The FY 2015-16 state budget isn’t finished yet, but Gov. Wolf will be talking about his second set of budget recommendations on February 9. How will they be different? How will they be the same?
With the announcement late Tuesday Gov. Wolf froze another 200 vacancies at DEP bringing the total reduction of positions to over 700 since 2002-03, the budget news this week was not good.
The second strike was the PUC announcing the Act 13 impact fee will be going down by $5,000 per well which may result in decreasing income from the fee by as much as $34 million.
The third strike was a Independent Fiscal Office report saying royalty income from natural gas wells on DCNR State Forest land would decline by 40 percent in the current fiscal year.
With funding and staffing for environmental programs declining even before the budget address, the Commonwealth is still facing legally mandated actions to clean up the environment-- like 19,000 miles of polluted streams in Pennsylvania and the Chesapeake Bay Watershed cleanup.
How will Gov. Wolf’s new budget proposal address them?
Will any of the proposals have bipartisan backing in the General Assembly? Or will the budget chaos continue?
Here are 5 things to look for in Gov. Wolf’s second budget address--
1. Will The Downward Spiral Of Funding/Staff For DEP Change? A standard part of DEP Secretary John Quigley’s stump speech has been how DEP has been singled out for budget cuts over the last 8 years that resulted in the loss of 14 percent of its staff, while the average across all agencies is 6 percent.
He said at his first budget hearing-- DEP has been “hollowed out” by budget cuts.
Secretary Quigley also put funding issues right out front in the January 21 Chesapeake Bay Program reboot announcement, where he made it clear many more resources were needed if Pennsylvania was to meet its commitments to cleaning up streams and rivers in Pennsylvania.
He is not alone in expressing concerns about DEP funding and staffing.
In 2007, then DEP Secretary Katie McGinty (former Chief of Staff for Gov. Wolf) said Gov. Rendell’s budget request for her agency that year “cut through the meat and into the bone.”
In 2010, DEP Secretary John Hanger (currently Secretary of Policy for Gov. Wolf) said during his budget hearing, “now we are down to the bone or close to the bone” in terms of having the resources needed to accomplish his agency’s mission.
The budget situation for DEP is now worse, much worse.
The Pittsburgh Post-Gazette reported late Tuesday Gov. Wolf has imposed what it said was a temporary freeze on filling 200 vacant positions within the Department of Environmental Protection, including filling any of its 24 vacant positions within the Oil and Gas Program.
These new numbers mean DEP’s authorized complement has shrunk from 3,200 in 2002-03 to its current 2,495, about 705 positions-- 22 percent-- as DEP Secretary John Quigley mentioned in a video report to DEP employees last week in a way that he considered them lost.
But numbers released by the Governor’s Budget Office in December show DEP received $3.3 million more in the three General Fund line-items related to personnel costs-- $128.6 million vs. $125.3 million last year and overall DEP received a 2.4 percent increase in funding.
In his budget proposal last year, Gov. Wolf did propose to add 50 new positions for the Oil and Gas Program funded by a new natural gas severance tax, but that fell by the wayside during budget negotiations and with a downturn in the oil and gas industry.
These reductions at DEP, if they stand, are the largest since Gov. Rendell furloughed 138 DEP employees in 2009 and eliminated 120 vacant positions when John Hanger was DEP Secretary.
There were no furloughs of DEP or DCNR employees under Gov. Corbett, although vacant positions continued to be reduced at DEP.
DEP received about $164.4 million in 1994-95 from the General Fund which increased to a high of $245.6 million in 2002-03. In the 2014-15 budget, DEP’s General Fund total was $141.4 million, after bottoming out in 2012-13 at $126.8 million, about half the highwater mark in 2002-03.
In the budget Gov. Wolf signed in December, DEP received 142.6 million in General Fund money.
DEP attempted to make up for some of these cuts with over $30 million in permit review and administration fee increases and by charging more costs to special funds, but it still comes up short. And more fee increases are in the works, especially for the mining regulation programs.
The total funding deficit for environmental programs since 2002-03 is now somewhere around $2.4 billion; not counting this year because the budget isn’t final. If you want a list of the cuts and diversions of environmental funds for other purposes, just Click Here.
This dramatic rollback in support of environmental protection has occurred during a time when the responsibilities of Agriculture, DEP and DCNR have increased, not decreased. No environmental laws or programs have been repealed to match the funding cuts, nor would many advocate repealing our environmental protection laws.
But this steady erosion in support begins to raise the question of whether DEP can continue to meet federal requirements for administering its surface mining and water quality programs, among others, putting them in danger of being yanked back by the feds.
What will the Wolf Administration do in its second budget proposal to begin to change this downward slide in staff and funding? Do we really want the feds to take over our environmental programs? Should we prepare for federal domination?
(See: Analysis: State Environmental Agency Funding Hasn’t Caught Up To 2 Decades Ago; Rep. Everett: If We Don’t Meet Chesapeake Bay Cleanup Milestones, It Isn’t Pretty.)
2. Will The Next Growing Greener Proposal Focus On Restoring The Environment? The Wolf Administration was expected to unveil the next generation of the Growing Greener Program to fund a major set of environmental, energy and other initiatives as part of the Governor’s new budget proposal.
But at a bill signing event Wednesday, Gov. Wolf said in response to a question about a reboot of the Growing Greener Program, “I’m in favor of the state making an investment in the environment. We are not at the point where we have the details on that, but I am supportive of the Commonwealth making an investment just as Gov. Ridge did, as Gov. Rendell did. This would be the third installment of that.”
The January 21 Strategy Paper announcing the Chesapeake Bay cleanup program reboot, said the Administration was “obtaining additional resources for water quality improvement by participating in planning a new round of “Growing Greener” funding, which will have Bay compliance as a primary goal, potentially making available several hundred million dollars to devote to local water quality issues and ultimately Bay compliance.”
It is the worst-kept secret in Harrisburg the Administration has been meeting with environmental groups to work up a next generation Growing Greener proposal.
The original Growing Greener Program passed in 1999 during the Ridge Administration and was focused on Pennsylvania’s real environmental problems-- watershed restoration, mine reclamation, protecting critical farmland and open space, plugging abandoned wells, funding water and wastewater projects and improving state and local recreation infrastructure.
The initiative provided continuous funding to support these program, and was later expanded by a $4.25 fee on every ton of waste disposed in Pennsylvania during the Schweiker Administration.
It remains the largest single investment ever made in restoring Pennsylvania’s environment.
The second Growing Greener Program in 2004-05 by the Rendell Administration capped the original program by diverting the waste fee proceeds to pay debt service on a $625 million bond issue to be spent over 6 years. The bond won’t be paid off until FY 2028-29.
The uses of the funds expanded to include brownfields cleanup, renewable energy, Game and Fish and Boat Commission projects and economic development projects like a parking garage in Scranton. It also provided funding to counties for similar projects with little oversight on how the funds were spent. (Click Here for a summary.)
A Legislative Budget and Finance Committee review of the Growing Greener II bond issue program is available online.
In 2012, the General Assembly passed Act 13 and imposed a drilling impact fee on unconventional natural gas drillers. (Click Here for a summary.)
A portion of the funding was earmarked for the Growing Greener Program, as established in Growing Greener II, but 60 percent of the impact fee revenue was also directed to counties and local governments for purposes far beyond the original environmental purposes of the program and again with little accountability for how funds are spent.
Beyond the uses outlined in Growing Greener II, the impact fee money went to such diverse programs as housing assistance, rail freight assistance, natural gas infrastructure development, the State Fire Commissioner, highway and bridge improvements and for new grant programs at the legislatively-control Commonwealth Financing Authority.
On January 30, the Public Utility Commission announced the 2015 per well impact fee would drop by $5,000 a well, following the formula in Act 13. The resulting loss of revenue to the programs funded by the impact fee could be as high as $34 million for a total income of $189.6 million. Last year the 2014 fee generated $223.5 million.
Since the original Growing Greener Program was passed, the name has been used to cover an increasing broader group of programs, many of which have nothing to do with restoring Pennsylvania’s environment. It has also been a tool for spending money, from a bond issue, for example, on programs that should be in the regular budgets of agencies.
Will the next Growing Greener proposal, if there is one, spread money across many, many programs, some of whom have nothing to do with restoring Pennsylvania’s environment, or will it be focused on priorities that make a real impact in protecting the environment and fund things we must do, like meet the commitments to cleanup 19,000 miles of streams and the Chesapeake Bay Watershed? (Click Here to see how clean streams in your area are.)
How will it be funded? Will it be another one-time bond issue to be spent in a few years and end, or will it provide continuous funding?
This issue is still very much up in the air.
3. Investing DCNR’s Oil & Gas Fund In Conservation, Not Operations: The Independent Fiscal Office reported January 27 revenue from natural gas leases on State Forest land will decline by 38 percent in FY 2015-16 and will not recover for another 3 or 4 years. This funding is critical because DCNR has been dependent of this revenue to fund personnel and other operational costs.
In FY 2014-15 the Oil and Gas Lease Fund supported $122.6 million in operating costs and the General Fund only $14.5 million. In FY 2008-09 the General Fund support for DCNR was $113 million and Oil and Gas Lease Fund revenue $11.8 million, nearly the reverse.
Last year, Gov. Wolf proposed to begin the process of weaning DCNR off the Oil and Gas Lease Fund to pay for more administrative costs with a $21.8 million General Fund appropriation.
His proposal was included in the Republican budget passed in December and signed into law by the Governor with $48.7 million more in General Fund money for DCNR's General Government, State Parks and State Forest Operations line items.
Will there be more General Fund money to support DCNR operations this year, especially in the face of declining Oil and Gas Fund revenues?
4. Keep The Keystone, Recycling, Storage Tank And Other Environmental Funds Whole: At various times over the last 13 years, Governors and/or the Senate and House have taken money from a variety of special environmental funds to balance the state budget.
In addition to the Oil and Gas Fund and the Environmental Stewardship (Growing Greener) Fund, money has been taken out of the Keystone Recreation, Parks and Conservation Fund, Act 101 Recycling Fund, the State Timber Fund, Alternative Energy Investment Act Program and “borrowed” from the Underground Storage Tank Insurance Fund.
Gov. Wolf and the General Assembly have so far not made attempts to borrow from these special funds to balance the FY 2015-16 budget, but that budget is not done yet.
A commitment to keep these funds whole would be another positive step.
5. Will A New Severance Tax Proposal Return Drilling Revenues To Help The Environment?: There has been no appetite for a severance tax on natural gas production in the Senate and House, especially given the general decline of the industry over the last year due to market conditions. Expected revenue from any severance tax would also not bring in the kind of revenue it would have in year’s past.
Gov. Wolf’s severance tax proposal last year only had one drop of funding for protecting the environment, the overwhelming majority of the funds went to fund basic education, much to the disappointment of the environmental community.
Will the new severance tax the Governor said he would introduce this year be different?
Gov. Wolf took some steps to address shortcomings in environmental funding in his first budget which were welcomed by the environmental community. But, he got mixed results so far in the budget chaos that has been his first year..
Somewhat ironically, in last year’s “5 Things,” we said, “Yes, the state’s budget is a jumble of competing interests, pet projects and new priorities, but no other set of state programs have been cut as long or as deeply over the last 12 years as environmental programs.” (emphasis added)
Little did we realize that “jumble” would mean we don’t yet have a state budget.
Pennsylvania can do better.
Perhaps redirecting some corporate welfare, like the $60 million a year they spend to support movie productions like Zack and Miri Make A Porno, would be a good start.
The environmental community is looking at reversing what has been a dismal trend over the last 12 years with Governors and members of the Senate and House of both political parties.
We are still hopeful February 9 bares at least some fruit or at the very, very least doesn’t hurt the environment any more.
To borrow a phrase, “You can’t keep taking resources away from this most important function and get to a good outcome.”
Click Here to watch the Governor’s budget address live starting at 11:30.
If you want more background on the budget from this week, Click Here.
If you want more background on the budget from this week, Click Here.
Related Stories:Analysis: PA Isn’t Cleaning Up Our Rivers, Abandoned Mines Quickly Enough