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Budget Hearings Continue with Dueling Numbers, Plans, Proposals

The House Appropriations Committee is finishing its budget hearings, and back in Harrisburg next week, while the Senate continues its annual agency examinations.  The Wolf Administration, in interviews and throughout the hearings continued to insist that the proposed budget is a comprehensive plan that has to be evaluated as a whole, and not as individual pieces.  Budget Secretary Randy Albright told the Senate that the problems and solutions are all interconnected, but that the targeting proposed by Governor Wolf will make the state more competitive.

Republicans continued to insist that the taxes proposed by Wolf would stifle small businesses, and not provide property tax relief in proportion to new tax revenues raised by the state.  Republicans said the proposals would raise taxes in 404 of 500 state school districts, raise taxes by $8 billion when fully implemented, and return only $3.6 billion for property tax and rent rebates.

In the hearings themselves, questions focused on agency responsibilities and the cost of Wolf’s tax proposals.  Some energy related information from the DEP and PUC budget hearings can be found below. 

By last weekend, both House Republicans and the Wolf Administration had launched dueling websites to help the public see the impact of the newly proposed taxes.  The Republican site,, shows net tax increases in 404 of 500 school districts.  Meanwhile the Governor’s website, showed impacts on families, rather than individuals, and the Governor himself continued a statewide “Schools that Teach” tour of public schools to promote his education funding proposals.

The Senate and the Governor initiated a series of letters to school districts over the budget as well, with the Senate first warning school administrators against spending funds proposed by the Governor.  Wolf upped the ante with a letter to school superintendents from acting Education Secretary Pedro Rivera directing districts to submit spending plans to the state Department of Education by May 15.  The House and Senate followed by advising superintendents to check with their lawyers before following the mandate.  

Senate Majority Leader Jake Corman said that before any taxes were discussed, pension reform had to be addressed, and said Senate Republicans are considering reducing future benefits for current state and school district workers back to 2001 levels.

In other words, if there is one thing that’s certain this spring, the budget will NOT be considered by the General Assembly as a comprehensive plan.  Pensions, taxes, liquor control, education funding, formulas, property tax relief, and more are on the plates.  And while all are interconnected, each creates its own set of issues that must be resolved.  It may be a long summer in Harrisburg.

Quigley Talks Taxes, Regulation, Energy Spending

Acting DEP Secretary John Quigley spent two days in the last week on the hot seat, with budget hearings before both the House and Senate Appropriations Committees.  During those hearings a number of issues were raised over energy related matters.  This week, in the Senate, questions included the Governor’s proposed severance tax, pipeline siting, drilling regulations, clean air act implementation and renewable energy funding.

Senate Environmental Resources and Energy Committee Chair Eugene Yaw (R, Lycoming) asked Quigley about the source of the $2.97 per thousand cubic feet floor price for severance taxes determined by the Administration.  Quigley responded that this was not a new precedent in Pennsylvania, citing the recent gasoline tax, and noted that the floor was partially drawn up to ensure sufficient funds are available for education funding.  Yaw questioned the constitutionality of that process.  The two also squared off over the cap that Wolf proposes for impact fees at $123 million for local impacts. 

Sen. Yaw suggested it is perhaps more correct that 49 other states haven’t been smart enough to follow the commonwealth’s lead with respect to an impact fee.  The reality is that a severance tax has its greatest support from regions of the state where there is currently no drilling.  Those areas stand to benefit from the tax with little if any local adverse impacts. 

In response to questions, Secretary Quigley said there are at least a dozen significant pipeline projects underway in Pennsylvania and said DEP needs to get “out in front,” and pledged to work with stakeholders to improve relations and communications with regulators and the public. 

Sen. Elder Vogel (R, Beaver) asked for commitment on the part of the administration to keep coal fired generating plants going. “The answer is yes, senator,” Quigley said.  “The governor is absolutely committed to maintaining the strength of Pennsylvania’s coal industry, maintain Pennsylvania’s position as a net energy exporter, and to meeting oncoming federal requirements in a way that is Pennsylvania-centric.

Sen. Vogel asked for details on the state’s response to the Clean Air Act requirements, and Quigley said that DEP was in the design phase right now, attempting to meet a moving target.  He said that a major stakeholder process was underway, and that the Administration will meet goals while conforming to the laws passed by the General Assembly requiring statewide involvement.  Quigley explained the EPA has established a requirement for Pennsylvania to cut its carbon emissions by 31 percent by 2030, and recognized the need to protect the state’s legacy energy industries. 

Quigley provided details on the alternative energy bond issue that would be financed with a portion of the severance tax funds. Quigley said that the funds would support various types of alternative and renewable energy projects as well as providing $25 million for “Last Mile,” a program to expand access to natural gas.  Senators like John Eichelberger (R, Blair) questioned the value of wind generation, which he called “not very efficient.”  Sen. Yaw also raised the issue of whether solar and wind generation would exist without subsidies. 

Quigley said that Pennsylvania needs a balanced energy portfolio, noting the Alternative Energy Portfolio Standards and federal requirements which become more stringent every year.  He said, “Every increment of low emission or no emission energy generation is going to be important.  While the total amount of energy generated by wind in Pennsylvania is small compared to coal, it is important.”  Quigley said, “We need to take a serious look at all of the sources and see what provides the most juice.”

PUC Hearing

During its own budget hearing in the Senate, the PA Public Utility Commission (PUC) dealt with questions ranging from fees and taxes to availability of natural gas, pipeline inspections, rail car safety and renewable energy generation. 

PUC Chairman Rob Powelson said that the impact fee declining would demonstrate a market signal and decline in drilling activity.  Comparing West Virginia’s severance tax revenues to Pennsylvania’s impact fee Sen. Mario Scavello (R, Monroe) noted that the last three years has shown $400.6 million in West Virginia, while the impact fee in Pennsylvania has generated $632.24 million. Powelson said the PUC is agnostic to the impact fee and merely distributes and calculates the fees back to the communities.

During discussions about existing power plants and prices, Powelson said increased access to natural gas has created new potential for reindustrialization of the North East Corridor. Powelson said current shutdowns of power plants has not impacted energy prices, but that there are impacts on local tax bases and jobs, noting that the Clean Energy Plan would make it more difficult to keep fossil fuel based plants running.  In terms of natural gas and declining coal generation while complying with the EPA regulations, Powelson said the PUC is expressing its concerns on reliability and affordability to the EPA.  Powelson said in the comments given to the EPA, the PUC said that Pennsylvania needs to be recognized for early adoption of clean energy and conservation efforts, and that additional renewable investments will help meet the EPA standards.

Commissioner John Coleman said the PUC has been working with the Center for Rural Pennsylvania to analyze areas where expansion of natural gas pipelines would have maximum benefit.  Powelson said 51 percent of Pennsylvanians are natural gas customers, and that without legislation, utilities are stepping up providing “get gas tariffs” for customers to make the switch to natural gas.

Powelson assured the committee that the PUC will strike an appropriate balance when the net metering regulations are finalized, and said that the Independent Regulatory Review Commission (IRRC) has asked the PUC to seek additional comment.  Agricultural biodigesters are one renewable energy system that will benefit from new metering.  .

Powelson was asked about Governor Wolf’s proposed $225 million fund for clean energy projects and how that might affect the AEPS. Powelson said many resources are being devoted to complying with the EPA Clean Energy Plan, and that the federal government was not recognizing Pennsylvania’s early efforts that have led to major steps in emissions reductions.

In response to questions, Powelson said the enactment of the AEPS and efforts to support renewable energy will help in compliance with the Clean Energy Plan.