The Finance committee passed three bills Monday morning.
From the Office of Majority Leader Mike Turzai.
Subject: Capital Facilities Debt Reduction Earlier this session, we passed legislation to reign in our debt spending by lowering the statutory debt ceiling on Redevelopment Assistance Capital Project (RACP) by $600 million. In the near future, I will introduce legislation to continue this effort to control all of our capital debt obligations and annual debt service.
In Fiscal Year 2002-03 (the last fiscal year of the Ridge/Schweiker Administration), the Commonwealth’s General Obligation Debt (including non-highway capital facilities debt, voter approved debt and disaster relief debt) totaled about $6.5 billion and the annual debt service (the annual payment on our debt obligation) was $701 million. As you know, debt spending substantially increased during the Rendell Administration. An analysis of the Commonwealth’s General Obligation debt and debt service for the 11 years starting the year immediately prior to the Rendell Administration and ending with FY 2013-14 shows the following: Even though growth of our General Obligation debt slowed substantially under the Corbett Administration, our debt obligation for Fiscal Year 2013-14 is about $10.7 billion. That’s an increase of 64% in just 11 years since the beginning of the Rendell Administration.
Debt service increased by $400 million during this same timeframe to $1.1 billion this year. This is an increase of 52% since the beginning of the Rendell Administration.
This legislation amends the “Capital Facilities Debt Enabling Act” to establish an annual spending limit on all types of projects under the “Capital Facilities Debt Enabling Act.” Effective July 1, 2014, and each year thereafter, releases for new projects under the Act would be limited to the following:
Flood Control Projects would be capped at $25 million per year.
Highway Projects would be capped at $25 million in new projects per year.
RACP’s would be capped at $125 million per year in new projects.
Public Improvement Project annual spending could not exceed $350 million annually.
Transportation Assistance Project spending would be capped at $175 million per year.
This legislation also contains a carry-forward provision which allows any unused allocations for a project type (or half the amount allocated in that year whichever is less) to be carried forward to the next fiscal year. For example, if the administration released only $100 million in new RACP projects in a fiscal year, the remaining allocation ($25 million) could be carried forward. Similarly, if the administration did not release any projects in the Highway category (which has a $50 million annual cap), then $25 million could be carried forward to the next fiscal year.
These changes will decrease our debt load in real dollars – real dollars that could be better spent funding the core functions of government in these difficult economic times. I urge you to add your name to the list of cosponsors of this legislation.
________________________________________
From the Office of Finance Chair Kerry Benninghoff.
Subject: Further Reduction of Redevelopment Assistance Capital Projects Debt Ceiling
Earlier this session, we passed legislation to reign in our debt spending by lowering the statutory debt ceiling on Redevelopment Assistance Capital Project (RACP) by $600 million. In the near future, I will introduce legislation to continue this effort to control our capital debt obligations and annual debt service.
From 2002 through 2010, the statutory debt ceiling for RACP projects was increased five times. In 2002, the RACP debt ceiling was $1.45 billion. A short eight years later, that ceiling climbed to an astonishing $4.05 billion. Using an average inflationary rate during this same timeframe, the RACP debt ceiling should be about $2 billion.
During this same time frame, RACP project releases skyrocketed from an average of $245 million per year under the Ridge/Schweiker Administration to $547 million under the Rendell Administration. In his last year in office, Rendell released $1.025 billion in new projects. These projects are funded through borrowing – bonds amortized over a 20 year period.
In 2013, the debt ceiling was lowered to $3.45 billion. This legislation will further reduce the RACP debt ceiling by an additional $500,000,000. Beginning July 1, 2018 (the year in which the RACP debt under Rendell peaks), and each year thereafter, the debt ceiling would be lowered by $50 million increments until it reaches $2.95 billion (on July 1, 2027). These reductions will ensure that, as we to pay off the debt accumulated under the Rendell Administration, we maintain a leaner, more transparent, RACP program.
The rationale for this legislation is fairly simple: By limiting our borrowing, we decrease our debt load and debt service over time. As debt service decreases, our ability to fund core government services goes up.
I urge you to add your name to the list of cosponsors of this legislation.
__________________________________________________
From the Office of Senator Sean Wiley.
Subject: Amending the County Pension Law
In the near future, I plan on introducing legislation that amends the County Pension Law (Act 96 of 1971) clarifying that when a county retirement board considers a cost-of-living adjustment the adjustment would not need to be calculated retroactively.
Currently some county retirement boards may be hesitant to approve a cost-of-living increase due to the understanding that an adjustment be retroactive to the previous approved cost-of-living increase. This retroactive effect has deterred some counties from approving a cost-of-living increase due to insufficient available funds.
My proposal would amend Act 96 to provide that a cost-of-living adjustment would not need to be retroactive since the time of the previous cost-of-living increase.
This legislation has already received the support of the County Commissioners Association of Pennsylvania (CCAP), as well as the American Federation of State, County and Municipal Employees (AFSCME) Council 13.
I hope you will consider joining these organizations and me in sponsoring this important legislation.