Harrisburg Update

The House Republican Caucus May 10th officially announced its budget proposal for fiscal year 2011-12. According to Republican Leader Mike Turzai (R-Allegheny), the plan represents the Caucus’s stance as “fiscal stewards of the hard-earned money of the taxpayers of Pennsylvania.” Rep. Turzai called Gov. Corbett’s original budget proposal an “important blueprint” and said the House Republican goal is “to have an on-time, no tax increase budget, without reckless borrowing, and that prioritizes spending and does so within the four corners of the governor’s blueprint.” Specifically the Republican proposal restores considerable portions of funding to K-12 and higher education cut from the Corbett budget, with state system universities seeing an 85 percent restoration and state-related institutions receiving anywhere from a 51-75 percent restoration. $210 million is allocated back to public schools.

After the release of the House budget proposal, Senate Minority Leader Jay Costa (D-Allegheny) and Minority Appropriations Committee Chairman Vincent Hughes held a Capitol Hill news briefing to express their criticisms to the House Republican’s amendment to Gov. Corbett proposed budget. Both noted the amendment does not address revenue from Marcellus Shale or the $500 million surplus and questioned the projected amounts saved by making cuts at the Department of Public Welfare. They also questioned the proposed uses of tobacco settlement funds.

House Democrats today publicly voiced their concern with both Gov. Tom Corbett’s proposed 2011-12 budget and the House Republican counter-proposal, set to be introduced later in the day.

Caucus leader Frank Dermody (D-Allegheny) accused Republicans of playing a “shell game” with their response to Gov. Corbett’s budget. “Republican budget cuts will lead to property tax hikes and even higher college tuition,” he said.

Democratic Appropriations Chair Joe Markosek (D-Allegheny) said the Commonwealth’s revenues are $506 million ahead of estimate thus far in the fiscal year, which according to him could mean an excess of $1 billion for the 2011-12 budget based on standard budgeting procedure that makes excess revenue part of the following year’s revenue base. He and other members of House Democratic Caucus questioned allocating the surplus to the Rainy Day Fund rather than blunting cuts to education and health care.

“The House Democrats believe that approach is flawed,” Democratic Policy Chairman Mike Sturla (D-Lancaster) commented.

In light of the events following the Japanese earthquake and tsunami, the House Veterans Affairs and Emergency Preparedness Committee earlier in the month held an informational meeting to learn about nuclear preparedness efforts in Pennsylvania. Members were assured that multiple plans and communication redundancies are in place and regularly practiced, however they were told the biggest risk is the event they haven’t planned for.

The Senate Public Health and Welfare Committee met to consider the nomination of Gary Alexander as Secretary of Public Welfare. Later in the confirmation hearing, Sen. Ward asked if the ChildLine program is fully staffed. Alexander replied that he did not think it is but would look into it. Sen. Ward asked for a timeline for how long it would take to find welfare fraud. "I'm hoping within the next 30 to 60 days to give you something definitive," Alexander answered.

Noting that DPW accounts for 42 percent of the state budget, Sen. Bob Mensch (R-Montgomery) commented that the three points that were previously testified upon were excellent, especially the ones calling for an audit and to visit facilities. The senator added that group homes would be impacted by budget cuts and he asked if there have been any discussions on how to "bring some help back to that line item." Alexander replied that he would be open to doing so if possible but "unfortunately, we don't have an abundance of money." The proposal could be re-tooled, he added. Sen. Mensch commented that collaboration is needed and he thanked Alexander for being aware of the cost and efficiency issues.

In his second round of questioning, Sen. Mensch noted the lag between private providers and counties and DPW with getting paperwork completed. Alexander responded that he is aware of this issue and he has asked members of the department to create a streamlined contracting process to work with providers and counties. He noted that in his meetings with counties, they have voiced similar frustrations with the state. Hiring is very difficult for counties, Alexander acknowledged. Sen. Mensch stated that counties should be empowered in this process.

Acknowledging that he had a litany of prepared questions, Sen. Vincent Hughes (D-Philadelphia), asked for a discussion on how DPW can address the increased growth in Medicaid enrollment and subsequent Medicaid costs to the state. He noted that in FY 2011-2012, Medical Assistance will provide health care coverage and long-term care services to 2.3 million Pennsylvanians, which equates to a 4.5 percent increase from this current year. Additionally, Sen. Hughes asked if DPW is moving towards a statewide managed care system. In response, Alexander explained Medicaid enrollment is growing due to a sagging economy, which means an increase in costs. "We have to be a smarter purchaser of services," he said, noting national statistics show that managed care helps drive down costs. Pennsylvania does not have a statewide managed care plan for Medicaid and "I certainly would welcome that," and "we have no other choice," he stated. Sen. Hughes asked if this is something that Alexander would attempt to do this budget cycle. Alexander answered that if the legislature wanted to implement this system, DPW would work immediately to get it done. It would take some federal approval, he added. Sen. Hughes asked if DPW has a plan to address loophole kids and also, how much savings would be realized by implementing a sliding scale model. Alexander replied that initial estimates of applying a co-payment to loophole kids would amount to $70 million, from which $30 to $40 million would be from the state. He acknowledged that some low-income families may not be able to afford the payment. The initiative may need to be re-tooled so that higher income people, those making more than $100,000 or $150,000 per year, would pay more. "Everybody should pay something," Alexander commented, opining the potential for abuse is there when people get something for free.