Capitol Update

Governor Wolf Proposes Budget Relying on Cost Cutting and Shale, Liquor and Gaming Revenues

Gov. Wolf released his FY 2017-18 proposed budget on Tuesday, February 7th. The budget proposes closing a nearly $2 billion structural deficit through major programmatic consolidations and merging of multiple state departments.

Cuts and Consolidations 

  • The Department of Aging, Department of Human Services, Department of Health and Department of Drug and Alcohol Programs are proposed to be merged into a single Department of Health and Human Services.
  • Wolf’s budget assumes the merger of the Pennsylvania Board of Probation and Parole with the Department of Corrections into a single Department of Criminal Justice.
  • $100 million in tax credit incentives are eliminated and replaced with a block grant.

Enhanced Revenue

  • Wolf’s budget assumes new revenue through the imposition of a natural gas severance tax at 6.5%.
  • Further efforts toward flexible pricing and supplier negotiations are projected to generate $137 million more through wine and liquor sales.
  • Gaming expansion is projected at $250 million. Implementation of electronic lottery games is also assumed.

Other assumptions within the proposal include: elimination of “loopholes” for specialty software and computer services, food sold to airlines, aircraft maintenance and repair and business storage; adoption of combined reporting in conjunction with CNI reductions (reductions to begin in 2019); a $25 per person fee assessed on municipalities which rely on State Police coverage in lieu of local police; and continuation of the Justice Reinvestment Initiative to reduce prison population and criminal justice costs.

Two Senior Officials Separated From Wolf Administration

Two senior officials recently left the service of the Wolf administration: former Secretary of the Department of Drug and Alcohol Programs Gary Tennis, and former Chief of Staff Mary Isenhour.

  • Tennis stated that he was ousted due to his disagreement the governor’s intention to merge the Department of Drug and Alcohol Programs with three others. News coverage mentioned criticisms of Tennis’s close association with a lobbyist for addiction treatment centers.
  • Isenhour left the administration to join Wolf’s reelection effort. She will be succeeded by Deputy Chief of Staff Mike Brunelle.

Controversial Legislation Marks Beginning of Session

The Pennsylvania Senate has affirmatively voted on three controversial bills:

  • SB 10 extends liability to sanctuary cities for actions of illegal immigrants in some instances, requires municipalities to enforce federal law relating to immigration, and requires municipalities to comply with immigration orders. Three democrats joined republicans in voting the bill out of the Senate by a margin of 37-12.
  • SB 3 prohibits abortions after 20 weeks of gestation (reduced from 24 weeks under current law). The bill passed the senate by a vote of 32-18 after several hours of debate. Criticism on the senate floor focused on interference with the relationship between doctors and patients.
  • SB 166 prohibits the state from carrying out payroll deductions for political purposes (effectively barring union-related payroll deductions, commonly known as the Paycheck Protection Act). The bill was met with criticism on the floor for being an attack on labor unions with the goal restricting the voices of union members. Six republicans joined democrats in opposing the measure. The bill cleared the Senate by a vote of 28-22.

The Senate returns to session on March 20th, and the House returns on March 13th. Appropriations hearings of both the House and Senate commence on February 21st.