2008 Budget Hearings
Highlights and Summaries
Monday, February 25, 2008
Hearings listed alphabetically here
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Auditor General Auditor General -
Summary Senate Appropriations Committee Chairman Senator Armstrong, 13th District, asked Auditor General Jack Wagner about his office’s performance audit of the Pennsylvania Higher Education Assistance Agency. The Auditor General said an interim report was issued outlining previously undisclosed instances of questionable spending. Asked about funding for computer improvements, which the office requests but the Governor removes, the Auditor General noted that the Legislature has always restored the funding and that it’s important to maintaining security. Senator Pat Browne, 16th District, noted the Auditor General’s Office conducted a performance audit of the Department of Community and Economic Development’s Opportunity Grant program, and urged the office to undertake performance audits of all state economic development grant and loan programs. The senator said follow-up audits should be standard procedure to determine if the financial assistance has resulted in the promised job creation. Senator John Rafferty, 44th District, pointed out that the Administration is proposing new grant programs, such as grants to promote alternative energy, and asked for input on ways to implement spending controls and accountability on the new initiatives. The Auditor General said limits on grant money should be implemented through legislation, including the return of state aid if grant requirements are not met. Questioned about the fiscal stability of municipal pensions across Pennsylvania, the Auditor General told Senator Rafferty the majority are sound, but many older, urban communities’ systems are underfunded, adding the state should consider consolidating local pension plans. The last audit of the Pennsylvania Turnpike was in 2003, and Senator John Gordner, 27th District, asked when the next one was due. The Auditor General said the latest audit is underway, but that it is focusing on road safety, and began before discussions to lease the Turnpike to a private company were undertaken. Senator Gordner noted that state law requires a financial as well as safety review, and received assurance that fiscal matters will be included in Turnpike audits. In another matter, the Auditor General told Senator Gordner that his office’s Taxpayer Advocate Hotline receives thousands of calls per year, with the majority of cases being referred to various state agencies. If a call is related to an audit, his office will ask for a follow-up regarding how it was resolved. Senator Roger Madigan, 23rd District, asked about the number and nature of the office’s audits. The Auditor General said the office performs about 5,000 per year, with 290 currently underway. Many, such as audits of volunteer firefighter relief associations, take weeks or months. Larger ones, such as PHEAA and large pensions can take more than a year. Asked about audits of the new Pennsylvania Gaming Control Board, the Auditor General said the process is still gearing up, with audits of the board’s hiring practices and diversity programs, adding that the Department of Revenue can do a better job of tracking the movement of dollars from casinos to the state. Senator Pat Vance, 31st District, asked about audits of state-owned hospitals. The Auditor General said they are regularly audited, covering general hospitals and specialty facilities. Asked if any of the hospitals are in dire financial need, the Auditor General told Senator Vance that the specialty hospitals are generally sound, but that he would have to report back on the others. Senator Stewart Greenleaf, 12th District, suggested performance audits should include recommendations as to whether programs and agencies should be sunsetted or pared down if they have outlived their usefulness. The senator asked about audits of the weights and measures bureau within the Department of Agriculture and noted he has a bill pending requiring gas station inspections to include measuring octane levels. The Auditor General said a performance audit of thousands of stations found that one in five had a pump with a missing or outdated weights and measures sticker, and said that Pennsylvania is one of four states that does not require testing of gas quality, such as octane levels. On the issue of the Department of Corrections Inmate Employment Program, the Auditor General told Senator Greenleaf that a performance audit found the programs could be more innovative, with more productive programs aimed at reducing recidivism. Senator Jake Corman, 34th District, noted that the office will pay five more employees out of the General Fund in 2008-09, plus union raises negotiated by the Administration, and wondered if the Auditor General and the Administration had a plan to absorb the new costs without taking resources from audits. The Auditor General said no plan had been discussed, but that the office will try to absorb the new costs by using technology to reduce the time it takes to perform audits. Senator Corman said he was concerned that the new spending and new programs proposed by the Administration will require even more audits at the same time personnel costs are increasing, and that it’s “tying your hands a little bit.” The Auditor General said it was true, to an extent, but that he will try to do more with less.
Historical & Museum Commission -
Summary Senator Browne, concerned with the commission’s priorities, noted an increase in tourism promotion but a marked decline in Museum Assistance Grants – which typically benefit relatively small, local historical societies. Senator Brown asked, “Was this your recommendation to the Governor?” Barbara Franco, PHMC Executive Director, noted it was because PHMC received no requests from “non-preferred” institutions for the upcoming budget year. Senator Rafferty questioned why some of the seven specifically named historical and scientific institutions received significantly less funding than the others. The Director indicated that those receiving less (i.e., Whittaker Center, Everhart and Mercer Museum) were classified as non-preferred institutions, gaining a place on the PHMC list as the result of direct or “legislative” initiative rather than direct solicitation (to the museum). Senator Rafferty urged the Director to formulate a “more efficient spending” plan - appropriating funds from one pot rather than dealing with numerous transactions, with supervision from one knowledgeable person, to ensure a fair playing field for the “preferred” and “non-preferred” museums’ funding competition. Senator Gordner asked how long it takes PHMC to respond to requests to local associations or museums. Senator Gordner next asked the Director about upgrades in the Museum and Archives. Senator Vance applauded the planned improvements to the Museum and Archives. Regarding the current budget, she queried the Director if she was confident that she had enough operating revenue. The Director maintained that only small capital and maintenance projects will suffer. Senator Greenleaf asked how the PHMC generates interest in history. The Director replied by naming six current and planned projects. Senator Corman took issue with two zeroed-out appropriations, amounting to $1.7 million, and the flat lining of the balance of the items by the Governor. The Senator asked the Director if she was really “comfortable” with this budget. Senator Corman reminded the Director that regardless of an initiative being legislative or administrative in origin, “it’s our budget,” and that it should be accurate. Concerning disparities between non-preferred and “politically” preferred distributions, the Senator said all should have a fair shot at state grants and subsidies. Senate Appropriations Committee Chairman Senator Armstrong asked the Director if the PHMC fought for the preservation of 19 historical buildings in Philadelphia during the planning of the Philadelphia Convention Center. She noted the Commission did not. Senator Armstrong closed the hearing by noting the need for a close examination of museum grants and subsidies. Department of State
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Summary The state’s new Lobbyist Disclosure Law, the effectiveness of new voting machines and the processing of overseas military ballots were the main focus of testimony during the Department of State’s hearing before the Senate Appropriations Committee. Appropriations Committee Chairman Senator Armstrong wanted assurances that the current complement of five employees was enough to implement the new Lobbyist Disclosure Law. Noting that the registration fee is $100 every other year, he asked Department of State Secretary Pedro Cortes exactly how much money has been generated. Secretary Cortes said approximately $486,771 was raised in fees in fiscal year 2006-2007. Senator Gordner echoed that concern, asking for a more detailed breakdown of fees collected and expenditures. “We want to make sure that you are enforcing the provisions of that law and that you have the resources to do it, particularly since there will be a drop-off every other year,” Senator Gordner said. Secretary Cortes called the enforcement of the law a “labor intensive operation” and said the fees collected may not be sufficient to cover total costs. Saying that he had “more of a plea than a question,” Senator Corman wanted assurances that the Department would not change its stance and force counties to purchase new voting machines, when the ones they have currently meet federal standards. “There are still groups out there that are adamantly opposed to these machines, even though they have worked well,” Senator Corman said. “Many counties went to a lot of trouble to purchase them and now are being asked to buy all new machines, just because some groups don’t have the same confidence that you do.” Secretary Cortes agreed with Senator Corman, noting that the machines are effective, and that the cost to move to other methods could be up to $100 million. On a related issue, Senator Browne cited a “substantial breakdown” within election results at the Northampton County election bureau, and asked the Department to determine how future mistakes can be avoided. Secretary Cortez said that most of the problems were caused by human error and did not impact on any races because the margins were relatively wide. Several senators raised concerns about the process for providing absentee ballots to military personnel and others overseas. “My concern isn’t the intent but in the execution, based on mailing timeframes,” Senator John Pippy, 37th District, told Secretary Cortes. “The problem is getting them to folks overseas in a timely manner and getting them back. Why is it so important to mail a ballot? Why can’t we use email?” Senator Pippy said such an effort could be attempted on a pilot and serve as a model for others – saving money and improving efficiency. Senator James J. Rhoades, 29th District, concurred, saying he wanted to “add my voice to the proper processing for our military personnel.” Senator Rafferty also questioned Pennsylvania’s procedure for processing overseas ballots. “Pennsylvania may be stricter than other states, if that is the case please let me know so we can make changes for you and certainly for military personnel overseas,” he told Secretary Cortes. Noting that many poll workers must work up to 15 hours on Election Day, Senator Rafferty also asked for recommendations to ease burden on judges of elections and minority and majority inspectors. “We have to work out something logistically to make sure we have people at these polls, and that they have some relief,” he said – pointing out that many workers in large assisted living facilities are asking for additional help. Senator Bob Regola, 39th District, wanted to know why the Administration is opposed to strengthening its policies on requiring voter ID, particularly for first time voters. Secretary Cortes said the Department is working on educating voters and poll workers. Several senators questioned the Administration’s recent decision extending the deadline for filing petitions because of inclement weather. While she said she did not oppose the extension, Senator Mary Jo White, 21st District, questioned how useful the move was when it wasn’t announced until about an hour before the deadline. Senator White also urged the Department to consider allowing counties to change to a system in which voters could vote by mail. “I ask this because in the rural areas we have serious transportation issues and weather issues as well,” she said. “It seems that allowing people to mail in their ballots would make sense.” Budget Secretary -
Summary Appropriations Committee Chairman Senator Armstrong opened the budget hearing on the Office of the Budget by questioning Budget Secretary Michael Masch about the legality of tapping the Rainy Ray Fund to provide $400 “tax refund” payments to households – many of which are exempted from paying state income taxes. “I was always under the impression that the Rainy Day Fund was for a ‘rainy day,’ not when you want to start a new program,” Senator Armstrong said. Senator Vance asked if the Administration had received a legal opinion as to whether the “rebate” would be subject to federal taxes. “Wouldn’t it be easy to write a letter to the IRS to see if it is taxable?” Senator Armstrong also questioned the Administration’s methods for providing non-preferred appropriations, funding for higher education and the film industry tax credit program. Citing a proposed $10 million allocation for police programs in Philadelphia, Senator Armstrong said he would like to see some of that money provided to third-class cities across the Commonwealth. Senator Browne, Chairman of the Senate Finance Committee, which oversees the state’s tax programs, raised several “general concerns” about the Administration’s revenue projections. Specifically, he noted a projected decrease in Corporate Net Income Tax revenues, while revenues for other business taxes are projected to increase. Senator Browne also questioned the projections for the Personal Income Tax. Noting that the Administration expects a decrease in cigarette tax revenue, Senator Browne raised concerns about the Governor’s proposal to tap that money for his proposed universal health care scheme. “I have concerns about the validity of that if you are using a shrinking revenue source for a new expenditure. How does that make sense?” Senator Browne asked. Senator Corman also discussed the Governor’s proposed universal health care scheme. Currently, $14 billion in tax dollars (including $7.2 billion in state money) already goes for health care in Pennsylvania. “Taxpayers in Pennsylvania are already making a significant investment in health care,” Senator Corman said. He added that nearly half of the individuals who would be under the Governor’s universal health care scheme are in the 18-34 year-old age group – which includes individuals who aren’t in the workforce, are between jobs, are in school, or just uninterested in paying the costs of buying health care coverage. Senator Vance questioned the Administration’s actions to shift programs from the General Fund to the Lottery Fund, especially with the Lottery Fund experiencing decreasing revenues. Senator Rafferty commented on the MCARE abatement program, noting that the Senate has passed legislation to extend the program. He asked Secretary Masch what would take place once the March 31 deadline for the deferral of payments by medical practitioners arrives. Senator Rafferty also asked if those practitioners would receive a rebate once the impasse is resolved. Obviously frustrated by an elaborate, yet non-responsive answer by Secretary Masch, Senator Rafferty asked, “You know how Harrisburg works. Between now and March 31 I don’t see a bill getting passed by both chambers and on the Governor’s desk. What is the fallback position?” Senator Regola stated that General Fund expenses under Governor Rendell have outpaced increases in personal income. He asked Secretary Masch, “How difficult would it be to live within the 3.29 percent (spending) limit set by the Taxpayer Protection Act?” Senator Regola is the prime sponsor of legislation that would enact the TPA, a measure that uses economic factors to limit spending increases, through a constitutional amendment. Senator Regola also noted that while the spending increase is now at 4.2 percent for Fiscal Year 2008-09, the figure could go significantly higher since the Governor again – as he has repeatedly in previous budgets - cut vital state support for many important programs with the expectation that the Legislature would restore the funding. Senator Gordner, citing a new $2 million appropriation for “mentoring of children of incarcerated adults,” asked whether a contract for the program had already been awarded to an “entity in Philadelphia.” Senator Gordner also asked what potential fiscal problems the Commonwealth faces since the Turnpike Commission has already secured bond money and is making payments to mass transit and PENNDOT, even though the proposed tolling of Interstate 80 is at an impasse. Senator Mary Jo White questioned the Governor’s “reneging” on a deal for a set reduction of Capital Stock and Franchise Tax. She said Pennsylvania is one of the few states that has that tax and a Corporate Net Income Tax, which places the state at a disadvantage in promoting economic growth and job creation. Senator White said she was also concerned because the Governor is slowing down the CSFT rate reduction to pay for hazardous sites cleanup. “We passed legislation to fund HSCA. If the Governor objected to the funding we provided in Senate Bill 1100, why didn’t we hear a counterproposal?” Senator White asked. Senator Rhoades questioned the $26 million allocated for a new high school exit exam program. “It is going to cost millions to get the test developed and millions to get it monitored. Why are we doing PSSAs? If we are looking for money, I don’t need another 26 million for exit exams, modify the PSSA,” Senator Rhoades said. Senator Madigan, Chairman of the Senate Transportation Committee, asked for information about the Governor’s proposal to lease the Turnpike. “The sooner you get the information to the general public, the better off we all will be.”
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