Governor Rendell Signs 13 Bills and Comments on Pay Raise Legislation

HARRISBURG, Pa., July 8 /PRNewswire/ -- Governor Rendell signed 13 bills into law that were passed by the legislature before they recessed for the summer. Among those bills were:

House Bill 815 - This General Appropriations Bill provides for authority necessary to release $24.3 billion in expenditures. The bill:

-- Continues and preserves health care and social services for our most
vulnerable citizens, despite $377 million cutbacks in federal fiscal
relief funds;
-- Secures and improves Pennsylvania's economic future through the
passage of my Job Ready Pennsylvania package and approval of $91
million in new state funds;
-- Makes historic progress in advancing early childhood education, high
school reform and community college funding; and
-- Increases enrollment in state-funded AdultBasic Health Insurance
program by codifying the historic agreement struck by Governor
Rendell with Highmark, Inc., Capital Blue Cross, Independence Blue
Cross and Hospital Service Association of Northeastern Pennsylvania
and provides for the expansion of the Children's Health Insurance
Program (CHIP)

In signing the bill the Governor blue-lined specific appropriations language and outlined overall concerns with earmarks and other conditional language as follows:

Financial Blue-Lines

The PEMA Federal Appropriation (Section 225) for $150 million was blue- lined because the bill provided appropriation authority twice.

The State Lottery Fund Appropriation (Section 301), intended to pay for the costs of the senior center grant program of $3 million, was blue-lined because the lottery fund is not able to absorb these new costs on a recurring basis due to other transfers and increasing PACE and PACENET program costs.

The Motor License Fund (Section 803) appropriation for $1 million for recreational trails for recreation vehicles was blue-lined because it was duplicative of existing appropriations.

Conditional Language Blue-Lines

Miscellaneous Provisions in the Bill under Part XX gave the Department of Transportation the authority to adjust construction contracts for highway projects involving steel. This authority is inappropriate given the Commonwealth's procurement laws and regulations.

General Fund and Federal Appropriations - Department of Public Welfare (Section 219) - The section includes language that would restrict Pennsylvania's ability to access available federal funds for family planning and restrict the delivery of family planning services. Moreover, the conditional language violates current federal law.

Motor License Fund Appropriation - State Police (Section 223) - The section includes condition language that would limit the Executive Branch's authority to manage the department because it imposes new requirements for public hearings in the event of closing a state police barrack.

Department of Transportation (Section 801) - The section includes language that inappropriately sets standards for the width of pavement markings.

With respect to all other conditional language throughout the General Appropriations Bill, the Governor 's signing letter read:

"The bill as sent to me also included a number of substantive
items containing language of the type which has been held
constitutionally improper in an appropriations bill, and I
believe this language is null and void without further action."

House Bill 182 - enacts changes to the Fiscal Code to increase appropriations for the Tobacco Settlement Fund and the Lottery Fund and transfers to the Rainy Day Fund.

The changes affecting the Tobacco Settlement Account include providing for the interest earnings on the Endowment Account to be transferred to the Tobacco Settlement Fund and for reductions in the Fund's allocations to both the AdultBasic Health Insurance Program and the Smoking Prevention and Cessation Programs. The transfer of the interest earnings and the reductions in specific Fund allocations were put into the law to ensure sufficient funding for the Medical Assistance Program.

Other Fiscal Code changes included: authority to increase appropriations for programmatic and administrative expenses ($41 million) in the Departments of Aging and Revenue, a deposit of 15 percent of the 2004-05 surplus ($64 million) into the Budget Stabilization Reserve Fund, more commonly known as the "Rainy Day Fund".

House Bill 176 - enacts changes to the Tax Code providing for a new "check-off" on the Pennsylvania Personal Income Tax form for the Military Family Relief Assistance Fund. This Fund will collect funds to be distributed by the Department of Military and Veterans Affairs to families who experience a sudden lost of income due to military service or death due to military service of a family member. The tax form "check off" for the U.S. Olympic committee was removed and all other credits were limited to four years.

The bill clarifies the Film Production Tax Credit placing the management of the credit program with the Department of Community and Economic Development and requires that if a company does not fully use its allocated credit, it must return the unused portion of the credit.

The bill clarifies the tax treatment of non-stock commodity and non-stock, stock exchanges to remove them from the definition of "corporation" and thus exempting these exchanges from the Corporate Net Income Tax.

The bill also changes the tax treatment of compensation that is invested in Non-Qualified Deferred Compensation Plans. This change enables the taxation of the invested funds to be shifted from the date of earning the compensation to the time of withdrawal from the deferred compensation program.

The bill includes increased penalties for filing fraudulent tax returns from $50 to $250 and places new requirements on the Department of Revenue with respect to the collection of unpaid local real estate transfer taxes and gives the department the power to impose a 10 percent penalty for electronic transfers that are done improperly.

House Bill 1168 - The Welfare Code bill preserves benefits to Medical Assistance and General Assistance recipients by enacting the following changes to the Welfare Code: establishes a three-month retrospective period of time for inclusion of medical expenses as a deduction from income when determining Medical Assistance eligibility with a lifetime limit of $10,000 in allowable income deductions for unpaid medical expenses; places stricter limitations for the determination of assets and income that tighten up eligibility rules for those seeking medical assistance coverage for nursing home care; provides for limits on medical appointments, hospitalization, and other medical assistance services. It also enables the creation of a Preferred Drug List and other enhancements intended to contain the cost of pharmaceuticals. The bill requires that all nursing homes contracting with the department be inspected by the department twice a year.

Senate Bill 86 - includes changes to the Support Law and is a companion bill to the changes that were made to the Welfare Code that enable the commonwealth to seek reimbursement for medical assistance costs already paid for by the commonwealth recipient if there is any action, claim or settlement associated with the recipients estate. It also updates provisions requiring that immediate family members contribute to the cost of care, thus decreasing the burden on the Medical Assistance program, when possible. This bill also increases the standards for reporting suspected child abuse.

House Bill 1521 - enacts changes to the Public Officials Compensation Law by authorizing increases to the existing salaries of the legislative, judiciary and executive branches of government. The governor signed this bill into law outlining his views in the attached letter.

Other bills signed into law were:

SENATE BILL NO. 608- SERS APPROPRIATION

SENATE BILL NO. 609 - PSERS APPROPRIATION

SENATE BILL NO. 610 - BPOA APPROPRIATION

SENATE BILL NO. 611 - WORKMEN'S COMP. ADMIN. APPROPRIATION

SENATE BILL NO. 612 - PPUC APPROPRIATION

SENATE BILL NO. 613 - OFFICE OF CONSUMER ADVOCATE APPROPRIATION

SENATE BILL NO. 614 - OFFICE OF SMALL BUSINESS ADVOCATE APPROPRIATION

ATTACHMENTS
Governor's letter on HB 1521

July 8, 2005

I am signing House Bill 1521. Because pay raise bills are always the subject of much debate, I want to explain my reasons for doing so.

I believe that this is good legislation because once and for all it takes the power to grant all subsequent pay raises away from the Legislature -- pay raises for the Judiciary, pay raises for the Executive Branch, and pay raises for the Legislature.

This legislation, particularly the concept of linking state salaries to a percentage of those paid equivalent federal officials, emanated from an idea put forth by our fine Supreme Court Chief Justice Ralph Cappy. It was a very good suggestion.

First and foremost, this legislation frees the Judiciary from depending on the Legislature to decide when and if Judges will receive a pay increase -- the very Legislature on whose actions the courts sit in judgment. That has raised in the minds of some an appearance of conflict and impropriety, creating the question "Did the court rule a certain way because the Legislature did or did not give the Judiciary a pay increase?" This legislation puts that question to rest.

Equally important, I strongly believe that high-ranking officials and Cabinet Secretaries in the Executive Branch are seriously underpaid. This increase rectifies this disparity. Uncompetitive pay levels have made it difficult for my administration and those of my predecessors to retain the very best talent. When I recruited people to join me in my administration, some talented men and women, especially those with young families declined to do so because the pay scale was so much lower than what they were making in the private sector. This pay disparity has also caused some talented people to leave state government and return to private life prematurely. I strongly believe that people who work in public service have to understand they must make some sacrifices and can never be paid the same as those in the private sector, but the gap must lessen to give us a chance to compete. A study recently done by Hay Associates confirmed my belief. It compared our cabinet salaries to the compensation these individuals would receive in the private sector, as well as to cabinet salaries in other states. The Hay study recommended cabinet pay increases significantly greater than this legislation will provide. It should also be noted that the raises for the Executive Branch do not take effect until January 2007.

Finally, this legislation would give pay increase to legislators as well. Many have already decried the fact that it would make the Pennsylvania General Assembly the second highest paid legislature in the country. This is a legitimate concern, but I strongly believe it is outweighed by the positive and long-range benefits I have outlined above. I also want to respond to the criticism that our legislators do not work hard enough to justify this or any other increase. I cannot speak with any authority about legislative productivity before January 2003 when I became Governor. But I believe that since that time the legislative leaders and I have embarked on a period of unprecedented legislative productivity. Think of the landmark legislation that has been worked on and passed into law in just the last two and one half years.

-- A senior citizen prescription drug bill that broke an almost decade
long impasse and that by using cost containment measures and
innovative procedures has allowed us to add almost 100,000 new seniors
onto the rolls of our PACE and PACENET program -- almost a 50%
increase.

-- A complex, aggressive, and creative Economic Stimulus Program that
will pump nearly seven billion dollars into Pennsylvania's economy in
the next three years. The funding pools created by this legislation
are already contributing to the surging Pennsylvania economy.

-- Several innovative measures to enhance student achievement such as
the Accountability Block Grant that targets hundreds of millions of
dollars to early childhood education programs, like Head Start and
full day kindergarten, new high school improvement initiatives, and
perhaps most importantly, Foundation Funding that will ensure that in
the future every school district in the state will spend an amount per
student that will provide a sound education foundation.

-- Two environmental programs that are the most important advances in
the protection of our environment in the commonwealth's history--
Advanced Energy Portfolio Standards which will require a significant
investment in the use of alternative and renewable sources of energy,
and Growing Greener II, which will provide more money towards
environmental cleanup and preserving our wild and natural areas than
ever before.

-- Expansion of gaming that will preserve and create nearly 42,000 jobs,
make hundred of millions of additional dollars available for economic
development, and that -- when we complete additional needed work this
fall -- will provide the largest level of property tax relief in
Pennsylvania history.

-- The ACRE program, which strikes the needed balance between the need
to improve the quality of our water, the right to farm, and townships'
ability to protect their quality of life.

This is an ambitious agenda, which has required a great deal of research, negotiations, and just plain hard work to achieve. The General Assembly has been an equal partner in that effort.

Lastly, should I be reelected Governor, I will not accept the pay increase to which I would be entitled in January 2007. When I ran for Governor in 2003, I knew what the salary was and that there would be yearly COLAs. I did not run for Governor because of the salary; rather I ran to change Pennsylvania for the better.

This decision should not reflect negatively on our judges or legislators who will receive pay increases under this legislation. They are not term limited and view their positions as careers. They therefore have a reasonable right to expect periodic raises, which they deserve.

Sincerely,
/s/
Edward G. Rendell
Governor

GOVERNOR'S LINE ITEM VETO MESSAGE

COMMONWEALTH OF PENNSYLVANIA
OFFICE OF THE GOVERNOR
HARRISBURG

THE GOVERNOR
July 7, 2005

To the Honorable, the House of Representatives of the Commonwealth of Pennsylvania

I have the honor to inform you that I have this day approved and signed House Bill 815, entitled, "AN ACT to provide from the General Fund for the expenses of the Executive, Legislative and Judicial Departments of the Commonwealth, the public debt and for the public schools for the fiscal year July 1, 2005, to June 30, 2006, for certain institutions and organizations, and for the payment of bills incurred and remaining unpaid at the close of the fiscal year ending June 30, 2005; to provide appropriations from the State Lottery Fund, the Energy Conservation and Assistance Fund, the hazardous Material Response Fund, the State Stores Fund, the Milk Marketing Fund, the Home Investment Trust Fund, the Emergency Medical Services Operating Fund, the Tuition Payment Fund, the Banking Department Fund, the Firearm Records Check Fund, the Ben Franklin Technology Development Authority Fund, the Tobacco Settlement Fund, the Health Care Provider Retention Account and the Community Health Reinvestment Restricted Account to the Executive Department; to provide appropriations from the Judicial Computer System Augmentation Account to the Judicial Department for the fiscal year July 1, 2005, to June 30, 2006; to provide appropriations from the Motor License Fund for the fiscal year July 1, 2005, to June 30, 2006 for the proper operation of the several departments of the Commonwealth and the Pennsylvania State Police authorized to spend Motor License Fund moneys; to provide for the appropriation of Federal funds to the Executive Department of the Commonwealth and for the establishment of restricted receipt accounts for the fiscal year July 1, 2005 to June 30, 2006, and for the payment of bills remaining unpaid at the close of the fiscal year ending June 30, 2005; to provide for the additional appropriation of Federal and State funds from the General Fund and the Motor License Fund, for the Executive and Legislative Departments of the Commonwealth for the fiscal year July 1, 2004, to June 30, 2005, and for the payment of bills incurred and remaining unpaid at the close of the fiscal year ending June 30, 2004", except as follows:

The appropriation of funds for the following purpose is already effected in Section 1905(b) of HB 815 and it is therefore duplicative and unnecessary and I withhold my approval from this entire item:

PART II
GENERAL FUND AND FEDERAL APPROPRIATIONS
FOR 2005-2006

Section 225. Pennsylvania Emergency Management Agency.

For general government operations of the Pennsylvania
Emergency Management Agency.

(4) "Domestic Preparedness - First Responders." This appropriation
includes $750,000 for the Smart States Initiative to develop and
implement hand held molecular sensing technology to protect port workers
from nuclear, biological, chemical and poisonous contamination in the
handling of containers and container contents.
Federal appropriation $150,000,000

I withhold my approval from the following entire item:

PART III
STATE LOTTERY FUND APPROPRIATION

Section 301. Department of Aging.

For a senior center grant program.
State appropriation $3,000,000

Because the appropriation of funds for recreational trails for recreational vehicles has been effected in separate legislation, the following appropriation is duplicative and unnecessary. Therefore, I withhold my approval from the following entire item:

PART VIII
MOTOR LICENSE FUND APPROPRIATION
FOR 2005-2006

Section 803. Treasury Department.

Refunding liquid fuels tax - to the restricted account created
pursuant to 75 Pa. C.S. Section 7706 (relating to restricted account)
for the use by the Department of Conservation and Natural Resources
for the improvement of the public roadways, highways and bridges of
the Commonwealth that are also used by snowmobiles and all-terrain
vehicles. For the purpose of this appropriation, improvement
includes, but is not limited to, grooming for snowmobile use and
safety.
State appropriation $1,000,000

I withhold my approval from the entire following item:

PART XX
MISCELLANEOUS PROVISIONS FOR 2005-2006


Section 2010. Motor License Fund limitation. - The Department of Transportation is authorized to make adjustments to construction contracts for highway capital projects involving steel entered into prior to March 1, 2004, where the adjustments are supported by mutual consideration.

The bill as sent to me also included a number of substantive items containing language of the type which has been held constitutionally improper in an appropriations bill and I believe this language is null and void without further action.

In the case of the following appropriations for medical assistance payments for outpatient services in Section 219, the language is also violative of current Federal Medicaid law:


PART II
GENERAL FUND AND FEDERAL APPROPRIATIONS
FOR 2005-2006

Section 219. Department of Public Welfare

For medical assistance payments - outpatient services, exclusive of outpatient services provided through capitation plans. The Department of Public Welfare shall not require a Recipient to obtain a physician referral in order to receive chiropractic services. The Department of Public Welfare shall not expend or authorize the expenditure of any funds for family planning services in excess of the amounts expended for such services in the 2004-2005 fiscal year and any such funds which are expended shall be subject to the same restrictions contained in the appropriation for grants for women's medical services.

State appropriation $921,080,000

The following Federal amounts are appropriated to supplement the sum appropriated for medical assistance - outpatient:

(I) "Medical Assistance - Outpatient." The Department of Public Welfare shall not require a recipient to obtain a physician referral in order to receive chiropractic services. The Department of Public Welfare shall not expend or authorize the expenditure of any funds for family planning services in excess of the amounts expended for such services in the 2004-2005 fiscal year and any such funds which are expended shall he subject to the same restrictions contained in the appropriation for grants for women's medical services.

Federal appropriation $1,288,555,000

In addition to the constitutional infirmity of the language and the fact that it is violative of Federal law, I believe that to follow the directives in these appropriations is just plain bad policy. Therefore, I withhold my approval from the following language in both of these appropriations:

The Department of Public Welfare shall not expend or authorize the
expenditure of any funds for family planning services in excess of the
amounts expended for such services in the 2004-2005 fiscal year and any
such fiends which are expended shall be subject to the same restrictions
contained in the appropriation for grants for women's medical services.

As stated above, while I believe that constitutionally improper language in the bill is null and void without further action, I am expressly vetoing the language that appears in the following appropriations to remove any doubt:

PART VIII
MOTOR LICENSE FUND APPROPRIATION
FOR 2005-2006

Section 223. Pennsylvania State Police

For general government operations of the Pennsylvania State Police. No less than $350,000 of this appropriation shall be for the continuation and expansion of comprehensive and proactive programs coordinating with Federal, State and local law enforcement to remove violent felons, illegal narcotics, illegal weapons and nuisance bars from crime-ridden communities. No Pennsylvania State Police barracks shall be closed until such time as the Pennsylvania State Police conduct a public hearing and provide 30 days' notice which shall be published in the Pennsylvania Bulletin and in at least two local newspapers.

State appropriation... $137,393,000

I withhold my approval from the following language in this appropriation:

No Pennsylvania State Police barracks shall be closed until such time as
the Pennsylvania State Police conduct a public hearing and provide 30
days' notice which shall he published in the Pennsylvania Bulletin and in
at least two local newspapers.

Section 801. Department of Transportation.

For the salaries, wages and all necessary expenses for the administration and operation of the maintenance program for State roads, bridges, tunnels and structures, including the operation of the county maintenance district facilities. At least $4,000,000 shall be used for the installation and maintenance of raised reflective pavement markers on interstate and similar highways and for installation and maintenance of such markers on other State roads at locations determined by the Department of Transportation. The $4,000,000 may be drawn from both the highway and safety improvement and maintenance appropriations. At least $3,000,000 shall be used for the Crossroads Development Project. The $3,000,000 May be drawn from both the highway and safety improvement and maintenance Appropriations. At least $1,500,000 shall be used for a pilot project to expand the width of pavement markings from four inches to six inches on limited access highways. The $1,500,000 may be drawn from both the highway and safety improvement and maintenance appropriations.

I withhold my approval from the following language in this appropriation:

At least $1,500,000 shall be used for a pilot project to expand the width of pavement markings from four inches to six inches on limited access highways. The $1,500,000 may be drawn from both the highway and safety improvement and maintenance appropriations.