Senate Budget Hearings – Key Points

Monday, March 22, 2021 

Department of Community and Economic Development 

New Manufacturing Tax Credit Will Spur Job Growth

Senators noted the importance of properly implementing the Local Resource Manufacturing Tax Credit program, which was created by the General Assembly last year to provide incentives for manufacturers to invest in Pennsylvania communities. The program is expected to help create thousands of family-sustaining jobs in the years to come.

Message Undermines Tax Credit Evaluation of Independent Fiscal Office

Senate Appropriations Committee Chairman Pat Browne (R-16) expressed frustration that the Administration is not presenting in its documents a fair picture of the financial and economic benefits of various tax credit programs as evaluated by the Independent Fiscal Office’s (IFO) performance-based budget review and report developed for Performance-Based Budget Board, which found that there are some benefits, but also some major costs to these tax credit programs which produce low-to-no return on their investment to the Commonwealth’s revenue capacity. The discrepancy between the department’s assessment of these tax credit programs and the ones performed by the IFO, whose review of these programs was required through legislation signed into law, creates a mixed message on the actual value of the programs.

Broadband Funding Cuts Hurt Rural PA

Governor Wolf’s budget eliminated funding for a key program created last year to support broadband deployment in unserved and underserved communities. Senator Kristin Phillips-Hill (R-28) pointed out that broadband was barely mentioned in supporting documents on DCED. Senators raised concerns about the department’s and Administration’s commitment to promoting broadband in rural areas, stressing that it needs to be a funding priority.

Helping Communities Survive

Stressing that many communities are struggling to survive, particularly during the pandemic, senators raised concerns about the effectiveness of the department’s programs to aid areas where large employers have closed, and municipalities have been declared financially distressed under Act 47. They also emphasized that the governor’s plan to prematurely close power plants would devastate many communities in Pennsylvania.

State Facility Closure Transition Program

The FY 2021-22 budget eliminates the $5 million program included in the current year’s

budget to assist municipalities with the permanent closure of a state facility. Committee members questioned the thinking that the transition program has served its purpose in just one year.

Department of Corrections

Corrections, along with Education and Human Services, make up 85 percent of the state budget. Senate Republicans continue to look for ways to reduce prison facility costs without compromising public safety.

The number of inmates were reduced by more than 6,000 over the past year, which is the largest drop in Pennsylvania history, with an anticipated further reduction of 2,000 inmates next year. Another cost-saving move would be statutory consolidation of the Department of Corrections and the Board of Probation and Parole, which would be authorized by Senate Bill 411.

Dealing with the pandemic has driven many Corrections costs. Secretary John Wetzel said more than $58 million in overtime costs directly related to COVID-19 will be covered by funding from FEMA.