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Final Budget Includes REAP Tax Credit, But Hazardous Sites Cleanup Fall Issue

(Updated July 17) It took more than a week after the Senate, House and the Governor declared a budget deal to put it in writing and the final result includes the REAP conservation tax credit, but not funding for the Hazardous Sites Cleanup Program. Other issues were pushed back to the fall.

In a big win for the environment, the House and Senate passed and sent to the Governor the Resource Enhancement and Protection Act (REAP) that gives farmers tax credits for installing conservation practices across the state.

The Chesapeake Bay Foundation and a coalition of more than 65 farm, environmental, business and sportsmens’ groups supported REAP that will, when signed by Gov. Rendell, provide $10 million in tax credits in its first year.

“We appreciate the steadfast commitment of REAP’s sponsors to seeing this legislation through, and for their dedication to improving water quality while helping farmers make ends meet,” said Matthew Ehrhart, Executive Director of CBF’s Pennsylvania office. “They clearly understand that a healthy environment and healthy farms go hand in hand, and that REAP will make significant strides toward meeting Pennsylvania’s obligations to reduce pollution going into our streams, rivers, and the Chesapeake Bay.”

REAP is a bipartisan measure sponsored by Representatives Jerry Stern (R-Blair) and Peter Daley (D-Washington) and Senators Mike Waugh (R-York) and Michael O’Pake (D-Berks), along with 79 other co-sponsors.

REAP was included in Senate Bill 97 (D.White-R-Indiana) that made a whole series of changes to the Tax Code.

Funding for the Hazardous Sites Cleanup Program was left hanging after an agreement between the Senate, House and Gov. Rendell to divert $40 million from the Keystone Recreation, Parks and Conservation Fund fell apart under pressure from environmental groups.

In response to the breakdown of the agreement, Sen. Mary Jo White (R-Venango), chair of the Senate Environmental Resources and Energy Committee, said, “We spent $50 million on HSCA (Hazardous Sites Cleanup Program) the last two years out of the Environmental Stewardship Fund – and nobody liked that either. The Governor requested $50 million this year. We offered $40 million – only to soon find out that DEP really only needs $22 million. HSCA funding is now not contained anywhere in the budget. And there has not been one word from DEP as to the impact on those employees or the hazardous sites cleanups in the Commonwealth.

“I do not believe it is our responsibility to revisit HSCA funding in the fall. The time is past. The budget is done. The legislature has essentially approved a two-year budget with agreement for no new taxes or fees. The Governor and House of Representatives did not keep their promise to fund HSCA. It is now incumbent upon the Governor and the Department of Environmental Protection to get creative and find the funding for HSCA somewhere within the $27 billion budget we approved earlier today.”

But the issue will be revisited in the fall, since available funding will run out in October, according to the Governor’s Budget Office.

The other major environmental issue pushed to the fall was Gov. Rendell’s Energy Independent Initiative. The General Assembly agreed to hold a special session starting September 17 to consider the issue. There was also a side agreement in principle to fund a $60 million alternative energy program within the existing 2007-08 budget framework.

The Governor was successful in getting several parts of his energy proposal, including:

· House Bill 1203 (Hornaman-D-Erie) making changes to the Alternative Energy Portfolio Standards Act, consistent with the Governor’s Energy Independence Initiative, which was amended, passed by the Senate and House and signed into law by the Governor and is now Act 35; and

· House Bill 1530 (Dermody-D-Allegheny) providing for long-term electric supplier contracts, was amended to narrow the focus to help major companies in Western Pennsylvania, passed by the House and Senate signed into law by the Governor as Act 36.

Gov. Rendell won another major victory in the budget with the passage of nearly $1 billion in transit and highway/bridge funding.

The transportation funding plan was included in House Bill 1590 (Markosek-D-Allegheny) and will provide $532 million for highway and bridge repairs and $414 million annually for mass transit systems through a series of new initiatives.

The plan involves increasing the existing Turnpike tolls by 25 percent by 2009 and by 3 percent each year thereafter and tolling I-80 to generate $340 million annually to securitize bonds that would be used to provide highway and bridge construction and transit funding.

In addition, local tax options for supporting transit in Allegheny County were included: a tax of up to 10 percent on the retail sale by glass of liquor, malt and brewed beverages and/or a $2 per day rental car tax.

Other budget highlights include:

· Up to $25 million to be diverted from the Environmental Stewardship (Growing Greener) Fund to pay debt service on Growing Greener II bond issue;

· Extension of the Wild Resource Conservation tax check-off until January 1, 2010 (included in Senate Bill 97);

· $4.3 million increase in State Parks Operations funding;

· $3 million increase in gypsy moth spraying;

· $1.8 million increase in State Forests Operations funding;

· $1.4 million increase in Heritage Park Grants;

· $1 million increase in Stormwater Management funding;

· $800,000 million cut in scrap tire cleanup;

· $300,000 cut eliminating the Chesapeake Bay Education Program;

· $300,000 to fund Municipal Climate Changes Plans;

· $240,000 loss of earmark for the PA Senior Environment Corps and is now at the discretion of DEP;

· $140,000 cut to county conservation district funding; and

· $600,000 cut in Agricultural Research.

The bills implementing the budget agreement include:

· House Bill 1286 (Evans-D-Philadelphia) General Fund budget bill, now Act 8A;

· House Bill 1590 (Markosek-D-Allegheny) transportation funding for transit systems, highways and bridges;

· Senate Bill 97 (D.White-R-Indiana) Tax Code changes including increasing film production tax credit, Education Improvement Credit, creating the Resource Enhancement and Protection tax credit and making changes to the Neighborhood Tax credit;

· House Bill 1295 (Hanna-D-Clinton) Fiscal Code changes, restoring the State System of Higher Education allocation from the Keystone Recreation, Park and Conservation Fund for fiscal year 2006-07 and including other budget implementing language for fiscal year 2007-08;

· House Bill 842 (Prime Sponsor Withdrew) budget-related changes to the Education Code;

· House Bill 1287 (D.Evans-D-Philadelphia) making appropriations from the State Gaming Fund, now Act 9A;

· House Bill 1631 (D.Evans-D-Philadelphia) capital projects to be funded from the State Gaming Fund – Pennsylvania Convention Center and the Penguins Arena; and

· Senate Bill 798 (Armstrong-R-Lancaster) Capital Budget 2007-08 Itemization Act.

PA Environment Digest will publish our regular issue on July 23.

NewsClips: 2 Weeks Late, Rendell Signs $27.2 Billion Budget

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Legislature Ends Budget Impasse

State Budget Passes

Rendell Expected to Sign $27.2 Billion Budget Today

Finally A Budget in Place for PA

$27.2 Billion Budget Sent to Rendell

Finally, A Budget

New I-80 Tolls, Turnpike Hike, OK’d for Road, Transit Fixes