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Senator Scott Wagner

Dear Friend,

The Senate Appropriations Committee, on which I serve, wrapped up its second 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.

The final week of hearings begin Monday at 9:30am.  You can access the schedule and watch the hearings live online, and I often post on Twitter and Facebook for those who do not have the opportunity to watch.

I always welcome your feedback and input. Please don’t hesitate to contact me via my website.

Sincerely,

Scott R. Wagner


Budget Hearings:


Monday, March 23

Public Utility Commission

Pennsylvania Public Utility Commission Chairman Robert Powelson and commissioners fielded questions regarding pipeline safety, as well as transparency and cooperation with local municipalities.

Other topics of discussion included:

  • The need for infrastructure upgrades.
  • Regulation of private transportation services like Uber and Lyft.
  • The potential effect of combined reporting requirements on utility companies and customers.
  • Alternative Portfolio Standards for renewable energy sources and compliance with EPA restrictions.
  • The potential impact of an additional severance tax on the natural gas industry and the effect on leaseholders.
  • Expansion of natural gas service to underserved areas.
  • Preventing and responding to utility outages.
  • Regulation of household goods carriers.
  • The use of anaerobic digesters and other best management practices on farms.
  • Changing enforcement responsibilities for the PA One Call system from the Department of Labor and Industry to the PUC.
  • The effect of power plant closures in western Pennsylvania.
  • The number of union versus non-union employees.

Watch the Hearing here.

Watch Senator Wagner questioned commissioners about staffing totals and the breakdown of union versus nonunion employees, including the fact that the PUC is the only state agency with a unionized legal team.

SERS/PSERS Public Pension Funds

Officials of the two state public pension funds, the State Employees’ Retirement System (SERS) and the Public School Employees’ Retirement System (PSERS), discussed their systems’ unfunded liabilities. Other topics committee members explored were:

  • Whether the 7.5 percent expected rate of return is too optimistic.
  • The impact of the Governor’s plan to issue a bond to help fund the plans.
  • The possible effect of moving to a passive-management system.
  • How system fund managers and boards make investment decisions.
  • Termination of poorly performing fund managers.
  • Participation in the SERS Deferred Compensation program.
  • The effect of the imbalance between active and retired members.
  • Why fees paid by systems are greater than in the private sector.
  • The cost to taxpayers of unfunded liability.
  • Pension bonds over 25 years will cost more to pay off than they save.
  • The reported general economic benefit of pension benefits.
  • The impact of Act 120 on pension costs.
  • The effectiveness of defined benefit versus defined contribution plans.
  • The use of index funds to reduce fees and boost returns.
  • The returns of fund investments compared to the S&P 500.
  • The effect of the Governor’s proposed sales tax on professional services on pension costs.
  • The average pension payout since 2000.
  • The effect of economic downturns on unfunded liability.
  • The need for citizens to plan for retirement.
  • Ideas for reducing costs of employees not affected by Act 120 reforms.
  • Feasibility of the Governor’s plan to slash management fees yet increase returns.
  • Costs of transitioning from defined benefit to defined contribution plan.

Watch the Hearing here.

Department of Health

Acting Health Secretary Karen Murphy and Physician General Rachel Levine answered questions from committee members including:

  • Implementation of the Prescription Drug Monitoring Program.
  • Status of the number of tanning facilities who have registered under the state’s new law.
  • Rationale for numerous cuts in programs and services, including biotechnology initiatives.
  • The growing heroin epidemic and how the state can attack this health threat.
  • Efforts to improve prevention and education for Lyme disease and the status of a task force established by the Legislature to address those issues.
  • The need to attract and retain primary care physicians.
  • The rising use of emergency care facilities and their impact on health care delivery.
  • How to determine if there are health issues in areas around Marcellus Shale well site.
  • Challenges that Emergency Medical Services are having with respect to funding.

Watch the Hearing here.

Tuesday, March 24

Department of Aging

Members of the Appropriations Committee quizzed Acting Secretary of Aging Teresa Osborne on programs for Pennsylvania’s senior citizens and several other issues including:

  • The reliance on projected increases in lottery sales to support programs.
  • The Governor’s proposed sales tax expansion to include nursing home care.
  • The extension of the moratorium on Social Security COLAs on PACE/PACENET income limits.
  • The need to promote aging in place.
  • The loss of senior centers across the state.
  • State support for senior centers.
  • Demographic trends and pressures on funding.
  • Funding of community care.
  • Proliferation in crimes against the elderly.
  • The effect of cost containment efforts.
  • Inequities caused by “hold harmless” funding to counties.
  • Implementation of long-term care programs.
  • Unionization of home health care workers.

Watch the Hearing here.

Thaddeus Stevens College of Technology

The committee explored the history and mission of the Thaddeus Stevens College of Technology with school president William Griscom. Among the topics covered were:

  • The need for skilled workers, such as machinists, welders and metal fabricators.
  • The effect of the Governor’s proposed sales tax increase on students.
  • The average tuition and student debt.
  • Services for students with learning disabilities.
  • The results of an audit of the school’s operations.
  • Graduates entering the workforce in demand for high-paying jobs.
  • The fact that skilled workers are aging and there are not enough Pennsylvania graduates to fill available six-figure jobs.
  • Cost per pupil and student demographics.

Watch the Hearing here.

Senate Wagner notes that he toured the college and found that it does much on a limited budget, with Thaddeus graduates entering the workforce in high demand for good-paying jobs, adding that an aging Pennsylvania population needs the next generation to learn productive skills. He added that there is a demand for skilled workers, and we need to solve this crisis. Watch here.

State-Related Universities

Representatives of Pennsylvania’s state-related universities answered questions regarding potential tuition increases and the effect of the governor’s budget proposal on tuition rates.

Other topics discussed during the hearing included:

  • The impact on students if the governor’s sales tax increase is enacted.
  • Certificate programs and other ways to help graduates meet the needs of employers.
  • The cost, expense and availability of online education programs.
  • Potential savings from the elimination of prevailing wage requirements for construction projects.
  • Progress on making higher education more military-friendly.
  • The total annual cost of higher education including tuition, fees and housing.
  • Four-year graduation rates.
  • The number of employees covered by PSERS and the effect of pension cost increases.
  • The proposed merger between Penn State Health and Hershey Medical Center.
  • Funding for agriculture research and education.
  • Tuition remission for university personnel and their families.

Watch the Hearing here.

Senator Wagner asked state-related universities for balance sheets showing total assets and liabilities, not just expenses. He also requested an estimate from Penn State on how much they could save on an upcoming construction project if they didn’t have to pay prevailing wage rates. Watch here.

Wednesday, March 25

Department of Environmental Protection

Acting DEP Secretary John Quigley was questioned about his request to fund 50 new inspectors, mostly for unconventional wells. Other topics discussed included:&

  • The need to provide the legislature with new regulations as soon as drafted and additional public hearings when revised.
  • The origins and constitutionality of the proposed natural gas severance tax.
  • The proposed cap on the local share of the Act 13 impact fee.
  • The ability of the state to prohibit drillers from passing on severance tax to leaseholders.
  • Pennsylvania’s share of funding the Delaware River Basin Commission.
  • Locations and construction of natural gas pipelines.
  • Reductions in the Hazardous Site Cleanup Fund.
  • The fate of coal-fired power plants in Pennsylvania.
  • The Governor’s alternative energy tax proposal funded by a portion of severance tax and bond.
  • Plan for reducing delays in issuing DEP permits.
  • The need for better time management with existing inspectors.
  • A breakdown of unionized workers and lawyers in DEP.
  • Projections for oil and gas production for the next several years.
  • The number of windmills in Pennsylvania and energy produced.
  • An update on tire pile cleanup totals.
  • Proposed stricter regulations of riparian buffers and the effect on much-needed road and bridge projects.
  • Improving access to natural gas for middle-class families.
  • Grants for endangered species studies in watersheds.
  • An update on the effectiveness of alternative energy incentive grants.
  • Collaboration between DEP and the Public Utility Commission.
  • Borrowing money for solar and wind projects.
  • Unfunded mandates placed on municipal authorities for Chesapeake Bay cleanup.
  • DEP working with PEMA over concerns about transportation of oil by rail.
  • The need to shore up accountability before offering more alternative energy subsidies.
  • Concerns over the cross-purposes of taxing one energy producer to subsidize another.
  • The apparent unsustainability of proposed new spending to be financed by a severance tax.

View the entire Budget Hearing here.

Senator Scott Wagner says he is opposed to new DEP gas well inspectors until the department implements better time management with existing inspectors. He also sought information on the number of unionized DEP workers and expressed doubt that oil and gas production will increase in the near future. Watch here.

Department of Corrections

Members of the Senate Appropriations Committee questioned Acting Corrections Secretary John Wetzel and John Tuttle, Acting Chair of the PA Board of Probation and Parole about several issues relating to Pennsylvania's prison population including:

  • The rising costs associated with incarcerating inmates and high rates of recidivism among prisoners.
  • Efforts to provide job-training to inmates so that they can find employment when then are released.
  • Enlisting the help of non-profits in providing services to prisoners to help them with re-entry.
  • Medical care provided to inmates, particularly mental health services for inmates who are leaving prison.
  • Providing education and vocational education to prisoners to improve their skills.
  • Converting prisons from coal to natural gas to save costs.
  • The role that mental health courts can play in lowering prison populations and costs.
  • The high cost of benefits, including pensions, for employees compared to the private sector.
  • Significant caseloads for county probation officers.
  • Providing support and mentoring to children of incarcerated inmates.
  • Overtime costs and the need to fill vacant prison guard positions to reduce those expenses.
  • Managing non-violent offenders in the community while not compromising public safety.
  • Consolidating the Department of Corrections and the Board of Probation and Parole to improve services to those who are incarcerated.

View the entire Budget Hearing here.

Senator Wagner noted that most of the increase in requested Corrections funding is employee benefits, which run much higher than similar paying jobs in the private sector. Watch here

PA Liquor Control Board

Pennsylvania Liquor Control Board Chairman Tim Holden and board members fielded questions regarding various liquor privatization and modernization proposals. 

Other topics of discussion included:

  • The decision to allow beer distributors to sell 12-packs to customers.
  • An update on tavern gaming licenses.
  • The potential to generate additional revenue if Sunday sales are expanded.
  • Additional personnel costs if Sunday sales are expanded.
  • The burden on consumers if a sales tax increase is enacted.
  • Legislation to allow 24-hour alcohol sales at casinos.
  • Current and projected revenues generated by state liquor sales.
  • Operational costs, pricing and mark-ups.
  • The gift ban for board members.
  • Allowing the direct shipment of wine and beer to out-of-state customers.
  • Efforts to prevent underage drinking and drunk driving.
  • The increase in sales at new and rebranded state liquor stores.
  • Investments in alcohol education.
  • Securitization of liquor store receipts.

View the entire Budget Hearing here.

Senator Wagner asks about the current price mark-up system and what is keeping the LCB from generating more revenue. He also requested more information on PLCB staffing, including benefits as a percentage of personnel costs. Watch here.

Thursday, March 26

Department of Human Services

Ted Dallas, Acting Secretary of Human Services, formerly the Department of Public Welfare, took questions from senators on a number of programs and services that his agency provides, including:

  • Expanding the Human Services Development Fund and providing greater accountability in tracking block grants.
  • The lack of psychiatrists in state hospitals and the fact that patients are not receiving care.
  • A psychiatric demonstration project that has shown great success but is not being used in Pennsylvania.
  • Concerns about the hiring of a New York-based company to oversee labor relations with direct care workers involved in home- and community-based services.
  • Combatting the growing heroin epidemic and providing first responders with Narcan to reverse overdoses.
  • Training of those who are administering the new child protection laws.
  • Outreach services to homeless veterans and the use of veterans courts to address issues.
  • Strengthening the integrity of the public assistance program to combat fraud and abuse.
  • Changes that have been made to the way community group home providers are being reimbursed.
  • The long delay in processing child abuse clearance checks.
  • The waiting list in many group homes and the need to more adequately fund them.
  • Funding for autism and the need to increase the appropriation to handle the growing number of cases.
  • Attempts to unionize direct care workers and the cost of the benefit package for employees.
  • Spending for programs and services for at-risk children.
  • Providing care to adult children who have mental illness.
  • Concerns about achieving sustainability in budgeting and the impact that imposing  additional taxes will have on programs and services.

View the entire Budget Hearing here.

Senator Wagner raises concerns about the Governor’s executive order to allow the unionization of direct care workers, especially in light of the Governor receiving campaign contributions from the union. He also questions the dramatic cost of benefits costs well above the private sector, and the Governor’s plan to impose a sales tax on personal care home services. Watch here.

Department of Community and Economic Development

Committee members questioned Dennis Davin, Acting Secretary of the Department of Community and Economic Development on the following:

  • The need for a proactive approach to help companies expand, stay or relocate in Pennsylvania.
  • Ensuring accountability when providing grants to the private sector to create jobs.
  • Concerns about the Governor’s proposal to expand the sales tax and how that will impact small businesses.
  • The impact of the film industry in Pennsylvania and the film tax credit.
  • Concerns about the Governor’s proposal to implement combined reporting and how it would affect companies because of a lack of predictability.
  • The importance of Main Street and Elm Street programs to economic development.
  • How the City Revitalization and Improvement Zone (CRIZ) Program has improved community development.
  • Concerns that the Governor’s plan to increase the tax that small businesses pay by 20 percent will stifle job-creation and economic development.
  • Concerns about achieving sustainability in budgeting and the impact that imposing additional taxes will have on programs and services.
  • Focusing more resources on tourism marketing and promotion.
  • Efforts to attract more skilled workers and provide job training.
  • The financial distress that many third-class cities are now under.

View the Budget Hearing here.

Senator Wagner confirms that projects receiving state grants must pay prevailing wage rates, notes that the skilled labor crisis is not being addressed by the proposed budget, and requests supporting material for DCED budget requests. Watch here.

Department of State

Acting Secretary of State Pedro Cortes discussed several election-related and state licensing issues. Specific topics discussed during the session included:

  • Status of a notification system when medical professionals are charged with a crime.
  • Online voter registration.
  • Business licensing.
  • The Governor’s proposed sales tax expansion to include professional services.
  • The Gosnell abortion clinic case.
  • Absentee voting.
  • State athletic commission.
  • Costs of advertising constitutional amendment ballot questions.
  • State boards and commissions.
  • Information technology equipment.

View the Budget Hearing here.


Twitter and Facebook: You can find me on Twitter at @SenScottWagner as well as on Facebook.
 

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