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Senator Scott Wagner

Dear Friend,

The Senate Appropriations Committee has completed the third and final week of public hearings on the proposed 2015-16 state budget.

Below are summaries and videos of each hearing, as well as video clips of my discussions with the department heads who testified. Within the summaries, the bold bullet points indicate topics I brought up during questioning. (Previous hearing summaries: Week 1, Week 2.)

Follow me on Twitter and Facebook for further developments on the budget process and all state-related matters. I always welcome your feedback and input. Please donít hesitate to contact me via my website.


Scott R. Wagner

Budget Hearings:

Monday, March 30

Department of Education

Committee members told Acting Education Secretary Pedro Rivera about the need to change the public school retiree pension system to reduce skyrocketing costs that are diverting funds away from the classroom. Other topics included:

  • Career and technical education funding
  • Early warning system for identifying students at risk of dropping out.
  • The constitutionality of the Governorís proposed property tax reduction plan.
  • The negative effects of the ďhold harmlessĒ clause which prevents state aid from being diverted to districts with rising enrollment.
  • The growing responsibilities of school nurses.
  • The need to address wages and benefits driving increased education costs.
  • The savings to be realized by eliminating prevailing wage mandates on school construction projects.
  • Spending on pre-kindergarten education programs.
  • Schools being required to teach to the state-mandated tests.
  • Concerns that the Governorís proposed property tax reductions are not permanent.
  • The need to increase accountability with any new state education funding.
  • The formula for proposed cyber education funding.
  • The lack of additional money for PlanCon school construction funding.
  • Disparities in state funding from district to district, and disparities in proposed property tax reductions.
  • The burden of requiring school districts to prepare a report by May 15 on budgeting proposed new state funding.
  • The need to reform the state basic education funding formula.
  • Removing pension spending from the education general fund budget gives a misleading view of actual education funding.
  • Funding and effectiveness of adult literacy programs.

Watch the hearing here.

Watch Senator Wagner notes that wages and benefits are the largest driver of the budget and that we need to rein in the 500 different labor contracts. He also inquired about the possibility of eliminating the prevailing wage requirements on schools and the Governorís property tax proposal. Watch here.

Department of Labor and Industry

Kathy Manderino, Acting Secretary of the Department of Labor and Industry, answered questions on a number of issues related to jobs and workers, including:

  • Staff complement and pension-related costs for the department.
  • The need to increase vocational rehabilitation funding to get more people into the workforce.
  • The rationale for using an out-of-state company for labor negotiations.
  • Wage pressure if the minimum wage is increased.
  • A crisis in finding skilled labor, particularly for manufacturing jobs.
  • Workersí compensation fraud.
  • The time frame for transferring information for PA residents who work out of state.
  • Increased funding for assisted technology, which helps those with disabilities.
  • Providing funds and assistance for the Centers for Independent Living.
  • How the proposed increase in the minimum wage would affect small businesses.
  • Sole proprietors who pay into unemployment compensation but cannot receive benefits.
  • Encouraging young people to obtain training in trades.
  • Cost-savings realized by a program that prevents prisoners from receiving unemployment benefits.
  • The importance of New Choices/New Options in helping workers who have been out of the workforce for a long time to find employment.
  • Vocational training for inmates before their re-entry.
  • The status of the State Workers Insurance Fund and its importance to state businesses.
  • How effective the U.C. Amnesty Program has been in recovering costs.

Watch the hearing here.

Senator Wagner recommends having guidelines and an estimated timeline for workers comp case settlement. He questions if an increase in the minimum wage is an implied increase for other workers and noted that there are already jobs paying over minimum wage that businesses cannot fill. Wagner also inquired about unemployment comp and workers comp fraud and what the department is doing to address it. Watch here.

Department of Banking & Securities

Acting Secretary of Banking & Securities Robin Wiessmann fielded questions from members of the Appropriations Committee on a number of topics related to the banking industry in Pennsylvania including:

  • Issues facing community banks.
  • Mortgage servicing.
  • Bank shares tax.
  • The influence of global banking trends on Pennsylvaniaís banks.
  • Financial scams.
  • Electronic transactions and cybersecurity.
  • The impact of the Governorís proposed sales tax expansion on the securities industry and investment services.
  • Payday lending operations.
  • Regulations on loan origination.
  • Passive versus active investment strategies for pension funds.

Watch the hearing here.

Tuesday, March 31

Department of Revenue

Acting Secretary of Revenue Eileen McNulty was questioned about the Administrationís unprecedented tax hikes and the impact on the Pennsylvania economy. Topics included:

  • Confusion over a possible sales tax on lobbying.
  • Services covered by the proposed sales tax on financial planners.
  • Re-release of the bulletin on bank shares tax.
  • Ability to nullify existing contracts to prevent drillers from passing a severance tax onto property owners.
  • Disparities in property tax reductions under the Governorís plan.
  • The failure of the Governorís school property tax plan to prevent property taxes from going back up.
  • Unrealistic projections for severance tax revenue.
  • The Governorís plan to cap natural gas impact fee funding and the effect on communities.
  • Strategy for meeting projections for lottery revenue increases.
  • The possible need to review criteria for Property Tax/Rent Rebate regarding surviving spouses over 50 and non-citizens.
  • The likelihood that retailers will round up the proposed 6.6 percent sales tax to 7 percent.
  • The complexity and legal challenges with implementing combined-reporting requirements on businesses.
  • The proposed sales tax on amusement park admissions and impact on local amusement taxes.
  • The Administrationís plan to implement a whole new regime of taxation and the ability to administer with current staffing.
  • The burden of adding $9 billion in new costs on the Pennsylvania economy under the Governorís plan and the effect on economic growth.

Watch the hearing here.

Pennsylvania Historical and Museum Commission

Senators asked James Vaughn, Executive Director of the PA Historical and Museum Commission about his agencyís budget and mission, including:

  • The use of public-private partnerships and volunteers in operating historical sites.
  • Increased fees and how it affects the number of visits.
  • The trend in attendance at historical sites and museums.
  • How important cultural and historical sites are to tourism.
  • Concerns about expanding the sales tax to cover admissions to facilities and the impact it would have on the number of visitors.

Watch the hearing here.

Department of Transportation

Acting Transportation Secretary Leslie Richards fielded questions about the stateís transportation system including:

  • Act 89, the stateís transportation funding plan, and the positive impact it has had on infrastructure.
  • Addressing the serious pothole problem caused by the harsh winter.
  • Federal legislation and funding needed to continue improvements.
  • Public-private partnerships for bridge replacement and other projects.
  • Exemptions for emissions testing for new vehicles.
  • The stateís Dirt and Gravel Road Program and its success in protecting streams.
  • Ensuring that seasonal workers are treated fairly with unemployment compensation and other benefits.
  • How to move transportation and development projects forward while protecting the environment.
  • Notifying communities when bridges are going to be closed or weight-restricted.
  • Solving serious traffic issues on Route 422.
  • A status report on the stateís structurally deficient bridges.
  • Encouraging the use of compressed natural gas and increasing the number of stations.
  • Updating the Pennsylvania Transit Revitalization Investment District (TRID) Act.

Watch the hearing here.

Senator Wagner requests a breakdown of PennDOTís employee structure as well as statistics on the amount of revenue generated by the increased fuel tax. He also raised concern with municipalities not being able to make emergency pothole repairs due to the fact such work would take overtime away from union members. Watch here.

Department of Agriculture

Acting Secretary of Agriculture Russell Redding fielded questions from members of the Appropriations Committee on a number of topics related to agriculture in Pennsylvania including:

  • Inequity in tax breaks for farmland, particularly in light of the array of tax increases proposed by Governor Wolf.
  • Support for the horse racing industry in Pennsylvania.
  • A proposed ďGreen AgricultureĒ initiative.
  • Funding for Penn Stateís agriculture programs and the University of Pennsylvaniaís veterinary school.
  • The impact of regulations on church fundraising activities.
  • State support for fairs and the potential for those events to be taxed under the Governorís proposed sales tax expansion.
  • Dog licensing and dog law enforcement.
  • Objections by the Pennsylvania Farm Bureau to the Governorís temporary and limited property tax reduction proposal.
  • Elimination by the Governor of funding for a number of programs in the Agriculture budget.
  • Resource Enhancement and Protection (REAP) tax credits to assist farmers.
  • High school agriculture science programs.
  • The PA Preferred program and promotion of Pennsylvania-grown products.
  • Farmland preservation efforts.

Watch the hearing here.

Wednesday, April 1

Pennsylvania Emergency Management Agency

PEMA Director Richard Flinn and State Fire Commissioner Timothy Solobay briefed members of the Senate Appropriations Committee on emergency operations and services, including:

  • Legislation to implement the updated statewide 911 system, and how fees will be assessed.
  • Concerns about the statewide radio system.
  • The dwindling number of volunteer firefighters and emergency services workers.
  • A status report on the new PEMA building, including costs involved in its construction.
  • Recruitment and retention of volunteer fire fighters and the savings they provide to communities.
  • Efforts to attract new volunteers, including tuition credits, loans and training.
  • PEMA's working relationship with the PA State Police.
  • Training for responding to incidents involving Marcellus Shale.
  • Responding to motorists who are stranded on highways for long amounts of time due to road condition.
  • Concerns about trains carrying large amounts of crude oil through communities and whether there is notification.
  • Merging fire companies to save costs and prevent duplication.
  • Funding issues faced by county 911 centers and the need to resolve challenges they are facing.
  • The value of the Local Emergency Relief line item.
  • Hazard mitigation efforts to prevent reoccurrence of flooding.
  • State assistance for volunteer recruitment and retention efforts.
  • Increased workers comp insurance rates for firefighters.
  • Pipeline emergency response training.
  • Legislation updating Title 35.
  • The authority of the 911 advisory board.
  • Why the Administrationís PEMA request is higher than what PEMA requested.

Watch the hearing here.

Department of Conservation and Natural Resources

Acting DCNR Secretary Cindy Adams Dunn answered questions about the benefits and impacts of natural gas drilling on public lands. Other topics of discussion included:

  • The legality and impact of the governorís moratorium on new natural gas leases in state forests and parks.
  • Increasing numbers of visitors to state parks.
  • A reduction in revenue generated by timber sales.
  • Modernizing the PNDI Environmental Review Tool.
  • Proposed funding cuts for Heritage Parks.
  • Funding for high-hazard dams.
  • The impact of additional funding dedicated to dirt and gravel roads.
  • A proposed increase in the Realty Transfer Tax.
  • Avoiding using state parks and forests as political pawns in the event of a prolonged budget debate.
  • Uses of Oil and Gas Lease Fund revenues.
  • Capital projects on public land.
  • Areas available for the use of alternative energy.
  • The total value of energy resources on state land.
  • Difficulties in projecting severance tax revenue.

View the hearing here.

Senator Wagner requests assurance from DCNR Acting Secretary Dunn that should the state budget not be passed on time that we will not hear about parks closing.  He notes that private businesses do not get a reprieve from paying taxes when a budget is not passed so revenue continues to come into the state. Watch here.

Department of Military and Veterans Affairs

Acting Adjutant General James Joseph discussed a number of issues pertaining to the Pennsylvania National Guard, the Pennsylvania Air National Guard and services provided to veterans by the Commonwealth. Specific issues discussed during the hearing included:

  • The number of National Guard members deployed.
  • Trends in recruitment and retention.
  • Information technology matters.
  • Funding for the education of veteransí children.
  • Waiting lists for state veteransí homes.
  • Veterans service outreach efforts.
  • Veterans Trust Fund donations and expenditures.
  • Health care coverage for veterans under Medicaid expansion.
  • A court ruling changing the definition of a paralyzed veteran.
  • Matching veterans with job openings.
  • Partnerships with the private sector to serve veterans.
  • Terrorist threats against service members.
  • Federal funding for veteransí services.
  • The success of county veteransí courts.
  • Dementia and Alzheimer ís disease issues among veterans.
  • Delays in processing Disabled Veterans Real Estate Tax Exemption program applications.
  • Increases in personnel costs caused by pensions.
  • Privatization of some services.
  • Creation of a separate Department of Veteransí Services.
  • Military advocacy of early childhood education.
  • Options for long-term care.

View the hearing here.

Senator Wagner inquires about the Disabled Veterans Real Estate Tax Exemption Program and discusses the Departmentís workersí compensation costs. Watch here.

Department of Insurance

Acting Insurance Commissioner Teresa Miller answered questions regarding the effect of the federal health care law, as well as other topics including:

  • The cost of healthcare exchanges under Obamacare.
  • Consolidation of healthcare insurers and the effect on consumers.
  • Federal concerns regarding minimum essential coverage under CHIP.
  • The consent decree between Highmark and UPMC.
  • Projected cost savings for employers in terms of Workerís Compensation.
  • Unfunded liability for MCARE and the number of malpractice claims in Pennsylvania.
  • Companies declining to sell long-term care insurance.

View the hearing here.

Senator Wagner notes that it is noble to reduce the workers compensation rate for employers, but the Department needs to be aware of the back-end costs employers incur as they work through resolving workers compensation cases. Watch here.

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