Major Environmental Priorities Not Addressed In FY 2019-20 State Budget, Shell Game Continues

The Senate and House finalized all the pieces of the FY 2019-20 state budget including the Fiscal Code bill, the Tax Code bill, the Administrative Code bill and were all signed by the Governor--

-- General Fund: House Bill 790.  Click Here for available budget documents. 

-- Fiscal Code: Senate Bill 712. Click Here for a summary.

--Tax Code: House Bill 262. Click Here for a summary.

-- Administrative Code: House Bill 1461.  Click Here for a summary.

The Big Picture

-- General Transfer Authorization To DEP/DCNR: The Fiscal Code bill was amended (A02603) with language saying the Secretary of the Budget is authorized to take up to $45 million from any other fund under the Governor’s jurisdiction and transfer the money to “augment the operations” of DEP and/or DCNR.  Operations generally means administrative costs.

-- “New” Water/Wastewater Funding: The amended Fiscal Code bill includes $83 million in funds for water and sewer grants administered by the Commonwealth Financing Authority.  The monies are pulled from 5 other non-environmental special funds for $59 million for small water and sewer projects of $30,000 to $500,000 and $24 million for the existing H20 water/wastewater program.

-- Coal Refuse Reclamation Tax Credit Increased: The Tax Code bill increases the Coal Refuse Reclamation Tax Credit to $20 million annually from $10 million to subsidize coal waste-to-energy electricity generation plants and extending the tax credit for the next 17 years from 2026 to 2036. (page 32).

-- Expanded REAP Farm Conservation Tax Credit: The Tax Code bill includes a $3 million increase in Resource Enhancement and Protection Farm Conservation Tax Credit Program targeted to the Pennsylvania portion of the Chesapeake Bay Watershed.  It also makes other changes to the REAP Program to expand eligibility and total credits available to farmers and third party sponsors of projects.

-- Changes To PIPE Program: The Pipeline Investment Grant Program at the Commonwealth Financing Authority was changed to allow funding of large residential conversion projects and combined heat and power applications and the amount of funding applicants can get is increased to $1.5 million from $1 million.

-- Local Environmental, Recreation Project Funding: The Fiscal Code bill cuts funding for community-based environmental resources, mine reclamation and recreation projects by about $16 million from the Environmental Stewardship (Growing Greener) Fund, once all the transfers are taken into account.

-- Permanent Transfers To Fund DEP/DCNR Operating Costs: The Fiscal Code bill takes money out of the Environmental Stewardship ($16.045 million) and Recycling ($10 million) funds to pay for the day-to-day operating costs of the Department of Environmental Protection and these line items formerly paid for by the General Fund--

-- $2.5 million in support for county conservation districts; and

-- $873,000 in costs for the Delaware and Susquehanna River Basin Commission, Interstate Commission on the Potomac River, Interstate Chesapeake Bay Commission, Ohio River Valley Water Sanitation Commission, Delaware River Master.

In addition, $2.25 million from the Environmental Stewardship Fund is transferred to pay for DCNR’s Heritage Parks Program when it used to come out of the General Fund. 

The Fiscal Code bill includes a permanent authorization to transfer monies from the Recycling and Environmental Stewardship funds at any point in the future to pay operating costs.

These changes make DEP’s and now DCNR’s budget even more dependent on fees to run the agency since both the Recycling and Environmental Stewardship funds are supported by fees on municipal waste disposed in Pennsylvania, rather than general tax money.

FYI. The General Fund appropriations for DEP in FY 2019-20 will be $135.147 million.  In the FY 1994-95 General Fund budget, DEP received $165.6 million. The General Fund appropriation for DEP in FY 2002-03 was $219.943 million.

-- Growing Greener 2 Bond Debt Service?: While the commitment of legislators is to pay the debt service for the Growing Greener 2 bond issue from the General Fund rather than the Environmental Stewardship Fund, the actual language in the Fiscal Code bill only has a one-time transfer of $20 million from the General Fund to the Environment Stewardship fund.  The big budget book from February says $26 million is needed to pay the debt service in the new fiscal year. The bill also does not repeal the language saying the Environmental Stewardship Fund will pay the debt service.

-- Hazardous Sites Cleanup: $15 million from DCNR's Oil & Gas Lease Fund to Marcellus Legacy Fund to DEP's Hazardous Sites Cleanup Fund (same as year’s past) 

-- No Transfer From Marcellus Legacy Fund To ESF: The Fiscal Code bill language also confirms $20 million will not be transferred to the Environmental Stewardship Fund from the Marcellus Legacy Fund.

-- Bigger Oil & Gas Lease Fund Transfer: The General Fund Budget bill increases the amount transferred from the Oil and Gas Lease Fund to $69.774 million to pay for DCNR operating expenses-- $37.786 million for General Government Operations, $17.706 million State Park Operations, $14.282 million for State Forest Operations.  

This means $69.774 million will not be available to pay for maintenance and conservation projects in State Parks and Forests.

These transfers were declared unconstitutional by the PA Supreme Court in 2017.

-- Temporary Ban On Law/Ordinances Affecting Single Use Plastics: Directing the Legislative Budget and Finance Committee and the Independent Fiscal Office to evaluate the economic and environmental impact of any regulation impacting single-use plastics, reusable plastics, auxiliary containers, wrappings or polystyrene containers and submit their reports to the General Assembly by December 31, 2020. Until the reports are submitted the General Assembly and a local governmental body may not pass a law, regulation or ordinance imposing a tax, fee or other restrictions on single-use plastics, reusable plastics, auxiliary containers, wrappings or polystyrene containers

Scorecard So Far

So the scorecard so far for the environment looks like this--

-- NOT ADDRESSED - River & Stream Cleanup: $257 million needed this year to implement the PA Chesapeake Bay Watershed Implementation Plan.  Failure to address this funding issue will push back the achievement of 2025 nutrient reduction goals by 19 years to 2044.

$83 million in water and sewer funding was made available to the Commonwealth Financing Authority, but the need is for funding for local agricultural and stormwater projects and that money was cut from the Environmental Stewardship Fund.

Some additional funding may be made available for farm conservation under Senate Bill 634.

-- NOT ADDRESSED - State Park & Forest Maintenance: $100 million needed to address over $1 billion in backlogged State Park and Forest maintenance.  Actually, more money was taken away from the Oil and Gas Lease Fund to pay operating expenses instead of maintenance and improvement projects.

The Details

For those interested in the details, here they are based on the amendments added to the bills so far--

Fiscal Code - Fund Transfers -- Senate Bill 712, A02588

-- General Transfer Authorization To DEP/DCNR: The Fiscal Code bill was amended again (A02603) with language saying the Secretary of the Budget is authorized to take up to $45 million from any other fund under the Governor’s jurisdiction and transfer the money to “augment the operations” of DEP and/or DCNR.  Operations generally means administrative costs.

-- Environmental Stewardship Fund - DEP/DCNR Operations: A blanket authorization to make transfers from the Environmental Stewardship Fund to DEP ($16,045,000 this year for DEP operations and various line items) and DCNR ($2.25 million Heritage Parks Program) in the annual general appropriation act. Plus permanent authorization to take operating costs from this Fund. (page 15)

-- Recycling Fund - DEP Operations: A blanket authorization to make transfers from the Recycling Fund to the Department of Environmental Protection in the annual general appropriation act ($10 million this year for DEP operations). Plus permanent authorization to take operating costs from this Fund.  (page 16)

-- Hazardous Sites Cleanup: $15 million from DCNR's Oil & Gas Lease Fund to Marcellus Legacy Fund to DEP's Hazardous Sites Cleanup Fund (same as year’s past)  (page 4)

-- Growing Greener 2 Bond Debt Service?: One time transfer of $20 million from Personal Income Tax income to Environmental Stewardship Fund.  The commitment was to pay Growing Greener II bond issue debt service from here on out of the General Fund, but this is only a one time transfer and the big budget book said $26 million was needed this year. (page 39)

-- Marcellus Legacy Fund: No amount transferred from Marcellus Legacy Fund to Environmental Stewardship Fund for FY 2019-20 (page 3)

General Fund Budget Bill - Fund Transfers II - House Bill 790

-- $69.774 million to DCNR-- $37.786 million for General Government Operations, $17.706 million State Park Operations, $14.282 million for State Forest Operations (page 341)

Click Here for a copy of the 2019-20 Budget Spreadsheet.  Click Here for other available budget documents.

Fiscal Code - Water & Wastewater Program Funding -- Senate Bill 712, A02588

-- Small Water & Sewer Projects: $59 million transfer from 4 different special funds [First Industries Program, Building PA Program, Water Supply & Wastewater Infrastructure Program, previous water project account] to the Commonwealth Financing Authority for small water and sewer projects of $30,000 to $500,000 with no match requirement (page 6)

-- H2O Water/Wastewater Program: $24 million transfer from the New PA Venture Capital Program to Commonwealth Financing Authority for H2O water/wastewater program (page 40)

Fiscal Code - Miscellaneous Provisions - Senate Bill 712, A02588

-- Changes To PIPE Program: The Pipeline Investment Grant  Program at Commonwealth Financing Authority was changed to allow funding of large residential conversion projects and combined heat and power applications and the amount of funding applicants can get is increased to $1.5 million from $1 million (page 14).

-- Organic Farming/Other Funding: $5 million organic transition, processing and marketing grants to Commonwealth Financing Authority (page 39)

-- Tick Testing: $500,000 for free tick testing by the State System of Higher Education (page 29)

-- Temporary Ban On Law/Ordinances Affecting Single Use Plastics: Directing the Legislative Budget and Finance Committee and the Independent Fiscal Office to evaluate the economic and environmental impact of any regulation impacting single-use plastics, reusable plastics, auxiliary containers, wrappings or polystyrene containers and submit their reports to the General Assembly by December 31, 2020. Until the reports are submitted the General Assembly and a local governmental body may not pass a law, regulation or ordinance imposing a tax, fee or other restrictions on single-use plastics, reusable plastics, auxiliary containers, wrappings or polystyrene containers (page 17)

-- Eliminating the Joint Legislative Air and Water Pollution Control and Conservation Committee by July 1, 2021 (page 21)

Tax Code Changes - House Bill 262, A02596

-- Coal Refuse Reclamation Tax Credit Increased: The Tax Code bill increases the Coal Refuse Reclamation Tax Credit to $20 million annually from $10 million to subsidize coal waste-to-energy electricity generation plants and extending the tax credit for the next 17 years from 2026 to 2036. (page 32).

-- REAP Farm Conservation Tax Credit: $3 million increase in Resource Enhancement and Protection Farm Conservation Tax Credit Program targeted to the Pennsylvania portion of the Chesapeake Bay Watershed (page 27)

-- Raising limit on tax credits available from $150,000 to $250,000 in any 7-year period (page 23)

-- Clarifying that a business, individual or individuals filing jointly are eligible for the tax credit program (page 23)

-- State Conservation Commission is authorized to set annual limits on third party sponsors of projects on farms to ensure fair and equitable distribution of tax credits (page 24)

-- Other Program changes to the REAP Tax Credit--

   -- Tax credit available for up to 90 percent [instead of 75 percent] for high priority best management practices like riparian forest buffers and their maintenance, livestock exclusions, stream crossings, cover crops, soil health and other practices determined by the State Conservation Commission (page 26)

   -- Tax Credit available for up to 50 percent [instead of 25 percent] for remediation of legacy sediments (page 25)

   -- Annual maintenance costs for best management practices like cover corps, buffers and other annual practices can be included in the costs eligible for the tax credit (page 26)

Did You Follow All That?

So, did you follow all those single and double fund transfers that make present day environmental funding one of the most complicated shell games around.

Related Articles This Week:

Growing Greener Coalition: Cuts Made To Environmental Stewardship (Growing Greener) Funding Could Have Planted 32,000 Acres of Stream Buffers
CBF: PA Elected Leaders Failed To Show The Will, Leadership To Restore Pennsylvania's Rivers And Streams

Column: Desire For Riches Often Comes At The Cost Of Natural Resources

Related Articles:

CBF: Pennsylvania Has Failed To Uphold Its Promise To Reduce Pollution Going To The Chesapeake Bay

Bay Journal: 40 Percent Of All Pennsylvania Rivers, Streams Violate Water Quality Standards