Saturday, March 28, 2020

PA Capitol Report: Historic Week Responding To A Historic Crisis

The Senate and House made history this week by having members vote for the first time from their district offices and many from their homes proving the General Assembly, which traces its roots back to the first Assembly summoned by William Penn in December 1682, could still function in a crisis where social distancing restricts in-person meetings.
Leadership in both the House and Senate said they are committed to transparency in their legislative actions and noted their intent is to use remote voting on issues related to responding to the coronavirus crisis.
The Senate and House passed and Gov. Wolf signed legislation last week to--
-- Provide $50 Million For Medical Equipment: House Bill 1232 provides up to $50 million in additional funding, if federal funding is inadequate, to healthcare facilities to purchase medical supplies and equipment, extends the deadline for certain state and local income tax payments and filings to July 15 and extends temporary regulations related to Pennsylvania’s medical cannabis industry until November 2021.
COVID-19 Working Capital Access Program. This $50 million is in addition to the $60 million in new funding provided last week to help small businesses impacted by the coronavirus through a new program under the Pennsylvania Industrial Development Authority’s COVID-19 Working Capital Access Program (CWCA) which began accepting applications this week from businesses with 100 or fewer full-time employees.  
SBA’s Economic Injury Disaster Loans are also available for up to $2 million in assistance and can provide economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. 
-- Change Primary Date: Senate Bill 422 postpones Pennsylvania’s primary election from April 28 to June 2, gives county election officials authority to close, relocate or consolidate polling places due to the potential shortage of available volunteers and venues, and allows county election officials to begin processing mail-in and absentee ballots earlier to ensure election results can be reported earlier.
The new deadline for registering for the Primary is May 18 and the last day to sign up for a mail-in ballot is May 26.
-- Waive Mandated School Days: Senate Bill 751 changes the School Code to temporarily waive a number of mandates on schools that cannot be fulfilled under the current circumstances, such as the requirement that all public schools must be open at least 180 days a year.  [These changes largely ratify emergency measures put in place by Gov. Wolf.] 
-- Change Unemployment Compensation: House Bill 68 temporarily eases eligibility requirements and access to unemployment compensation for workers who have been directly impacted by COVID-19, including waiving the one-week waiting period for all claimants during the governor’s disaster declaration. Job search and registration requirements for claimants would also be waived.  [These changes largely ratify emergency measures put in place by Gov. Wolf.] 
  Veto Override?
The Senate and House may be tempted to stray from their “intent” to only vote on issues related to the coronavirus as a result of Gov. Wolf’s veto of House Bill 1100 that would give a taxpayer-funded subsidy to manufacturers using natural gas to make fertilizer and other products.
Sen. John Yudichak (I-Luzerne) told Pennsylvania Capital-Star “We will rally as a Commonwealth and beat back the coronavirus pandemic, and when we do it will be time to get Pennsylvanians back to work by overriding Governor Wolf’s veto.”  Read more here.
The bill emulates the taxpayer-funded subsidies given to the Shell ethane plant in Beaver County which will provide an estimated 600 permanent jobs when completed.  Legislation passed in 2011 provided Shell up to an estimated $66 million a year in tax credits for building the plant in Pennsylvania.
Shell found the site and optioned the land in March 2012 and site development and construction, which began in earnest in November 2017, is continuing today.  On March 18 Shell shut down construction of the site due to coronavirus concerns.
Revenues Dropping
There is no doubt the shut down of non-life-sustaining businesses, stay at home orders now covering 22 Pennsylvania counties and closing casinos and state liquor stores will have a significant negative impact on state and local revenues.
This at a time when people are applying for unemployment-- 650,000 from March 13 to March 25 alone-- and other public assistance programs in record numbers.
On March 23, Gov. Wolf imposed a freeze on state hiring and nonessential purchases unrelated to the coronavirus response with three months left in the fiscal year.  Read more here.
On March 29, Gov. Wolf took action to layoff about 2,500 part-time and seasonal state employees and interns in all agencies in response to worsening state revenues.  PennDOT and the Department of Revenue were immediately affected and other agencies, like DCNR, could be as well. More details when available. Read more here.
One immediate example is PennDOT highway and transportation funding.
On March 26, IHS Market, a global business analytical firm, said its analysis shows demand for gasoline in the United States could fall by more than 50 percent as a result of social isolation measures adopted by state and federal governments.
They said the size of the decline will be much greater than the impact of the 2008 recession and could be further protracted depending on how effective social distancing measures are at controlling the spread of the COVID-19 virus.
This will result in a significant hit to state highway and transportation revenues because Pennsylvania depends on per gallon gasoline taxes.
PennDOT was already facing a $2.5 billion annual shortfall to adequately fund interstate highway and bridge needs in addition to a $1.2 billion public transit funding deficit.  Read more here.
In February, PennDOT announced it would be forced to shift $3.5 billion in funding from local road repairs to the interstate highway system to meet its federal obligations. Read more here.
State lottery sales were starting to drop in March as a result of business closures and the big multi-state lotteries like Powerball and Mega Millions are cutting this size of their jackpots in the face of sales drop off.  BTW, the odds of winning are still the same-- long shot. Lottery officials are pushing their online games as an alternative. Read more here.
The state lottery generated about $1 billion in revenue in 2019, with about 25 percent going to programs that benefit older Pennsylvanians.
The state-owned university system is also expected to take a $100 million hit because of refunds for student room and board payments.  Read more here.
Pushing the tax filing and payment dates back to July 15 will also mean a short-term cash-flow squeeze on the state because April is traditionally the biggest month in terms of revenue collections. Read more here.
When the Senate and House wrapped up budget hearings in early March, one of the biggest “surprises” was medical assistance costs in the current fiscal year were running ahead of estimates by not $500 million, but $800 million.  
Other programs were also running ahead of estimates by even more, meaning there is a structure deficit in FY 2019-20 of perhaps as much as $1.4 billion.  Meaning, those bills have to be paid before the new fiscal year even begins. Read more here.
Of course, the one place there is a $172 million surplus is in the operating accounts of the Senate and House. Maybe that could be put to good use for taxpayers, instead of sitting in the Senate and House bank accounts.
In short, the state and local revenue picture is ugly, uglier than after the 2008 recession and the recession following the September 11 attacks and states are already warning the emergency funding in the latest federal stimulus package is not enough.  Read more here.
The General Assembly and Governors have been jerry-rigging state budgets for years that kept transferring money from one pocket to another or with one-time gimmicks, deliberately underestimating spending for programs like medical assistance, relying on expanded gambling and liquor sales to bring in more money and borrowing huge amounts of money-- $1.5 billion in 2017 alone-- to make the state budget balance.
This is going to be a very rough ride indeed and even the House and Senate need to sacrifice.  Read more here.
What’s Next?
The House is on a 12-hour call of the House Speaker, but is scheduled to be back in voting session on April 6.
The Senate recessed and is at the call of the President Pro Tempore.  Its session schedule called for a return to voting session on April 6, but that schedule is up in the air.
[Posted: March 28, 2020]  PA Environment Digest

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