September 2008, and jobs in the private sector are at a record high.

“It is clear that when elected officials limit government spending only to the amount of money the government takes in and keeps its hands out of the pockets of hard-working Pennsylvanians, the economy improves.”

Rep. Rick Saccone (R-Allegheny/Washington)

“The House has sent the Senate a fiscally responsible budget proposal that contains no tax increases and limits the growth of government spending. I strongly urge the Senate to follow our lead.

“Legislators have been under enormous pressure to levy extraction taxes on the Marcellus Shale industry, a move that could place tens of thousands of Pennsylvania jobs in jeopardy. The House has done well to resist this temptation. Instead, our budget relies on getting the Commonwealth out of the business of selling liquor once and for all and finally privatizing our state stores – a move that would raise hundreds of millions of dollars in new revenue.

“The House budget proposal also would increase state funding for K-12 education to record levels for the fourth year in a row. The false claim that the Legislature cut $1 billion from education was soundly refuted by what we passed today.

“The Senate now has the opportunity to revise the measure and send it back to our chamber. While I support the budget bill in its current form, my position could change depending on how many modifications are made. I am hopeful that common sense will prevail and that the House’s pro-jobs, pro-growth budget will remain largely intact.”

Rep. Matt Gabler (R-Clearfield/Elk)

“I am proud to support a budget that lives within our means and respects the hard-working taxpayers of Pennsylvania. H.B. 2328 supports and prioritizes the core functions of government in difficult economic times.

“For the fourth consecutive fiscal year, this budget will fund K-12 education at a record level. This commitment of $10.3 billion in state funding to our schools is nearly $400 million higher than the greatest amounts available to schools under Federal Stimulus in 2010-11. Special education funding is increased by $20 million in this budget, and this budget includes additional support to assist school districts in paying their increased pension obligations. These increases show our continued commitment to future generations.

“Obligations placed on us by the federal government, in the form of both increased costs and reduced reimbursements have made the task of achieving a balanced budget difficult. In spite of that, we have put forth a responsible spending plan that does not increase taxes or rely on new debt.

“Our financial practices are starting to pay off. Pennsylvania is moving in a more business-friendly direction. Pennsylvania’s unemployment rate is at its lowest point in six years and below the national average. Colorado-based WhiteWave Food Company’s decision to purchase the former International Custom Products building in Sandy Township is an example of a rebirth happening statewide. This budget bill continues that trend and will keep us moving toward prosperity and fiscal stability.”


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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