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Budget Briefing: Much More Drilling, No Signed Budget, Senate Returning July 8

At best the new FY 2014-15 state budget is still a work in progress. Although the Senate and House passed a General Fund budget on June 30, Gov. Corbett has still not signed it. In addition, work on the follow-along Fiscal Code bill implementing the budget (and more), still isn’t done. The Senate is returning July 8 to consider what to do with the bill.

Here’s what you need to know.

The Senate and House Republicans Monday approved, by party-line votes, House Bill 2328 (Adolph-R-Delaware), a $29 billion General Fund budget with no tax increases, but which is based on $246.5 million in transfers from special funds, $95 million in additional “non-impact” natural gas leasing in State Parks and Forests, $20 million in DCNR timber sales and $75 million from a Philadelphia casino license that may or may not happen.

Click Here for a copy of the line item spreadsheet. Click Here for the budget balance and transfers sheet. A summary and Senate Fiscal Note are available. A summary and House Fiscal Note are available.

At a press conference Wednesday, Gov. Corbett said all options are on the table-- including vetoing the budget passed by the General Assembly-- to get meaningful action on pension reform by the House and Senate. The Tribune Review reported Tuesday the Governor was considering a blueline veto of funding for the Senate and House to get them to move on pension reform.

The Governor has until July 11 to sign House Bill 2328.

Sen. Chuck McIlhinney (R-Bucks), the only Senate Republican to vote against the budget, said, “While a number of extremely important services and priorities are funded in the state budget, I have serious objections to balancing the budget through the use of revenue from additional fracking on state forest lands. Balancing the books at the expense of our natural resources is the wrong approach and sets a dangerous precedent going forward.

“A number of environmental groups have expressed serious concerns regarding the impact of opening more state lands to fracking, and sportsmen’s groups have voiced fears of the effect the additional drilling activity could have on our delicate ecosystems and wildlife. Given the gravity of these issues, I could not in good conscience support the spending plan in its current form.”

Gov. Corbett said Wednesday he was disappointed House members used a procedural maneuver Tuesday to send a pension reform bill-- House Bill 1353-- back to Committee which he said disguise the fact they can’t stand up to special interests (unions) and vote on pension reform. Click Here for more details.

In response, the House late Wednesday reported House Bill 1353 out of the House Human Services Committee, but it remains on the House Calendar.

For its part the Senate Monday passed a limited pension reform bill-- Senate Bill 922 (Brubaker-R-Lancaster)-- moving elected officials off of a defined benefit program, but it too saw no action in the House.

The Fiscal Code bill-- House Bill 278 (Baker-R-Tioga)-- that usually accompanies the budget this year became a catch-all for changes to education programs, taxes, regulating conventional oil and gas wells and lots of other changes in law that have not gone through the Senate and House in other legislative vehicles.

A detailed summary and House Fiscal Note are available.

On Monday the Senate Appropriations Committee made 66-pages of changes to House Bill 278 and passed the bill, but only after a tie vote on the Senate Floor was broken by Sen. Scott Wagner (R-York) changing his vote. The Senate then recessed to September 15 (but has to return to session on July 8 because the House amended the bill) putting pressure on the House to finish the remaining budget work.

Tuesday the House upended a deal Senate Republicans thought they had with House Republican leadership on the provisions in the bill by removing language related to the Bank Shares Tax (which helped balance the budget), City Revitalization and Improvement Zone, extra funding for the Allentown school district and authorizing the enactment of a cigarette tax in Philadelphia.

Back on the House Floor several provisions in the bill were challenged and an attempt was made to suspend the rules to amend the bill again to impose a moratorium on further leasing of DCNR lands for drilling and eliminating a part of the bill that would regulate conventional oil and gas wells differently than Marcellus Shale wells.

A challenge was also raised on the constitutionality of the bill saying the legislative process used to cobble the bill together with so many different, unrelated provisions was unconstitutional, but that effort failed by a vote of 117 to 83.

The House then voted 121 to 78 to return the bill to the Senate which must now make a decision on whether to concur with the House changes or insist on its own version when it returns to session on July 8.

As a final order of business the House amended and returned to the Senate House Bill 1177 (Lucas-R-Crawford) which would authorize Philadelphia to adopt a $2/pack tax on cigarettes, the same Philadelphia cigarette tax the House removed from the Fiscal Code bill earlier.

The House then adjourned Wednesday to September 15, unless sooner recalled by the Speaker.

The Senate now scheduled to come back to session on July 8 to finish work on both House Bill 278 and House Bill 1177, but according to statements by a spokesperson for Senate Majority Leader’s Office there was no indication what it might do. The spokesperson did say the provisions related to Bank Shares Tax must get done in some vehicle.

Revenue Declines

Pennsylvania collected $2.8 billion in General Fund revenue in June, which was $23.7 million, or 0.8 percent, more than anticipated, Secretary of Revenue Daniel Meuser reported late Wednesday.

Fiscal year 2013-14 General Fund collections totaled $28.6 billion, which is $508.8 million, or 1.7 percent, below estimate. The Independent Fiscal Office projected a year-end deficit of $572 million. Click Here for more details.

Here’s a thumbnail of the new budget--

Agriculture

-- Transfer $17.6 million Horse Racing Fund for Dept. of Agriculture operations

Environmental Protection

-- DEP Operations - $12.4 million increase

-- Sewage Facilities Planning Grants - $500,000 increase

-- Delaware River Basin Commission - $500,000 cut

-- Transfer of $6.2 million from Alternative Fuels Incentive Grant Fund

Conservation & Natural Resources

-- Heritage Parks Program - $2.75 million, up from $2.25 million last year

-- Transfer of $95 million from “non-impact drilling on DCNR Land

-- Transfer of $73 million from the Oil and Gas Fund for DCNR operations