Updated2: Wolf Proposes Level Funding For DEP, DCNR, $325M Alternative Energy Bond

Gov. Tom Wolf proposed his first budget Tuesday suggesting part of a new natural gas severance tax be used to fund a $325 million alternative energy bond initiative.  An additional $10 million from the severance tax would go to the Department of Environmental Protection for Oil and Gas Program enforcement and a new abandoned oil and gas well plugging initiative.
There is also mention of a new $500 million revenue bond issued through the PA Infrastructure Investment Authority for drinking water and wastewater system improvements.

Although administrative funding for both DEP and DCNR was essentially flat compared to last year, both agencies would see a complement increase for the first time in several years-- 50 new positions at  DEP for Oil and Gas Program enforcement and 20 new positions at DCNR earmarked for Point State Park and Washington Crossing State Park.

DCNR’s budget does include a step toward weaning the agency off of the Oil and Gas Fund to cover administration costs-- a $17.1 million increase in General Fund monies to support State Park and Forestry Operations.  

The $2.2 million Heritage Parks Program was zeroed out, but $2.2 million was included to fund Washington Crossing State Park operations.

The most significant changes come from reductions in transfers to the agencies from the Environmental Stewardship (Growing Greener) and Keystone Recreation, Parks and Conservation Funds.

DEP is proposed to receive $39.6 million less than last year in transfers from the Environmental Stewardship Fund and DCNR would receive $20.8 million less in transfers this year from Fund, although the actual spend amounts are close to the current fiscal year--

-- DEP Watershed Restoration $25.4 million ($24.6M spent this year)

-- DEP Abandoned Mine Reclamation - zeroed out, (zero spent this year)

-- DCNR Community Conservation Grants $4.1 million, ($4.2M spent this year)

-- DCNR Park and Forest Facilities $11.8 million, ($11.2M spent this year)

-- DCNR Natural Diversity Grants $366,000, $689,000 less ($366,000 spent this year)

-- Debt Service $39.9 million, $2.2 million less than last year (which is good)

-- Agricultural Conservation Easement $10 million, $300,000 more than last year

-- PennVEST Water and Sewer $16 million, $400,000 more

DEP’s  Hazardous Sites Cleanup Fund $8.6 million would receive $5 million more from the Marcellus Legacy Fund (Act 13) than last year.

DCNR would receive $73.2 million less in transfers from the Keystone Recreation, Park and Conservation Fund than last year, although the actual spend amounts in the budget documents are about the same as the current year--

-- Park & Forest Facility Rehabilitation - $23.5 million  ($11.8M spent this year)

-- Grants For Local Recreation - $19.6 millon  ($19.6M spent this year)

-- Grants To Land Trusts - $7.4 million  ($7.8M spent this year)

New Alternative Energy Initiative

The proposed budget includes a $675 million bond program, supported by revenue from the proposed natural gas severance tax, to invest in economic development initiatives, including a $325 million Alternative Energy Initiative that has these major components--

--  $30 million for Combined Heat and Power (Cogeneration)

-- $20 million for Wind Power

--  $20 million for Green Agriculture

-- $30 million for the Pennsylvania Energy Development Authority

-- $25 million for “Last Mile” Natural Gas Distribution Line Development

-- $50 million for PA Sunshine - Solar Investment

-- $50 million for Energy Efficiency

-- $100 million for Technology Investment (Budget In Brief, page 10)

 New PennVEST Water, Sewer Bond

In the details of Gov. Wolf’s budget proposal there is a provision for issuing $500 million in revenue bonds through the PA Infrastructure Investment Authority to address deteriorating municipal water and sewer systems without, a follow-up explanation said, the need for more revenues.  This would be a one-shot infusion of money for infrastructure improvement.

Additional Severance Tax/Impact Fee Details 
In a budget briefing held by Acting Secretary of DEP John Quigley and Acting DCNR Secretary Cindy Dunn, Quigley clarified it was his understanding the environmental protection programs funded under the Act 13 drilling impact fees would continue to be funded by the impact fee and not the new proposed severance tax.

As previously reported, the existing Act 13 impact fee would also fund the monies now given to local communities.

Marcellus Shale Health Registry

$100,000 has been included in the Department of Health proposed budget to create a registry of health concerns and clinical data of residents located in proximity to geographic areas where natural gas activities are underway. The registry funding will also allow for further analyses by the department's epidemiologists regarding potential health impacts of Shale drilling.

Environmental Funding Priorities

Of the five environmental funding priorities discussed in last week’s PA Environment Digest, Gov. Wolf’s proposal

1. Environmental Funding In The Severance Tax: $10 million was included for DEP in the proposal.  More significantly, Acting DEP Secretary John Quigley said during a budget briefing all the environmental programs funded by the Act 13 drilling impact fee would remain in tact.

2. Funding To Meet Pennsylvania’s Watershed Cleanup Commitments: There was no proposal to address the 19,761 miles of polluted streams in Pennsylvania, nor a proposal on how the Commonwealth will meet its 2017 Chesapeake Bay Cleanup commitments.  Acting DEP Secretary Quigley said during the briefing they know where they are and what commitments they have, but have not yet developed a plan to get there. There is a proposal for a new $500 million PennVEST bond issue for drinking water and wastewater systems which is good, but it does not address Pennsylvania's most significant water quality problems: abandoned mine lands, agricultural runoff and stormwater management, at least in the details seen so far.

3. Investing DCNR’s Oil and Gas Fund On Conservation, Not Operations: The proposed budget takes a step in weaning the agency off Oil and Gas Fund revenues for administrative costs, with an increase of $17.4 million in General Fund monies.

4. Begin Restoring Staffing Levels At DEP, In Particular Water Programs: 50 more positions are proposed to be added to DEP for the Oil and Gas Programs, but not in the Water Quality Programs.

5. Keep The Keystone, Recycling, Storage Tank And Other Environmental Funds Whole: The Governor’s Budget Office documents show no transfers from these special funds to the General Fund that were not previously authorized.  In some cases, as noted above, the agencies will be getting less funding from some special funds, but the spend numbers are about the same for each agency.

Click Here for a copy of the detailed budget documents.  Click Here to read the full budget address.
PA Legislative Services has made available video of the DEP budget briefing to media by Acting Secretary John Quigley and the DCNR briefing by Acting Secretary Cindy Dunn.

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