2008 Budget Hearings
Highlights and Summaries

Attorney General | Auditor General | Budget Secretary | Department of Aging | Department of Agriculture | Department of Community and Economic Development | Department of Conservation and Natural Resources | Department of Corrections | Department of Education | Department of Environmental Protection | Department of General Services | Department of Health | Department of Insurance |  Department of Military And Veterans Affairs | Department of Public Welfare | Department of Revenue | Department of State | Gaming Control Board | Historical & Museum Commission | Labor & Industry | Liquor Control Board | PSERS/SERS | State Related Universities | State Police | State System of Higher Education | Treasury Department

3/11/08 - Special Hearing on Budget Cuts
- Senator Armstrong
- Hearing - running time 2 hours 35 minutes
 

Senate Appropriations Monthly Report
Budget Recap
Week 1 - (PDF)
Week 2 - (PDF)

Attorney General - - 1 hour 15 minutes

Senator John Gordner (R-27) comments on the success of the Do Not Call list, which significantly reduced telemarketing calls for consumers.

Summary

Senate Appropriations Committee members focused on reducing gang violence and preventing identity theft during a budget hearing with Attorney General Thomas Corbett.

Senate Law and Justice Committee Chairman Senator John Rafferty, 44th District, asked if there has been an increase in gang activity in the Commonwealth. Senator Pat Browne, 16th District, asked how the Governor’s proposed 2008-09 budget would impact the Route 222 Corridor Initiative to prevent gang violence. Senator Browne urged Attorney General Corbett to request additional funding if it would help to curb gang activity in the eastern and central parts of the state.

Senate Appropriations Committee Chairman Senator Gib Armstrong, 13th District, asked for an update on efforts to reduce identity theft. Appropriations Committee Vice Chairman Senator Robert Tomlinson, 6th District, voiced his concerns about identity theft that results from Social Security numbers on county documents.

Several members expressed concerns about the limited funding proposed by the Governor for a number of vital public protection programs. Senator Armstrong asked what positions would not be filled if the Attorney General’s Office received the Governor’s proposed 1.9 percent increase, rather than the 3 percent that Attorney General Corbett requested. Senator Jake Corman, 34th District, expressed concerns that the Governor’s budget proposal would underfund the Attorney General’s Office and asked if the Governor gave any feedback on the Attorney General’s initial budget request.

Senator Bob Regola, 39th District, commended Attorney General Corbett for requesting an overall funding increase less than the rate of inflation. Senator Regola also asked how the Governor’s proposal would affect the Attorney General Office’s efforts to crack down on illegal drugs. Senator John Pippy, 37th District, asked if the Attorney General’s Office had the resources available to educate the public on preventing crimes against children. Senator John Gordner, 27th District, expressed concerns about funding for regional offices that handle thousands of consumer complaints.

Senator Pat Vance, 31st District, asked if the state’s Do Not Call list should apply to political “robo-calls.” Attorney General Corbett said that he had concerns about First Amendment issues, but he would be willing to look at any legislation that was proposed. Senator Rafferty suggested offering consumers the option to remove their numbers from robo-call lists.

Senator Roger Madigan, 23rd District, thanked Corbett for his work on the Agriculture, Communities and Rural Environment (ACRE) Initiative and requested an update on the program.

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Auditor General - - 1 hour 15 minutes

Senator Pat Browne (R-16) 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 similar audits of all state economic development grant and loan programs.

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.

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Budget Secretary - - 2 hours 12 minutes

Senator Pat Vance (R-31) questions Budget Secretary Michael Masch about a provision of the Administration's PACE plan that gives higher rebates to seniors in urban areas of the state.

Senator Jake Corman (R-34) raises concerns to Budget Secretary Michael Masch about the high cost of the Governor’s new health care proposals.

Senator James Rhoades (R-29) questions Budget Secretary Michael Masch about the need to spend a proposed $26 million on exit exams.

Senator Mary Jo White (R-21) addresses disagreements over Hazardous Sites Cleanup Funding with Budget Secretary Michael Masch.

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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Department of Aging - - 1 hour 27 minutes

Summary

Senate Aging and Youth Committee Chair Senator Pat Vance, 31st District, noted that 80 percent of the Department of Aging’s funding for support services goes to nursing home care and the remaining 20 percent is allocated for home- and community-based care, which places Pennsylvania 47th among states providing for in-home care.

Senator Vance expressed concerns about the extensive waiting lists for basic services for the elderly such as Meals on Wheels. She said that was especially troubling when the Governor’s proposed 2008-09 budget includes funding for increasing several new initiatives, but flat funds current programs.

Senator Gordner was informed that enrollment in PACE and PACENET currently stands at 157,000 Pennsylvanians in each program. He asked whether the Department anticipates any changes in Medicare Part D or in the contribution rate for enrollees in PACE and PACENET.

Senator Rafferty cited the special role that senior centers play in the lives of older Pennsylvanians and asked why the Department has not sought more funding to provide additional grants for those agencies.

Senator Greenleaf asked about the scope of community-based services available to families who want to keep an older person in his or her home. “It’s important that you keep up on that. Many people would stay in their homes if they could,” Senator Greenleaf said.

Senator Regola cited a newspaper article in which the Department stated that there was a waiting list of 3,000 individuals, of whom, 500 needed nursing home care and the other 2,500 needed in-home services “to make life easier.” Senator Regola asked whether it is more cost effective to channel funding to those needing critical services or those needing assistance to make life easier.

Senator Browne noted a shift in funding for Department of Aging General Government Operations from the General Fund to the Lottery Fund and asked whether there is a cap on the amount of administrative services that could be paid by the Lottery Fund. He specifically questioned tapping the Lottery Fund to pay for the oversight of services that aren’t covered by that fund.

Senator Pippy asked whether the Department has specific plans to improve community-based services on the local level. “We do these hearings every year and the intent is good, but sometimes I think everything gets lost in the budget. With the things you are talking about, you have to think statewide, but act locally.”

Senator James Rhoades, 29th District, asked if there is sufficient funding for the Property Tax Rent Rebate Program since the Legislature increased eligibility for the program. He added that is he introducing legislation that would divert unused money from that account to provide funding for energy assistance for senior citizens.

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Department of Agriculture - - 1 hour 40 minutes

Senator Roger Madigan (R-23) expresses concerns about the future of agriculture to Secretary of Agriculture Dennis Wolff.

Senator Gib Armstrong (R-13), Chairman of the Senate Appropriations Committee, questions the need for crop insurance.

Senator Pat Browne (R-16) addresses funding concerns with the State Food Purchase Program.


Senate Agriculture and Rural Affairs Committee Mike Brubaker (R-36) and Senator Bob Regola (R-39) discuss the importance of Conservation Districts to farmers and the environment with Agriculture Secretary Dennis Wolff, and voice their opposition to cuts in Conservation District funding.
- Senator Brubaker
- Senator Regola

Summary

Several senators focused on proposed cuts to vital agricultural programs during the Senate Appropriations Committee budget hearing with Department of Agriculture Secretary Dennis Wolff.

Agriculture and Rural Affairs Committee Chairman Senator Mike Brubaker, 36th District, expressed concerns about the proposed cut in state funding to the Animal Health and Diagnostic Commission. Senator Mike Waugh, 28th District, detailed the important role that the Commission plays in protecting food safety and public health.

Senator John Rafferty, 44th District, expressed concerns about the flat funding proposed for food safety inspections and Senator Bob Regola, 39th District, urged the Department to place a greater focus on preventing agro-terrorism. Senator Regola also questioned why funding was not increased for the state food purchase program.

Senator Pat Browne, 16th District, urged Secretary Wolff to reconsider budget priorities for the state food purchase program to provide more help to low-income state residents.

Senator John Gordner, 27th District, pointed out the importance of Pennsylvania's hardwood industry and asked Secretary Wolff to explain the proposed 20 percent cut in funding for hardwood research.

Senator Mary Jo White, 21st District, questioned the state's commitment to promoting bio-diesel with proposed cuts in agriculture research. Senator Roger Madigan, 23rd District, also expressed concerns about the proposed cut in agriculture research, adding that cutting funding for research sends the wrong message to the agriculture community. Senator Gordner asked if the bio-diesel subsidy will be helpful to promote renewable energy in the state.

Senator Jake Corman, 34th District, pointed out that the Department's personnel costs were expected to rise by 9 percent, while agricultural programs took an overall 2-percent cut in the budget proposal. A number of senators also criticized inadequate funding for Conservation Districts.

Senate Appropriations Committee Chairman Senator Gib Armstrong, 13th District, asked why the state subsidizes crop insurance for farmers. Senator Brubaker asked if the crop insurance program would be fully funded and asked Wolff to highlight the importance of the program.

Senator Pat Vance, 31st District, asked why the Department has changed its stance on the duties of the Executive Secretary for the state Horse and Harness Racing Commission. Senator James Rhoades, 29th District, asked how the devaluation of the dollar could affect Pennsylvania's role in the global agriculture marketplace.

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Department of Community and Economic Development - - 1 hour 33 minutes

During the budget hearing for the Department of Community and Economic Development, Senator Pat Browne (R-16) comments on the proposed economic stimulus package.

Senator Mary Jo White (R-21) comments on the need to continue with the phase out of the Capital Stock & Franchise Tax.

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Department of Conservation and Natural Resources - - 1 hour 37 minutes

Senator Stewart Greenleaf (R-12) encourages Department of Conservation and Natural Resources Secretary Michael DiBerardinis to promote hiking trails at state parks and forests that taxpayers have funded.

Summary

Several senators raised concerns about a decision this year by the Department of Conservation and Natural Resources to no longer employ lifeguards at state park beaches. 

Senator John Gordner, 27th District, asked DCNR Secretary Michael DiBerardinis if the change was made to cut costs or because of staffing difficulties.  Senator Gordner and Senator Pat Vance, 31st District, raised concerns about liability issues if drownings occur. Secretary DiBerardinis said the move is actually part of a five-year trend to reduce lifeguards at state parks, adding that Pennsylvania is not out of step with other states.   Senator Gordner noted that the Legislature had not been aware of that trend.

Pointing to the biggest threat from gypsy moths in over a decade, Senator Mary Jo White, 21st District, wanted assurances that the Department’s allocation was adequate to deal with infestations.  Senator Roger Madigan, 23rd District, echoed those concerns, saying that gypsy moths and other forest pests are a major concern to the timber industry.

Senator White also asked Secretary DiBerardinis about the Department’s decision to raise user fees at state parks and whether the Department has the authority to levy admission fees.  Senator John Rafferty, 44th District, wanted to know whether the number of park employees will increase when user fees rise.  Secretary DiBerardinis said the fee increases will be modest and competitive with other states and all new revenue will go back into the park system.

Senator Rafferty and a number of other senators said they are very interested in a proposed flood mapping project that DCNR is currently undertaking throughout the state to identify flood-prone areas.   “State government needs to make recommendations to county and local government once we get that information,” Senator Rafferty said.  “I think the information is invaluable.”

Senator Madigan said many municipalities are discovering that their flood maps are very much out of date, and he wanted to know when the new maps will be available and how communities could access them.  Secretary DiBerardinis said the Department is committed to making the technology available and sharing it with anyone who could find it useful.

Noting that many sewage treatment plants are being asked to spend a great deal of money as part of the Chesapeake Watershed clean-up initiative, Senator Vance asked what DCNR is doing to keep pollution from state park and forest lands out of streams. 

As a sponsor of the state’s Rails to Trails Program, Senator Stewart Greenleaf, 12th District, asked for a status report on the program and how it is being received.  He noted that because Pennsylvania was a major railroading state, the Commonwealth has many abandoned rail lines that are ideal for hiking and biking.

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Department of Corrections - - 1 hour 24 minutes

During the budget hearing for the Department of Corrections, Senator Mike Waugh (R-28) remarks on the difficult balance between being tough on crime and prison overcrowding.

Summary

The growing inmate population in State Correctional Institutions and the system's increased costs were the primary issues explored by the Senate Appropriations Committee during a budget hearing on the state Department of Corrections.

Senate Judiciary Committee Chairman Senator Greenleaf opened the hearing by commenting on the "tremendous explosion in (Pennsylvania's) prison population," in part due to the incarceration of less serious, non-violent offenders. He said Pennsylvania's experience is directly counter to that of New York. Pennsylvania incarcerated about 1,600 new inmates last year while New York reduced its prison population by 1,000.

Secretary of Corrections Jeffrey A. Beard said the population jumped significantly since 1980. Then, the state had 8,000 inmates in eight institutions with a budget allocation of $94 million. Today, Pennsylvania has 46,000 offenders in 27 institutions with a budget of $1.7 billion.

Senator Rafferty asked if there is sufficient funding in the proposed 2008-09 budget for inmate education and vocational training programs. Secretary Beard said the funding will have to be monitored, adding that vocational technology programs are voluntary, but the education programs are mandatory for inmates who do not possess at least a GED.

Senator Browne asked whether a 109-percent increase in federal funding provided for incarcerating illegal immigrants had a correlation to a similar increase in the number of illegal immigrants in Pennsylvania.

Noting that about 14 percent (6,000) of the 46,000 state inmates are convicted sex offenders, Senator Regola asked what treatments are available for those individuals and their recidivism rate. Senator Regola is the prime sponsor of legislation that would provide for the chemical treatment of certain sex offenders who commit their crime on a victim who is under 13 years of age.  

Senator Gordner asked about contract negotiations, departmental staffing, and the planned construction of new prisons. Senator Gordner asked if enactment of pending legislation that would ban mandatory overtime for nurses could be extended to potentially affect the Department's ability to assign overtime to corrections officers.

Senator White asked whether security measures had been upgraded at SCI Albion in the wake of a recent escape from the facility. She also inquired about housing provided for wardens at the correctional institutions.

Senator Vance asked what provisions are made for Pennsylvania's 150 "nursing home eligible" elderly inmates. Secretary Beard said inmates tend to "age faster" than the general public as a result of their lifestyles.

Senator Corman asked Secretary Beard to identify what drug crimes he considered to be non-violent. He noted that the illegal drug trade fosters violence in the community.

Senator Waugh asked how many inmates will end up spending the rest of their lives in prison and raised concerns about the increased costs, particularly for health care associated with geriatric prisoners.

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Department of Education
- Part 1 - 1 hour 32 minutes
- Part 2 - 1 hour 42 minutes

Senator Jim Rhoades (R-29), Chair of the Senate Education Committee, comments on the formula being used to fund public education and its affect on local taxes.

Senator Mary Jo White (R-21) explains to Education Secretary Gerald Zahorchak how the current school funding formula shortchanges rural school districts.

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Department of Environmental Protection - - 2 hours 8 minutes

Senate Environmental Resources and Energy Committee Chair Mary Jo White (R-21) questions Environmental Protection Secretary Kathleen McGinty about funding levels for PENNVEST, which helps communities pay for upgrading water and sewage treatment plants.

Summary

Senate Environmental Resources and Energy Committee Chair Senator Mary Jo White, 21st District, said the Governor originally indicated that a proposed new tax on property insurance to pay for flood remediation would apply only to property owners in flood plain areas and asked if that was accurate. Secretary Kathleen McGinty said the tax would actually be assessed on all property insurance bills throughout Pennsylvania.

Senator White noted the Administration has not funded sewage treatment programs and took issue with the Administration’s claims that it was the result of federal cuts, noting that the federal 1999 law enacting cuts anticipated states would fund the programs. The senator also asked if the Secretary would pledge to release the names and amounts of unsuccessful applicants for funding through the Energy Development Authority, as required by the Ethics Act regardless of whether a potential conflict of interest exists. The Secretary said she had to check with legal counsel.

Senator Vance took the Secretary to task for alleging in a newspaper column that critics of the proposed Chesapeake Bay Tributary Strategy are motivated by politics. The senator noted that efforts to protect the bay region have been led by Governors of both political parties and that legislators in the affected area are speaking up for area taxpayers who will be seeing huge increases in sewer bills. The senator also noted that Virginia and Maryland provide funding for their bay mandates, while Pennsylvania’s is unfunded. The Secretary said it’s “time to pay the bill” and that the legislature will face difficult votes on the issue.

On the issue of black fly spraying, the Secretary told Senator Vance that the cost of the program has gone down, but there is no decrease in spraying.

Senator Gordner said a per-gallon production incentive is necessary to produce soybean biofuel production in Pennsylvania, otherwise producers will have to shut down and Pennsylvania will buy its biofuels from Midwestern states with incentives. Secretary McGinty said Pennsylvania currently offers a production incentive of 5 cents per gallon, and she would support increasing it.

Senator Gordner asked what steps the state is taking to explore the Marcellus Shale Fields, which runs from upstate New York, across Pennsylvania into eastern Ohio and West Virginia and could contain as much as 50 trillion cubic feet of recoverable natural gas. The Secretary said DEP is meeting with Penn State researchers and investors coming to the state to consider development opportunities, and the senator urged her to continue the efforts.

Senator Rafferty thanked the Secretary for DEP’s work in addressing TCE air emissions in his district. The senator asked if the state was planning a public education campaign to prepare consumers for the end of rate caps on electric bills. The Secretary said the heart of the Administration’s plan is reducing energy prices, but mentioned no specific education plan. The senator noted that residential rates could go up 35 percent in his area and the state should protect consumers.

Senator Greenleaf asked what the Commonwealth was doing in the area of waste coal. The Secretary said it has supported new waste coal plant construction and supports existing plants. The senator asked if there are any concerns regarding Pennsylvania’s water supplies, as some other states face. Secretary McGinty said the legislature implemented a five-year study of Pennsylvania’s water supplies, with the report to be issued on March 18.

Several members, including Senator Regola, noted the proposed cut in funding for Conservation Districts, even though they face increased work loads. The Secretary said the proposed funding is level, at $3.1 million, but that the General Assembly has been responsible for the increase last year and in previous years. The senator asked if funding for emergency response hazardous cleanups was adequate, and the Secretary noted that the Legislature’s recent passage of a bill funding the Hazardous Sites Cleanup Act was helpful.

Senator Browne asked DEP Secretary Kathleen McGinty for an update on the status of sewage grant permit approvals and asked about the budget for the Advanced Energy Development Program which reduces energy consumption in Commonwealth-owned buildings. Senator Browne noted the projected energy savings are constant for the next several years, with no improvement. Senator Browne asked Secretary McGinty if proposed DEP regulations to limit truck idling are different from his legislation to do the same. The Secretary said some enforcement provisions may be different and that there is no plan before DEP to extend limits beyond commercial trucks.

On competing Alternative Energy Investment bills passed by the Senate and House, Senator Browne noted that one difference is the Senate bill provides more tax credits to energy development companies, which need them to get beyond the upfront assistance proposed by the House and Governor. The Secretary said paying for credits is the issue, and the senator said the Governor may have to reduce upfront capital to pay for it.

Many departments and agencies are faced with increased personnel costs tied to a union contract negotiated by the Administration, and the Secretary acknowledged to Senator Corman that the bulk of the DEP budget increase is due to that contract. Senator Corman said he is concerned that the Governor has put legislators in a box, by limiting overall spending increases to around four percent while hiking personnel costs, making it less likely that initiatives such as Conservation Districts can have their funding restored.

Noting that the proposed Chesapeake Bay Tributary Strategy will impact taxpayers, sewer ratepayers and farmers, Senator Corman asked why the Administration has not yet advocated for assistance as it has for mass transit, for which the Governor has traveled the state and held rallies. Secretary McGinty said, “I think that’s to come.”

Senator Rhoades cited a newspaper article on a liquefied carbon project in Greene County that quoted the Secretary as saying Pennsylvania has to find a way to not burn coal. The Secretary said that is not her position, and that DEP is pushing approaches that enable coal use to grow even under carbon restraints, through the use of sequestration and other methods. Senator Rhoades also noted that while the use of biosolids and sludge has many of the same downsides as waste coal, they do not face the same scrutiny or restrictions. The Secretary agreed that waste coal is no worse and should not be used to stoke fear.

On alternative energy, Senator Rhoades said the Administration has several far-reaching ideas for the future, but that more could be done to allow individual property owners to access alternative energy more quickly, without a vast energy program. He said Pennsylvania has abundant water, wind, oil and gas resources and the state needs a clearinghouse for innovative ideas that are already being used by individuals.

Senator Rhoades also said he supports ongoing use of hidden cameras to combat illegal dumping, and asked about news that South Carolina is going to close a dump that accepts radioactive waste from Pennsylvania. The Secretary said the closing could happen, but there is no imminent problem.

Senator Roger Madigan, 23rd District, asked if there was anything the Legislature could do to clarify the issues involved with oil and gas leases, which often lead to conflict between property owners and those holding the rights to underground resources. The Secretary said it would be helpful if laws were updated to clarify the rights of surface and subsurface property owners.

Senator Madigan asked what would be entailed in the upcoming release of a statewide inventory of Pennsylvania’s water supplies, authorized by the General Assembly five years ago. The Secretary said it would lead to a series of findings, including water atlases for each region, water budgeting tools, and ultimately proposed regulations of water withdrawals and reporting.

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Department of General Services - - 1 hour 7 minutes

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Department of Health - - 1 hour 55 minutes

Senator Roger Madigan (R-23) urges Dr. Calvin Johnson, Secretary of Health, not to weaken the privacy of patient treatment records.

During the budget hearing for the Department of Health, Senator Jake Corman (R-34) comments on the need to work with schools on a childhood obesity program.

Summary

Senator Madigan was among several members to question Department of  Health Secretary Dr. Calvin Johnson over proposed regulation changes that would weaken protection of personal records of individuals in drug and alcohol treatment. The Secretary said the proposed changes have not been finalized and were designed to give both treatment centers and clients access to information, while still requiring patient consent.

Senator Rafferty asked if any increase in diseases was particularly worrisome, noting a higher incidence of tuberculosis and whooping cough cases. The Secretary said there is a combination of new and emerging diseases being watched, including chronic diseases and asthma. Asked about prevention efforts, he told Senator Rafferty that the Department is working with other agencies to promote vaccinations.

On the matter of the Department's new Gambling Addiction Hotline, the Secretary told Senator Rafferty and Senator Gordner that the hotline received 80 calls from July 2007 to February 2008 and that 86 people have been trained as addiction counselors across the Commonwealth.

Senator Gordner and Senator White questioned the Secretary about Pennsylvania's pandemic influenza planning, noting that the budget to stockpile vaccines was down. Secretary Johnson said Pennsylvania has purchased enough vaccines to meet its part of the federal goal of 25 percent coverage nationwide. Noting the three-to-five-year shelf life of vaccines, Senator Gordner and Senator White encouraged the Department to rotate the medication into active use as its age limit nears and purchase fresh supplies. He told the senators that the federal contract with pharmaceutical companies makes it difficult to rotate the medication, but that the contract could be revised.

Noting that smoking prevention and cessation was the original intent of the Tobacco Settlement Fund, Senator White asked why it appeared money was cut to evaluate prevention cessation efforts. Secretary Johnson said the evaluation budget is multi-year and will go up and down, adding that reports show cigarette smoking by adults and youths is decreasing. When asked why funds were left over for mobile health care clinics and other initiatives, the Secretary said the state did not receive enough bids and has to start the process again.

Senator Browne asked why funding for drug and alcohol treatment was reduced, with the Secretary saying some activities were one-time initiatives and not due to receive ongoing funding. The Senator also noted that the Administration's change in the formula to calculate "bad debt" among not-for-profit acute care facilities was having an adverse effect.  The Secretary also assured the Senator that the Administration is not planning on forcing community treatment centers to make methadone available as part of heroin addiction treatment.

Pointing out that the purpose of budget hearings is to find ways to save money and not just spend it, Senator Vance asked if the Department would coordinate with the Department of Public Welfare in the training of assisted living facility inspectors to save money. The Secretary said it hasn't yet, but would look into it since the departments have combined the licensing function for drug and alcohol treatment and mental health structures. Senator Vance said she was concerned that funding for school district nurses remains flat while nurses are faced with more problems to handle. The Secretary agreed, noting that funding for school nurses has been flat for more than 20 years and needs to change.

Senator Waugh expressed concerns that funding for some emergency medical services programs has been reduced or cut in the 2008-09 budget. He asked if there is adequate funding for emergency medical services coordination statewide. 

Senator Corman asked the Secretary how the Administration derived the estimate that uninsured Pennsylvanians add 6.5 percent to the cost of insurance premiums. Secretary Johnson said he did not know, but would check. Senator Corman noted that since the Governor's proposed health care insurance program would not cover all of the uninsured, even if implemented, the net savings would not amount to 6.5 percent.

Senator Corman also noted that personnel costs were up in the Health Department's budget, while many other line items were reduced. He expressed concern that the trend was not uncommon throughout the budget and that state spending was going in the wrong direction, therefore resulting in service cuts.

Senator Rhoades said a non-profit primary care facility in his senatorial district had to temporarily close due to lack of funds. He stressed that the state should more clearly define "primary care" so facilities can better access support. Senator Rhoades said the need for new nurses has reached "catastrophic" levels and asked if the Health Department and Pennsylvania's colleges can address the problem.

Senator Stewart Greenleaf, 12^th District, asked what Pennsylvania was doing to assess the problem of autism. The Secretary said the state uses Tobacco Settlement funds for research, and will be awarding a $16 million to $18 million contract soon. Responding to Senator Greenleaf's question on Lyme disease, the Secretary said a task force was recently convened to address diagnosis, treatment and surveillance efforts. Senator Greenleaf said he was concerned by what appeared to be a reduction in funding for biotech research, but the Secretary said the funding usually fluctuates from year-to-year.

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Department of Insurance - - 1 hour 52 minutes

Senator Don White (R-41), Chair of the Senate Banking and Insurance Committee, questions the Administration's proposal to fund an expanded healthcare plan with the MCARE fund.

Senator Pat Browne (R-16) and Senator Jake Corman (R-34) debate funding for "Cover All Pennsylvanians" with Acting Insurance Commissioner Joel Ario.
- Senator Browne
- Senator Corman

During the Insurance Department budget hearing, Senator Mary Jo White (R-21) suggests that using the MCARE fund to pay for the Administration's new healthcare plan is a bad idea.

Summary

Several Senators raised concerns about the Governor's proposed universal health care scheme during the Senate Appropriations Committee's budget hearing with Acting Insurance Commissioner Joel Ario. 

Senator Don White, 41st District and Chairman of the Senate Banking and Insurance Committee, extensively grilled Acting Commissioner Ario about the Governor's proposal to take a $400 million surplus from the MCARE fund to pay a portion of the costs of his universal health care scheme. Noting that overpayments by practitioners built the surplus in the MCARE Fund, Senator White asked, "To the best of your knowledge, did the Administration ever ask the Legislature to take another look at the assessment formula? That is a substantial amount of money to be overcharging providers."

Senator Don White also raised concerns about spending the surplus when the Fund faces an unfunded liability of $1.8 billion.  A better use of the surplus, Senator White said, would be to "wean the doctors" off of the program through a plan that he introduced as a key component of Senate Bill 1137.

Under questioning from Senator Gordner, Acting Commissioner Ario admitted that high-risk medical practitioners, such as obstetricians and neurosurgeons, who already pay more than $100,000 in medical malpractice insurance premiums, could see those costs increase by 50 percent if the MCARE abatement program lapses. Generally, the premiums for providers would go up by 25 to 33 percent, he added.

Senator Browne, Chairman of the Senate Finance Committee, asked about the Insurance Department’s role in the Governor's proposed 7-percent tax surcharge on property owners' flood insurance policies. Senator Browne said he was not aware of any similar surcharges imposed by any other state.

Following up on questions he originally raised with the State Budget Secretary on Monday, Senator Browne again questioned the Administration's funding plan for the Governor's universal health care scheme. He noted that the Governor originally wanted to impose an "unpopular and unsustainable" 3 percent tax on businesses. Now, the Governor is looking at cigarette taxes, even though those revenues are decreasing and the health costs would certainly go up.

Senator Regola, noting that the Governor is patterning his universal health care scheme after similar programs in California and Massachusetts, asked whether he would follow the example of those states and exempt small employers from state mandates for the coverage. Senator Regola also urged the Administration to work with the Legislature to provide state oversight on the proposed merger of Highmark and Independence Blue Cross to ensure competition in the market.

Senator Mary Jo White said she also supported the need for state oversight on the Highmark/IBC merger. Further, she noted a need in Pennsylvania for more fairness in insurance reimbursements to providers. Some providers may receive as much as three times more than others for the exact same medical procedures, Senator White said.

Senator Mary Jo White sharply criticized the Governor's plan to tap the MCARE program for his universal health care scheme. She said she expected the MCARE abatement program to eventually be phased out, something that won't likely happen if the fund is used as a funding source for a new entitlement program.

Senator Rafferty cautioned that Pennsylvania still has a shortage of doctors, especially in high risk fields. He said too many graduates from Pennsylvania's medical schools, especially those in high-risk specialties, are leaving the state after they complete their studies. Eliminating the MCARE abatement could exacerbate the problem, Senator Rafferty said.

Senator Pat Vance, 31st District, reviewed enrollment trends in the existing adultBasic health insurance program in Pennsylvania.  She asked how the Administration could claim that the Governor's proposed universal health care scheme, which would include prescription drug and some mental health care coverage, would have lower costs than the existing adultBasic program.

Senator Stewart Greenleaf, 12th District, asked if the Administration has looked at public-private partnerships for the universal health care scheme. He said the experiences of other countries show that costs go up and availability goes down if a health care program is "overly dominated" by government.

Senator Jake Corman, 34th District, criticized the Administration’s contention that the Governor's universal health care scheme is not an entitlement program. He added that the Administration would be better off working to address health care costs. Senator Corman said the real problem is affordability, especially when government spends $14 billion (including $7 billion in state money) for subsidized health care in Pennsylvania. "We don't have a health care problem in Pennsylvania. We have a health insurance cost problem in Pennsylvania," Senator Corman said.

Senator James Rhoades, 29th District, asked about trends in long-term care insurance in Pennsylvania. He also raised concerns that employers may drop insurance coverage as a cost-saving step if the Commonwealth sets up the Governor's universal health care scheme.

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Department of Military and Veterans Affairs - - 1 hour 10 minutes

Speaking to Pennsylvania Adjutant General Jessica Wright, Senator Pat Browne (R-16) outlines the need for a cabinet-level position for the Department of Military and Veterans Affairs.

Summary

Senate Veterans Affairs and Emergency Preparedness Committee Chair Senator Lisa Baker, 20th District, asked state Adjutant General (Major General) Jessica Wright if her Department has adequate funding and staff to implement the growing number of new programs that it administers. Specifically, she said she has heard concerns about the processing of applications for the Persian Gulf Bonus program.

General Wright acknowledged that the Department is facing higher demands and is working to process applications more efficiently. 

Senator Baker also suggested that the Commonwealth partner with health care providers to improve treatment of post traumatic stress disorder and asked if the state pensions for blind or paralyzed veterans is spent down every year. General Wright said they are not, and she would like the legislature to give her the authority to use leftover funds for other veterans programs.

Senator John Pippy, 37th District, asked General Wright what she needs from the Legislature to assist with the growing number of programs for veterans, such as the Real Estate Tax Rebate Program and the Military Family Assistance Program.  Noting that the state does not reimburse local governments for properties of disabled vets that receive a tax exemption, he said “there are some who feel that if we believe in the program and mandate it, then we should fund it.”

Senator Gordner questioned General Wright about recruitment efforts and wanted assurances that the state had adequate funding to provide tuition benefits and life insurance to those serving their country.

A member of the Southeast Veterans Center Advisory Board, Senator John Rafferty, 44th District, praised the Department for its “dramatic leadership” in improving services at the state’s veterans’ homes.  He said that all the homes now have dementia units to help assist patients and that the quality of care is excellent. 

Citing a report that rated only 67 percent of Pennsylvania’s armories and field sites as “adequate,” Senator Browne asked if the Department needed additional resources to bring more facilities up to standards.  General Wright acknowledged that many of the facilities are old and outdated, but modernizing them is costly.  Senator Browne also applauded the Department for providing funding for veterans outreach assistance and said that there have been discussions in the Legislature about establishing a cabinet level position for Veterans Services.

Senator Stewart Greenleaf, 12th District, centered his questioning on the Base Realignment and Closure (BRAC) decision to close Willow Grove Air Station, which is home to the 111th Fighter Wing – an extremely skilled and important air unit.

Senator Bob Regola, 39th District, asked General Wright to explain how the increased funding for veterans outreach will be used. The General said veterans organizations will apply for money and demonstrate how they would they would use it, for example, to help eligible veterans process applications for benefits. The funds would not be used for direct assistance to veterans.

Senator Regola said he would push to restore funding for the Civil Air Patrol. General Wright acknowledged that she did not request the elimination of CAP funding, adding that it was the Administration’s idea and that she considers CAP “a very worthy organization.”

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Department of Public Welfare - - 1 hour 58 minutes

Senator John Gordner (R-27) suggests that the Administration's proposed $120 million program to provide checks to individuals who do not pay taxes would be better used to provide non-medical service providers a Cost of Living Adjustment (COLA).

Senator Jake Corman (R-34) and Senator John Pippy (R-37) tell Secretary of Public Welfare Estelle Richman that the state could afford Cost of Living Adjustments (COLAs) for community care providers if the Administration was not pursuing so many other questionable, expensive initiatives. - Senator Corman - Senator Pippy

Summary

Senator John Rafferty, 44th District, and several Appropriations Committee members expressed opposition to the “carve out” excluding pharmaceutical benefits from the rebidding for state contracts to provide services to Medical Assistance patients. He asked why payment for pharmacy services was not included in the Healthy Choices rebidding process.

Department of Public Welfare Secretary Estelle Richman said the change was to save money and told the senator that about $1 billion out of DPW’s $23 billion combined state/federal budget is for pharmaceuticals. Senator Rafferty later suggested that the rebidding could have taken place along two tracks – with and without including payment for pharmaceutical benefits.

Senator Rafferty asked if the DPW’s Pharmaceutical and Therapeutics Committee was conducting its meetings in compliance with the state Sunshine Law. Secretary Richman said the meetings are abiding by the law. Senator Rafferty said there have been complaints in his district about administration of the Low Income Home Energy Assistance Program (LIHEAP) related to delayed callbacks and fuel delivery and asked the Secretary to look into it.

Senator Bob Regola, 39th District, said he also opposes the pharmacy “carve out”, and asked the Secretary if she considered the change significant. Secretary Richman replied that the change is more about claims processing and that users will not notice a change. The senator urged DPW to delay implementation until the Senate Public Health and Welfare Committee has a chance to hold a public hearing on the matter.

Senator Regola noted that spending for home and community based services has been increased in recent years, but the promised savings have not been seen, as the number of nursing home residents has not gone down.

Proposed assessments to be levied on hospitals in Philadelphia and Allegheny County raised concerns from Senator Pat Browne, 16th District. The senator said the assessments don’t take into account a facility’s current financial circumstance and amounts to taxing health care services, while allowing counties and the state to use that revenue for non-health care needs.

Senator Browne noted that while the number of welfare cash assistance recipients has gone down, the number moving on to work has remained flat. The Secretary said that as the number of cash assistance recipients comes down, the people remaining are harder to employ than those who previously moved into jobs. Senator Browne also advocated additional funding for nurse-family partnerships.

Senator John Gordner, 27th District, was among several members to call for a cost-of-living adjustment for community care providers. The senator noted that the AFSCME contract negotiated by the Administration provided raises for Commonwealth employees, but nothing for direct-care providers. When the Secretary noted she had tried to find the $100 million needed to fund a provider COLA, Senator Gordner said the Governor could scrap his “gimmick” to provide a one-time tax rebate to Pennsylvanians who pay no income taxes and use some of the $130 million cost for a COLA.

Senator Gordner also expressed concerns over possible changes in medical assistance transportation in rural areas. The Secretary said DPW has only solicited information on improving the system to save money.

Senator Mary Jo White, 21st District, noted that a new federal funding formula increases the county share of funding for child support enforcement, but Secretary Richman said the state’s policy has been to not step in and make up the difference caused by federal funding reductions. Senator White noted that county, state and federal taxpayers are essentially the same people and the state would be better suited to pick up the shortfall.

Pennsylvania law allows the state to intercept lottery winnings over a certain amount if the winner owes child support, and Senator White asked if the same precedent applies to slots parlors. The Secretary said legislation is pending that would do that.

Senator Pat Vance, 31st District, asked about the independent review panel that oversees how domestic violence funds are distributed and whether new money for domestic violence would go primarily to Philadelphia, as it did last year. Secretary Richman said she traditionally does not override the panel’s recommendation unless it is way out of line. She added that the Philadelphia allocation was a one-time payment.

Senator Vance said she was concerned about flat funding for county medical assistance, noting that many nursing home residents are on medical assistance. She said it amounts to a funding cut since counties are facing higher costs. Questioned about the creation of 19 new DPW positions, Deputy Secretary Mike Hall said they were necessary to implement Senator Vance’s legislation licensing long-term living facilities in the state.

Senator Robert Tomlinson, 6th District, said counties are bracing for a new centralized, statewide payment system for mental retardation services. The Secretary acknowledged that it’s a major change, shifting authority from counties to the state, but Pennsylvania must submit a centralization plan if it wants to continue receiving federal waivers to fund services. She said counties will still administer services and that the state will find a way to make up financial losses tied to the change.

Senator Tomlinson asked why early intervention services for birth-to-age-3 receive less funding than programs aimed at children age 3 to 5. It was explained that the birth-to-3 initiatives are run by DPW, while programs for older children are administered by the Department of Education, which must fund COLAs for service providers.

Senate Appropriations Committee Chairman Senator Gib Armstrong, 13th District, questioned an $8.8 million request for Facilities and Service Enhancement. The Secretary said it is part of negotiations that have been going on for more than a year with hospitals looking for a different way to deal with rates. Senator Armstrong said he was surprised that it had not been discussed in the last budget either, and that no one could give an explanation for a $500,000 contract with the Philadelphia Treasurer’s Office. He requested further detailed information on the spending.

Senator Jake Corman, 34th District, noted that the “carve out” issue had been negotiated out of the budget last year, and that the Secretary could wait until the issue is settled with passage of the 2008-09 budget and then send out bids for the Healthy Choices program.

Regarding the lack of COLAs for mental health workers, Senator Corman noted the Governor has proposed many new spending programs, when core needs such as this should be taken care of first.

Senator Corman warned that it was risky for DPW to base its budget on the assumption that House Bill 1150 will pass, which would shift the cost of autism services from Medicaid to private health insurance carriers. He also expressed concerns that the insurance mandate would negatively impact premium rates at a time when Pennsylvania is trying to make insurance more affordable.

Senator John Pippy, 37th District, echoed Senator Corman’s comments that the Administration should fund COLAs for mental health workers before unveiling new government programs, noting that it is a part of a larger problem in which the Administration cuts good programs because they were legislative initiatives. Senator Pippy urged the Secretary to work with the Legislature on plans to impose new taxes on hospitals in Allegheny County and Philadelphia, saying that more discussion is needed.

Responding to a question from Senator Stewart Greenleaf, 12th District, the Secretary said DPW is trying to reduce the size of waiting lists for mental retardation services and is careful that any new policies do not add to the wait. She said it would cost $262 million to eliminate the waiting list.

Senator Greenleaf said operators of home health care agencies are overdue for an increase in reimbursement rates. Secretary Richman said DPW is implementing selected increases, but first targeting private duty shift nursing, dentists and primary care physicians.

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Department of Revenue - - 1 hour 53 minutes

Summary

Senator Browne, Chairman of the Senate Finance Committee, which has oversight over the Department of Revenue, asked Revenue Secretary Tom Wolf about several projected tax revenue estimates.

Senator Browne specifically cited a projected decrease in Corporate Net Income Tax revenues during Fiscal Year 2008-09, while revenues for other business taxes are expected to increase over the same period. Senator Browne also questioned the projections for the Personal Income Tax.

Senator Browne also noted a projected 3.4 increase in sales tax revenues, compared to an expected national increase of 2.2 percent even though Pennsylvania's sales tax base is "thin when compared to other states."

Senator Rafferty said he had serious concerns about the extensive borrowing and fund transfers pushed by the Governor in the past and proposed for the future. Senator Rafferty specifically cited borrowing for economic development programs, Growing Greener II, and the proposed $850 million bond for alternative fuels, as well as the Governor's proposal to tap funds from MCARE and the tobacco fund. He cautioned that Pennsylvania could end up in a financial crisis such as the one currently facing New Jersey. "What about us financially with all the borrowing that we have done and are going to do if the Governor's plan is accepted? What position does that put Pennsylvania in?"

Senator Vance noted that lottery sales revenues are down $47.1 million this calendar year to date. She added that Pennsylvania has spent $118 million over the past six years to modernize and upgrade the lottery program. "Are we really getting a bang for our buck?" Senator Vance asked.  Citing the Administration's on-going transfer of funding for general government operations and other programs from the General Fund to the Lottery Fund, Senator Vance said that with the dip in sales the Department will have to work hard just to maintain the solvency of the Lottery Fund.

Senator Greenleaf asked about revenues currently being generated by Pennsylvania's slot machine venues and the projections for when all 14 sites are operating. Senator Greenleaf also asked if increasing gas prices would impact Pennsylvania's Liquid Fuels Tax collections.

Senator White said the Legislature had agreed to a plan that reduces the Capital Stock and Franchise Tax by 10 percent a year. She said she was surprised to hear that the reduction proposed for FY 2008-09 would be less than 10 percent. Secretary Wolf admitted that the proposed reduction was "less than half" of the 10 percent that was agreed to.  Senator White also expressed concerns about the Governor's proposal to tap the Rainy Day Fund and the fact that the Governor is not adding money to that fund in FY 2008-09.

Senator John Gordner, 27th District, said the Governor's rebate scheme would require a change in the law regarding the Rainy Day Fund. He said the law currently bans the use of the Rainy Day Fund for new programs. Senator Gordner said the law also requires the Governor to make a payment in FY 2008-09 and would have to be changed if the Administration intends to skip out on that mandated payment.

Senator Waugh asked why tax revenues from horse racing are stagnant even though one of the "sales pitches" for slot machines was that they would help promote the racing industry in Pennsylvania. Senator Waugh also expressed concerns about the Governor's plan to tap the Rainy Day Fund. He suggested providing a $500 tax credit to Pennsylvania's emergency responders at one-third of the cost of the Governor's rebate scheme.

Senator Roger Madigan, 23rd District, said commercial trucking companies pay a tax to the Commonwealth based on miles traveled, with revenues projected at $37 million. "How often is the program audited and what assurances are there that the numbers are accurate?" Senator Madigan asked.

Appropriations Committee Chairman Senator Armstrong followed up on that issue, saying that he has heard that Pennsylvania "is being shortchanged."  He added that many drivers are buying fuel in New Jersey where prices are lower than in Pennsylvania. Senator Armstrong also asked what happens to money from gift cards that are not redeemed.

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Department of State - - 1 hour 40 minutes

Senator John Pippy (R-37) questions Department of State Secretary Pedro Cortes about simplifying the voting process for active military personnel.

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.”

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Gaming Control Board - - 1 hour 9 minutes

Senator Pat Browne (R-16) expresses concern that certain electronic card games are stretching the letter of the law.

During the Gaming Control Board Budget Hearing, Senator Jake Corman (R-34) suggests a role for the Attorney General’s office in the process of conducting background checks for gaming licenses.

Senator Mary Jo White (R-21) questions the allocation of gaming revenues and the number of State Police troopers on duty at the casinos.

Senator Mike Waugh (R-28) expresses concern that slot machine gaming is having a negative impact on local charitable endeavors.

Questioning during the Senate Appropriations Committee budget hearing on the Pennsylvania Gaming Control Board (PGCB) centered on a recent indictment of a license holder and how the process can be improved and strengthened statutorily.

Senator Browne asked PGCB Chairman Mary DiGiacomo Colins what changes are being made to make the regulatory process stronger and more effective.

Noting that it is crucial for the PGCB to receive as much background information as possible when considering licensees, Senator Corman asked if there is a role for the Attorney General to play in such investigations.  He added that the State Police Commissioner is a political appointee and as such, may not be neutral.

Senator Rhoades echoed those statements, adding, “I know there is the issue of civil versus criminal and due process, but we don’t want to create a void in helping you to do your job.”

Citing increased levels of crime around casinos, Senator Rafferty wanted assurances that there would be adequate funding to have troopers at all facilities.  “I think they are doing a commendable job now, and I want that to continue,” he said.

Several senators asked when gaming profits would be sufficient to provide much-promised property tax relief to state residents. Chairman Colins said that profits are sufficient to begin providing some reductions this summer.  

Senator Mary Jo White, 21st District, inquired about policies involving free drinks at casinos and how the venues were equipped to deal with alcohol-related incidents.

Appropriations Committee Vice Chairman Senator Tomlinson praised gaming board members for getting so many licenses up and running so quickly and doing such a thorough job of scrutinizing applicants.  As a result, he said, state and local coffers are growing, jobs are being created and area businesses are benefiting.  He noted that Pennsylvania’s gaming industry has grown very quickly, compared to New Jersey, which occurred over a longer period of time.

Senator Mike Waugh, 28th District, wanted assurances that the Commonwealth is doing everything it can to improve and support the horseracing industry, adding that tracks have made significant investment in their facilities.  Chairman Colins said that increases in prize purses are having a positive effect on the breeding industry and farmland preservation.

Senator Waugh also raised concerns that charitable organizations and non-profit organizations in his district are seeing a crack down on their carnivals and other events because of pressure from the casino industry to close their operations down.

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Historical & Museum Commission - - 1 hour 4 minutes

During the budget hearing for the Historical and Museum Commission, Senator Jake Corman (R-34) remarks to Executive Director Barbara Franco about the need to present all budget priorities in their annual budget request.

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.

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Labor & Industry - - 59 minutes

Senator John Rafferty (R-44) tells Acting Labor and Industry Secretary Sandi Vito that the Administration should end the practice of eliminating funding for worthy programs and forcing the Legislature to restore the funds.

During the Labor and Industry Budget Hearing, Senate Appropriations Committee Chairman Gib Armstrong (R-13) comments on the difficulties that can be presented by the prevailing wage.

Summary

Senator John Gordner, 27th District and Chairman of the Senate Labor and Industry Committee, asked why funding was decreased by $450,000 from last year for Centers for Independent Living (CIL).  Acting Secretary Sandi Vito said the decreased funding is necessary to make room for the Governor’s new programs. 

Senator Gordner and Senator John Rafferty, 44th District, also asked why the Department eliminated funding for Self Employment Assistance. Senator Rafferty reminded the Acting Secretary that small businesses are the backbone of Pennsylvania's economy.  The Senator also noted that many businesses find it difficult to fill high-paying positions with adequate benefits.

Acting Secretary Vito noted the importance of the initiative, but added that it does not supply self-sustaining living costs and that it will be up to the Legislature to restore funding. 

Countering the Acting Secretary's claim that the Department reduced costs from unemployment insurance claims, Senator Gordner noted that those figures were controlled by statute and not the Department.  Given a federal cut of 9 percent in the Workforce Investment Act, Senator Gordner asked about the Acting Secretary's ideas for maintaining the program's viability.

The issue of maintaining solvency of the unemployment fund, given the prospect of a pending economic downturn, was raised by Senator Pat Browne, 16th District.  Senator Browne asked the Acting Secretary if the Department could get through any potential difficult economic times.  Acting Secretary Vito said there currently is no solvency problem; however, the Department will have to seriously consider the possibility of recession.  Senator Browne was also concerned with the flat-lined funding of the Vocational Rehabilitation Fund and asked if current placement levels and the $331 wage-per-week were sufficient. 

Senator Bob Regola, 39th District, requested a cost analysis of the Uniform Construction Code and queried the Secretary about the use of $2.3 million for local and municipal code support.  The Acting Secretary informed the Senator that the money pays for training municipal code personnel, providing training to opt-outs, and for statewide code enforcement. 

Senator Mary Jo White, 21st District, questioned the Acting Secretary about the effects of the recent minimum wage increase on employment.

Appropriations Committee Chairman Senator Gib Armstrong, 13th District, addressed the unfairness of the Prevailing Wage Act on local school districts and municipalities, and emphasized the need to increase the threshold from $25,000 to $75,000.

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Liquor Control Board - - 1 hour 27 minutes

During the Liquor Control Board budget hearing, Senator Gib Armstrong (R-13), Chairman of the Senate Appropriations Committee, remarks on the need to modernize the sale of wine and spirits in Pennsylvania.

Senator Pat Browne (R-16) discusses privatization issues with LCB Chairman Patrick Stapleton.

Summary

Because Pennsylvania's state store system is a monopoly, a number of Republican senators urged the Pennsylvania Liquor Control Board (PLCB) Commissioners to work harder at making a wider variety of products available to consumers, particularly in rural areas of the state.

Senator Mary Jo White, who represents a large rural area, took issue with a PLCB assertion that consumers can obtain any available product within 48 hours. "I tried it and I found out that my store only stocks once a week," she said. "When people try it out in real life, they find that's not how it works.  It continues for consumers to be a very spotty system.  You have an obligation to serve all people."

Senator Rhoades reiterated that concern – noting that stores are being closed in his district, forcing people to drive further. Senator Corman agreed, saying, "We have an obligation to provide this in rural areas – whether it is profitable or not.  It's part of the business of being a monopoly."

PLCB Chairman P.J. Stapleton said the agency is working to improve service and ensure that all state stores meet high standards.

Senator John Pippy, 37th District, said he has heard complaints about the quality and quantity of high-end wines in state stores and asked if steps are being taken to improve access to some of the smaller California vineyards. "What I'm hearing is that people were happy with the Chairman's Select and it seems to be slowing down," Senator Pippy said.

Noting that there is a growing market for wine, Senator Greenleaf referenced a recent Philadelphia Inquirer article that said the state store system is not doing a good job marketing Pennsylvania wines.  He wanted to know if the PLCB responds to requests for wines and urged the agency to do more to enhance wine sales.

Senator Greenleaf also suggested that the PLCB consider imposing a fee on every liquor licensee and using the revenue to provide free transportation to people who are too intoxicated to drive. Senator Greenleaf said many universities have started providing the service. Chairman Stapleton said he was supportive of the concept.

Senator Mike Waugh, 28th District, whose senatorial district borders Maryland, said that many residents in his area of the state "go down the road" to buy their alcohol.  He wanted assurances that the PLCB has a specific marketing plan for these facilities located near the state’s borders.

Senator Waugh also made a pitch for Pennsylvania wineries, which are a key part of the state's agricultural industry.  "I encourage you to do what you can to give our winemakers the benefit of the doubt and the ability to market their product," he said.

Appropriations Committee Chairman Senator Armstrong said he would prefer to privatize and modernize Pennsylvania's state store system. "I think we are caught in a time warp and we are not being consumer friendly.  If you put this out there to the people, they want convenience, not inconvenience," Senator Armstrong said.  "Anyone who comes to Pennsylvania can't believe we are stuck in prohibition."

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PSERS/SERS  - - 1 hour 9 minutes

Senator Gib Armstrong (R-13), Chairman of the Senate Appropriations Committee, comments on the strong performance of the state retirement systems.

Summary

The Senate Appropriations Committee heard testimony from the Pennsylvania State Employees Retirement System (SERS) Chairman Nicholas Maiale and the Pennsylvania Public School Employees Retirement System (PSERS) Chairman Melva S. Vogler.

The Senators all praised the work of SERS and PSERS in delivering a strong financial return to the Commonwealth.  Senator Browne asked about the agencies’ mixture of investments in stocks as well as alternative investment instruments.  He also mentioned discussions in the legislature regarding investing in companies that practice good public policy.

Senator Gordner asked what percentages of retirees take their money out of the Systems.  He also wanted to know if any analysis was done on the self-funding of COLAs by mandating retirees can only obtain another COLA if their monies remain in the retirement fund.  He also cited college professors, who when they begin teaching in Pennsylvania, are given a choice to enter into the State System.  If they decline to join the System immediately and instead decide years later they would like to opt in, it would be at a significant cost. 

Senator Madigan commended SERS and PSERS for their strong investment returns.  With the uncertainty in the stock markets and inflationary pressure continuing, he asked what procedures and shifts they might make in the coming year.

Appropriations Committee Vice Chairman Senator Tomlinson and Senator James Rhoades, 29th District, asked for an estimation on what a COLA would cost the Commonwealth this year.

Senate Appropriations Committee Chairman Senator Armstrong concluded the hearing by praising SERS and PSERS on their strong performance, noting that Pennsylvania has one of the most effective retirement systems in the nation.

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State Related Universities - - 1 hour 56 minutes

Senator Jake Corman (R-34) discusses the need for additional research institutions in the Commonwealth.

During the budget hearing for the State-Related Universities, Senator Jim Rhoades (R-29), comments on the need to retain medical school graduates as practicing physicians in Pennsylvania.

Summary

Several members of the Senate Appropriations Committee voiced concerns about the rising cost of higher education during a budget hearing with Pennsylvania's state-related universities.

The hearing included testimony from Temple University Vice President and Chief Financial Officer Anthony E. Wagner, Lincoln University President Ivory V. Nelson, University of Pittsburgh Chancellor Mark A. Nordenberg and Pennsylvania State University President Graham Spanier.

Education Committee Chairman Senator Rhoades asked the university officials how the Governor's funding proposal would affect current and future university students. The university representatives projected that tuition would increase by more than 5 percent and student loan debt would be greater under the Governor's proposal.

Appropriations Committee Vice Chairman Senator Robert Tomlinson, 6th District, asked how many students at state-related universities receive financial aid through the Pennsylvania Higher Education Assistance Agency, as well as how much debt the average student would face after graduation. Senator Stewart Greenleaf, 12th District, asked how much tuition has increased over the past 10 years and what costs are driving tuition increases.

Senator Mary Jo White said that the Governor's proposed 1.5 percent increase for state-related universities was "embarrassing" and Senator Corman joined her in advocating increased funding for higher education. Senator Roger Madigan, 23rd District, and Senator Mary Jo White also questioned the proposed cuts to agriculture research while the state is trying to promote the production of bio-fuels.

Senator Madigan asked university representatives to explain why the six-year graduation rate at state-related universities is less than 63 percent. Senator Browne asked how much funding was used for remedial education for students who do not meet proficiency standards.

Senator Rafferty expressed concerns about the safety of state-related universities and questioned what security practices the university has in place to alert and protect students in case of an emergency.

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State Police - - 2 hours 14 minutes

During the budget hearing for the Pennsylvania State Police, Senator Jake Corman (R-34) questions the process of background checks for gaming licenses.

 

Senator James Rhoades (R-29) questions whether the Pennsylvania State Police are staffed sufficiently to handle increased responsibilities.

Senator Rafferty, Chairman of the Senate Law and Justice Committee, opened the budget hearing with the Pennsylvania State Police by asking Commissioner Colonel Jeffrey Miller to respond to “disturbing testimony” by members of the Pennsylvania Gaming Commission that the State Police withheld information that led to the granting of a license to Mount Airy Casino Resort owner Louis DeNaples.

Colonel Miller -- saying he was disturbed by misinformation and personal attacks by PGC members -- provided a detailed account of the State Police investigation of DeNaples, which he said was completely separate from the background investigation by the Gaming Commission prior to its issuance of a license to Mount Airy Resort. Colonel Miller said former PGC Chairman Tad Decker was fully aware that under federal law the State Police, the FBI, and the state Attorney General could not provide information regarding criminal investigations to a “non-criminal justice” agency, in this case the PGC. “The Pennsylvania State Police followed the letter of the law in every instance,” Colonel Miller said.

Noting that Colonel Miller made it clear that PGC investigators were informed that an investigation of DeNaples was underway, Senator Pat Browne, 16th District, raised serious concerns about the misinterpretation of state laws regarding the issuance of gaming licenses. “How could they (PGC) issue a license if they knew an investigation was going on?”  Senator Browne added that the law may have to be “tightened up” to prevent similar problems in the future.

Responding to a question from Senator Gordner regarding potential changes to the gaming law, Colonel Miller suggested opening “suitability hearings” for applicants to the public and to allow more input by the Attorney General’s office.

“We can write new laws, but ultimately people have to operate under the laws. At the minimum someone is not being honest with this committee,” said Senator Jake Corman, 34th District. “Someone made a decision to turn a blind eye to the information that was available.”

Senator White requested an update on the State Police’s proposed six communications centers, including one planned for Clarion, and the rollout of the statewide 800 megahertz radio system.   She also criticized the round-the-clock use of “highly trained” state troopers at casinos, when they could be replaced by security personnel. “The presence of the State Police in these facilities is not particularly useful,” Senator White said.

Senator Gordner asked for a justification for proposed significant increases in fees for background checks for firearm purchases.

Commenting on the costs incurred by having the State Police provide coverage in municipalities that don’t have their own police forces, Senator Vance said it is “inherently unfair” for those municipalities to receive half of the revenue raised from citations issued by the State Police.  Colonel Miller estimated that a total of $8.5 million is going to those municipalities from those fines.

Senator James Rhoades, 29th District, noted that State Police staffing is currently about 185 troopers below its full complement. He asked if a review had been undertaken regarding the increased workload of the State Police, including its roles with gaming and in providing background checks.

Senator John Pippy, 37th District, asked about State Police readiness and capabilities to address emergency situations in cooperation with PEMA and the Pennsylvania National Guard. Senator Pippy also asked if the State Police patrolled the highways around Pittsburgh as it does in Philadelphia. Colonel Miller said the State Police has a good working relationship with the Pittsburgh Police Department.

Senator Greenleaf asked whether other states have experienced problems, particularly with organized crime, associated with gaming. Colonel Miller said the State Police work and talk continuously with law enforcement officials from other states to learn how to address crimes associated with gaming.

Appropriations Committee Chairman Senator Gib Armstrong, 13th District, said he’s received a number of calls from veterans’ organizations and social organizations regarding stepped up law enforcement by the State Police regarding small games of chance, particularly in south-central Pennsylvania. Senator Armstrong said the perception is that enforcement was stepped up with the opening of slot machine revenues. Colonel Miller said the State Police has not stepped up enforcement with the opening of the slot machine venues, but because of complaints. Investigations revealed that many organizations are taking in much more than the $5,000 per-week maximum allowed under state statute.

Senator Armstrong asked how the Amish, who shun photographs, are able to purchase firearms. Colonel Miller said he didn’t know how they were able to meet the legal requirements, but would check into it.

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State System of Higher Education - - 1 hour 8 minutes

Sen. Gib Armstrong (R-13) discusses the high cost of a new computer system to serve the State System of Higher Education.

Sen. Mary Jo White (R-21 tells Executive Vice Chancellor Peter Garland that State System of Higher Education should provide financial assistance to the municipalities that host state universities.

Summary

Senate Appropriations Committee members focused on student safety during a budget hearing with State System of Higher Education Executive Vice Chancellor Peter Garland.

Senator Rafferty asked what measures were being taken to step up campus security in light of recent violent outbreaks on college campuses. Senator White suggested levying a nominal fee on students to help support local law enforcement in host communities to protect public safety. Senator Waugh urged the SSHE to specify any improvements that would be needed to provide a safe learning environment for students.

Several senators voiced their concerns about the costs at SSHE schools. Senate Education Committee Chairman Senator Rhoades asked what the total annual cost would be for students for tuition and housing.

Appropriations Committee Vice Chairman Senator Tomlinson requested more information on capital expenditures on SSHE campuses and questioned how performance funding is distributed among schools. Appropriations Committee Chairman Senator Armstrong questioned the costs of the computer system mandated for all 14 SSHE schools.

Senator Browne asked how SSHE graduation rates and costs compare to the national average. Senator Regola asked what the average student loan debt would be for SSHE graduates.

Senator Browne pointed out that a small number of students are currently enrolled in engineering and related fields. Senator Rhoades asked what the SSHE is doing to educate students for high-need positions for Pennsylvania, such as nursing and engineering.

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Treasury Department - - 51 minutes

During the Department of Treasury budget hearing, Senator Jake Corman (R-34) comments on the difficulties presented by shortfalls for personnel costs in the Administration’s budget proposal.

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