00:01 - With us this afternoon our representatives from the

00:03 - secretary of the budget and the department of revenue

00:06 - from the budget office we have zachary reverse secretary of the budget.

00:11 - From the department of revenue we have patrick brown revenue secretary.

00:16 - We have alison morgan executive deputy secretary

00:19 - amy gay gill deputy secretary for tax policy

00:23 - adrian zimmerman deputy secretary for administration.

00:26 - She

00:27 - stephanie wyant deputy executive director

00:29 - marketing and products at the pennsylvania lottery.

00:33 - Welcome everyone thank you for being here today if I could ask you all to please rise

00:38 - and raise your white right hand to be sworn in.

00:41 - Do you swear that the testimony you're about to give us the truth the whole truth and

00:44 - nothing but the truth so help you god and if so please indicate by saying I do.

00:48 - Thank you very much.

00:51 - As reference for members of the audience governor shapiro is proposed fiscal year two

00:54 - thousand and twenty six twenty twenty seven general fund budget

00:57 - is fifty three point three billion dollars

01:00 - which is an increase of two point seven billion dollars

01:02 - or five point four percent from this year's revised budget

01:05 - the budget for the governor's

01:07 - budget office is twenty seven point five million

01:10 - and the budget for the department of revenue is two hundred and thirty two point one

01:14 - million dollars I'm going to start off with some questions to lead off

01:18 - before pausing and turning to some members and I'll be back later on so

01:23 - I'm going to start off today

01:24 - with questions for the department of revenue.

01:27 - Secretary brown is good to see you.

01:30 - Yup

01:30 - and just a reminder for folks if I may interject

01:32 - to make please make sure your light is on

01:35 - the other thing I ask is that.

01:38 - Please try to keep if your your

01:40 - microphone is on please try to keep your phone away from the microphone it does start

01:44 - to provide interference and buzzing that's what you'll hear

01:47 - and

01:48 - so secretary brown and one to start off by

01:49 - saying thank you to the department of revenue.

01:52 - Last year our office

01:54 - raised a concern related to delays associated with the I t c refund payments

01:59 - and over the course of the last year

02:01 - the department has made substantial improvements

02:04 - to the efficiency of the I t c program and

02:08 - and we've heard that from those who util lies that are involved in that process

02:12 - and I know we've met with your team

02:13 - numerous times over the course of that and and you

02:16 - guys did everything you said you were going to do

02:18 - and we really do appreciate that so can you describe

02:21 - the changes that were made the streamlining the processing of iai tc refunds.

02:29 - The major thing

02:30 - mr chairman was

02:32 - does more timely communication

02:34 - between

02:35 - the

02:36 - department of community and economic development and us in regards to

02:40 - those that would qualify for the credit

02:42 - for the

02:42 - credit

02:43 - a weekly

02:44 - exchanges

02:45 - so we can

02:47 - keep things moving along

02:48 - with the exchange of information was wasn't happening that quickly in the past

02:54 - so that's that's been very helpful

02:55 - and.

02:57 - The electronic filing of returns is is been beneficial across the board for everything

03:02 - and

03:03 - so being able to electronically file the application form

03:07 - eleven twenty three and thinking this.

03:09 - Has really reduced the processing time for that

03:12 - and

03:13 - and then just continue to do what we try to do work with outside groups.

03:18 - Communicating them about

03:19 - information that's needed

03:21 - timing of returns

03:23 - but overall

03:25 - the

03:25 - changes that we've made in

03:27 - in a coronation activity with dcd as you mentioned as

03:31 - greatly improve the process so thank you

03:33 - thank you and I think some of the.

03:35 - Really talking about the impact of

03:38 - what the

03:39 - potential for

03:40 - filing extensions that were asked for by certain of some of these operating entities

03:44 - what that would mean for the whole processing of it too two so.

03:49 - So do you think at this moment the way things are

03:51 - going you don't foresee needing to have any changes.

03:54 - In law or regulation that you think we're on a good path I think so yeah

03:58 - if you're again if you

04:00 - hear anything and you're concerned about

04:02 - the partnerships importance I thank you

04:04 - well as you as you remember it starts to get real quiet

04:06 - when people are happy when things are going better so.

04:10 - The governor's proposed budget and essentially includes.

04:14 - The same set of major revenue proposals as we've seen in previous years

04:18 - adult use cannabis skill games and combined reporting

04:22 - some adjustments have been made in the underlying

04:24 - assumptions that help produce more tax revenue

04:26 - but it basically

04:28 - I called it over some repeat of the last three years that we've seen.

04:32 - Recognizing that these have been controversial items here with the general assembly

04:35 - and

04:36 - mister secretary of any of these revenue proposals been able to survive a vote in

04:40 - both legislative chambers to your knowledge.

04:44 - Not in a vote from

04:45 - both chambers to my knowledge.

04:47 - Are you aware of any bipartisan agreement between the leadership teams or the

04:51 - respective chambers to enact these revenue proposals.

04:54 - As you stated we have

04:56 - propose these revenue proposals in the past and

04:57 - there have been some productive conversations

05:00 - and as it relates to

05:02 - these topics and

05:04 - and I do believe that we are.

05:06 - Committing to continue to work with

05:08 - all sides in the general assembly on enacting

05:10 - these revenue proposals but no agreement yet.

05:13 - Correct

05:14 - has the governor's office provided draft language as part of this year's budget

05:17 - materials that would effectuate his revenue proposals

05:20 - unlike in some of the prior years.

05:23 - Some proposals have been introduced in the past

05:26 - like the.

05:27 - Combined reporting proposal

05:29 - from previous years

05:30 - as well as minimum wage proposals and.

05:33 - I do believe there are ongoing conversations around.

05:36 - Regulation of skill game

05:38 - machines proposal the proposal for skill game

05:40 - machines

05:41 - as well as adult use cannabis us and I do know those are.

05:45 - Bipartisan conversations with multiple caucuses

05:47 - and can you just give some insight as to

05:50 - why potentially

05:52 - we keep returning to the same conversations on some

05:56 - pretty sensitive topics that we have not been able to make great inroads on here why

06:01 - especially in terms of where our spending is versus what are our our revenues are for

06:05 - a lot of our broad-based other taxes

06:08 - and obviously a structural deficit to grapple with

06:12 - why do we keep turning to

06:13 - to these especially if there are much smaller

06:15 - component of the overall structural deficit.

06:19 - Yeah I think.

06:20 - You know.

06:21 - We have a

06:23 - a charge

06:24 - when we're inactive and when we are proposing a budget.

06:27 - As outlined by statute to

06:29 - provide for new revenues

06:31 - if we have.

06:33 - An.

06:33 - And

06:34 - if we have less.

06:36 - Revenues available from surplus and

06:38 - current revenues available for the proposed expenditure so we've proposed new

06:42 - new revenues

06:43 - we believe that from a policy perspective the revenues that we're proposing

06:47 - and are

06:49 - pretty common sense

06:50 - and believe that.

06:52 - In.

06:53 - Enacting.

06:55 - Legislation to

06:56 - regulate adult use cannabis

06:58 - will.

07:00 - Not only provide new revenues but will also

07:04 - provide for economic activities for

07:07 - those who want to participate in the market

07:09 - and also addresses some issues of cross-border

07:12 - purchases of

07:14 - adult use cannabis in other

07:15 - in other states

07:17 - and

07:17 - on the regulation of skill game

07:19 - machines you know

07:20 - the.

07:21 - Pennsylvania is often

07:23 - viewed as a leader

07:24 - in.

07:25 - Casino

07:26 - or.

07:27 - Legalized gambling

07:28 - and I think having an unregulated market out there

07:31 - obviously impacts the ability to make sure that.

07:34 - The gaming control board has the authorities

07:36 - and the ability to properly.

07:39 - Oversee that

07:40 - and I think

07:42 - all of these proposals

07:44 - make sense from that perspective

07:45 - and.

07:47 - You know that these are these are the avenues

07:49 - that we have proposed and you know obviously

07:51 - a final enacted.

07:53 - Budget is a

07:55 - negotiated product with the general assembly

07:57 - and we're open to conversations with the

07:58 - general assembly on what new revenues look like.

08:01 - Thank you secretary over the over the past several years.

08:04 - Tax refunds have increased significantly and according to the budget materials

08:09 - are expected to increase further throughout the planning years

08:12 - and.

08:13 - What is the

08:14 - causing do you think that escalation that we've

08:16 - seen over the last few years related to tax refunds.

08:20 - That we're seeing fiscal year the fiscal year.

08:28 - Sorry about that.

08:29 - When it comes down to the amount of payments that are being made on non withholding

08:34 - and people expecting

08:36 - profitability to be higher than it otherwise would be

08:38 - and

08:39 - his overall trendline here just have that.

08:42 - Can identify anything other than.

08:45 - Extended payments have been trending up

08:47 - and

08:48 - waiting to

08:49 - estimates as the profitability of the.

08:55 - And always refunds

08:57 - will go up.

08:58 - When you have.

09:00 - Increases in on the withholding side increases in wages so.

09:06 - They

09:07 - tend to trend up consistently over the years because of that reason

09:11 - but the only

09:12 - identifying factor we can see is the fact that

09:14 - people are being just a little more conservative

09:16 - and how much payments or make

09:18 - at any

09:19 - of their been any material

09:21 - or or anything material impacted by court decisions perhaps or do you think it's

09:25 - truly about the the wages being higher and

09:28 - wages and estimates of profitability

09:31 - that's really really what it is and and when folks.

09:35 - Use a safe harbor at one hundred percent and

09:38 - their profitability doesn't come out to where

09:41 - they otherwise would be cause a lot of

09:43 - a lot of faux shoes cause there's

09:44 - more predictable use a safe harbor

09:46 - at one hundred percent of last year

09:48 - if it doesn't work out to where they expected to be

09:51 - and if

09:52 - profitability goes down then there's going to be higher refunds

09:55 - at it and it's

09:56 - we see it in terms of budgeting yeah if he was only a few years ago were

09:59 - budging about one point two billion

10:01 - tax refunds and now

10:03 - you know seeing it north of two billion

10:05 - you know obviously we're seeing that change so just wanted to ask that question.

10:10 - Any tax refund payments.

10:12 - Or tax refund payments being issued in a timely fashion

10:15 - and how much interest is paid each year for

10:17 - payments that may not go out in a timely fashion.

10:21 - We.

10:21 - Continue to work to improve our process as far as

10:25 - timing of refunds I think the folks are

10:28 - overwhelmingly satisfied with that part of our process.

10:33 - The

10:34 - the interest number I don't have that right on

10:36 - me now but I can get that to you mr chairman.

10:39 - Appreciate that

10:41 - right I'm going to pause right now.

10:42 - I'm going to turn to members

10:45 - we're going to proceed to questions by members of the

10:47 - state of the committee and their standing committee chairs

10:49 - standing committee chairs will have ten minutes for questions and committee members

10:52 - will have a five minute period for questions

10:55 - like where my members and testify as

10:57 - to be brief and directing your questions and answers that and all members will have

11:01 - an opportunity present their questions

11:03 - of our schedule permits where we will have

11:05 - time for a second round.

11:06 - We are going to begin with

11:08 - senator.

11:10 - Costa

11:11 - to start off before we sorry

11:13 - centre cos I didn't see you sitting there

11:14 - will turn over to center costa and

11:16 - turn to our standing committee chairs very much mister chairman

11:19 - secretary aries and everyone here today thank you for being here.

11:22 - Looking forward to hearing the testimony.

11:25 - It's tax season pretty much

11:26 - and a lot of folks are coming to our offices with regard to the property tax

11:30 - rebate program

11:31 - I know we made some significant changes a couple of years ago

11:34 - can either one of you tell me what the status of

11:37 - what we anticipate

11:38 - this year and what numbers we're looking at

11:40 - and how that program

11:41 - is working out with half the things it has done already

11:44 - as the

11:48 - action by the general assembly.

11:50 - In terms of expanding the program.

11:53 - Was something that was in order for the program to continue to survive was absolutely

11:57 - necessary and I applaud this community

11:59 - members and the general assembly working with the governor and his

12:02 - proposal to advance it

12:04 - because it's really

12:05 - put the program back to where it was

12:07 - expected to be

12:09 - because of.

12:10 - Info collation adjustments over time.

12:14 - That have adjusted social security the numbers

12:17 - of beneficiaries went from the five hundred

12:19 - thousand range down to three hundred thousand

12:21 - are back above five hundred thousand now and

12:24 - three hundred and sixteen million dollars total that's

12:27 - all that's paid out

12:29 - and

12:30 - one of the.

12:31 - Really important changes that

12:33 - assembly work with cover sparrow on was

12:36 - this doesn't

12:36 - exist in many of our programs as

12:39 - adjusting for

12:40 - the cost of living.

12:42 - That the numbers will benefit from the program will not reduce overtime just because

12:47 - social security adjustments.

12:49 - So.

12:50 - We are continuing to.

12:52 - In the first year was a challenge to get all the.

12:56 - The expansion population

12:58 - approved it was one hundred and sixty five thousand

13:01 - but

13:02 - it went

13:03 - I think

13:04 - I think it went.

13:06 - Very well

13:07 - the

13:08 - total amount that we're approving.

13:10 - His.

13:12 - Runs about ninety seven ninety eight percent rate

13:14 - so.

13:15 - Overall the program has been.

13:18 - In line with the general assembly's intentions it has been.

13:21 - Drastically improved.

13:26 - Two

13:27 - governor's proposal

13:28 - one of the proposals dealt with

13:31 - a critical infrastructure fund

13:32 - and

13:33 - is can either one of you comment about

13:35 - what the scope of that would need look like I know the amount is going to be

13:39 - over four years a billion dollars over four years but.

13:42 - Some of the details that

13:43 - have you flushed out some of the details in terms of how you're going to

13:46 - drive some of that out and went programs

13:48 - and agencies you might be looking at.

13:51 - Yeah thank you leader

13:52 - and.

13:53 - So as

13:54 - you heard the governor speech and the governor's proposal sorry I'm going to look

13:57 - this way because it's hard for me to talk to mike.

13:59 - As you heard

14:00 - from the governor speech affordability is obviously a

14:04 - a.

14:04 - Big component of his policy platform meant.

14:08 - The critical infrastructure funding referencing was born

14:10 - out of that lens

14:12 - and

14:13 - you saw him speak to his points on energy

14:16 - and affordability you've seen him speak to

14:18 - and you know the importance of housing

14:21 - as it relates as a workforce issue.

14:23 - As well as just an overall attraction issue for

14:25 - our demographics

14:27 - and

14:28 - we've made

14:28 - and we've made some pretty good investments in school infrastructure

14:31 - over the last few years

14:33 - but the.

14:35 - I think the the the real vision for the critical infrastructure fund was to try to.

14:40 - Go big and

14:41 - and make some.

14:42 - Big investments in those areas all in the vein of affordability so I think

14:47 - as we had

14:48 - as we have envisioned it and proposed it would be for those kind of three main areas

14:52 - it would be school facility funding

14:53 - and

14:54 - he would before an new new housing as well as refurbishment of existing housing

14:59 - as well as trying to bring more energy to the grid

15:01 - doing all of those things puts us in a good position to continue

15:05 - building on the.

15:07 - No.

15:07 - Changes to the business climate that we've made in pennsylvania

15:10 - in concert with the general assembly on

15:12 - reducing our corporate income tax rate as well as parenting reform.

15:15 - So I think

15:16 - that was kind of the vision behind that.

15:19 - Thank you very much I get to want to go back to texting as well as texts

15:22 - programs texts

15:23 - benefits

15:24 - and

15:25 - the gaming resources that make their way to

15:27 - property tax owners

15:29 - or property homeowners

15:30 - can you share with us what

15:32 - we certified the last recent years and

15:34 - would you happen to know the cumulative amount of money that comes from the gaming

15:37 - programs into these funds

15:39 - but a minimum what you've been able to certify most recently.

15:42 - Yeah last year was the first year that we have certified over a billion dollars

15:46 - out of the property to actually fund

15:48 - and that's for a general property tax relief through farmstead homestead exclusions

15:52 - this budget again

15:53 - envisions will certify the same amount one point o two five billion

15:56 - and

15:57 - over

15:59 - since its inception

16:00 - I believe it's around thirteen billion dollars

16:03 - that we've been able to certify for property tax relief.

16:06 - It.

16:07 - For several years

16:08 - was around five hundred and ninety million dollars then increase to seven hundred and

16:11 - fifty in two thousand and twenty two

16:13 - and two thousand twenty three

16:15 - and then was nine hundred

16:16 - and

16:17 - nine hundred million in twenty four and

16:19 - certified one point o two and twenty five and we'll do that again in twenty six.

16:24 - Thank you thank you mr sherman it's all the questions I have thank you.

16:27 - Thank you centre

16:28 - now to our standing.

16:30 - Committee chairs we have centerpiece caetano followed by senator ferry.

16:35 - Thank you mr chairman and thank you all for being here of from your

16:39 - agencies to testify as always

16:42 - secretary brown it's nice to you

16:43 - always.

16:45 - I'd have a series of questions the first

16:47 - area really talks about the

16:49 - the massive changes that were made in hr one on the federal level

16:52 - and how we're dealing with those changes here in pennsylvania

16:57 - last year's budget required

16:58 - the

16:59 - department to complete a report by the end of this year evaluating the impact of

17:03 - certain decoupling position posts

17:05 - provisions

17:07 - that we inserted in our budget to decouple

17:08 - from the federal rules that had just changed

17:11 - can

17:12 - any of you provide an update on the status that report and share any significance

17:16 - of your evaluation so far.

17:22 - We.

17:23 - Are still working on it.

17:25 - We'll make sure we

17:26 - get it to you

17:28 - in as

17:29 - most expeditious way possible

17:31 - but the main reason obviously and this will come out in the report

17:34 - and this has happened over the course of.

17:36 - Many times when the federal government has moved on their attack tax policy.

17:40 - When.

17:41 - We have a

17:42 - finite

17:43 - amount of resources that we have to account for was a

17:46 - a billion dollar loss in overall receipts

17:48 - and you know these

17:50 - these provisions.

17:52 - Research development.

17:54 - Qualified production property

17:56 - interest expense are obviously important provisions

17:59 - but.

18:01 - There's a balance that's required here that stopped required in washington

18:04 - and when.

18:05 - We want to set

18:06 - priorities for for spending losing a billion dollars

18:09 - off the top because of an action in washington is just

18:12 - as high to accompany but I think

18:14 - the report will.

18:16 - Report will document that as well but I think that's

18:20 - the primary reason why

18:21 - decoupling

18:22 - is something that.

18:24 - This government needs to consider often when

18:26 - the federal government moves on one tax policy.

18:29 - Short

18:31 - and just to follow up on that

18:32 - have you.

18:34 - Been able to

18:35 - even at

18:36 - a preliminary stage understand

18:38 - some of the

18:39 - outcomes from decoupling from hr one on the c n I t.

18:45 - So on the scene ity

18:47 - collections yes sorry.

18:50 - These

18:51 - provisions are

18:52 - are across the board for pass through entities and corporate income tax

18:57 - I don't think we've bifurcated

18:58 - the number between c and I

19:01 - and p I t but we can do that for you

19:04 - but the.

19:05 - Largest spending

19:07 - and this is the largest percentage of r and d is done in the widely held company

19:11 - and

19:12 - so probably that.

19:14 - That will be mostly in there

19:16 - but there all

19:17 - the

19:18 - interest expense limits.

19:20 - Tend to hit for larger companies

19:22 - think the standard is twenty five million in over are all receipts

19:27 - in order to be subject to this one sixty three j limitations

19:31 - so that's likely to be

19:32 - more in the sea and I that it is an impurity

19:35 - because they've qualified production properties across the board

19:38 - and mainly from a policy perspective that's more targeted to the small business anyways

19:43 - but in that report we'll make sure we bifurcate those numbers we

19:45 - thank you yeah I think it's very important for us to understand

19:48 - how hr one has made significant tax policy changes in this country and

19:53 - as pennsylvania continues to

19:55 - figure out ways to continue to grow our economy

19:58 - that we find the places where it makes sense maybe to align with federal incentives

20:01 - and some of the things that they've done on the tax policy side to attract businesses

20:05 - but also to help.

20:07 - Was and families and things like that.

20:09 - As you may know hr one created in

20:12 - new exemptions for early ira weight ira withdrawals

20:16 - they expanded some of the existing exemptions

20:18 - to allow people to access ira money at certain points of their lives.

20:22 - The two new ones are

20:24 - related to childbirth and adoption

20:27 - which previously did not exist and so.

20:29 - I have legislation that would.

20:32 - No longer tax those early ira withdrawals on the

20:35 - on the state level

20:36 - to add an additional state incentive to folks that

20:39 - are growing their families in these instances and

20:43 - you know it would still be taxed on a federal

20:45 - level but they would not be able they would not

20:47 - face an early withdrawal penalty

20:49 - and we waive tax here

20:50 - I think that's a good way to support families here in

20:52 - pennsylvania continue to grow our population and continue to

20:56 - keep our young people here

20:58 - in this state and so

20:59 - at as revenue

21:00 - to take a look at that proposal as part of their report and determine if that's

21:04 - something that would have a net positive on our population growth

21:07 - without obviously impacting revenue in a significant way.

21:12 - And

21:12 - I want to switch gears to some of our past work on tax policy.

21:17 - Last year we we made some significant investments in

21:21 - two tax credit programs a child and dependent care

21:23 - enhancement tax credit and the work in pennsylvania tax credit

21:26 - can you give a summary of how those are working and

21:30 - if you have any data collected on those yet.

21:34 - The

21:35 - working families tax credit is

21:37 - probably the most significant change this government has made in

21:41 - tax policy waiting to working families in fifty years it's a

21:44 - tremendous.

21:46 - Digital component of our

21:48 - personal income tax system

21:50 - and it's playing out their way in terms of filing as of last as of this week

21:55 - we have over three hundred thousand returns have been filed

21:58 - over one hundred million in benefits that have been approved to be distributed

22:02 - and we expect that too.

22:05 - Our estimate is one hundred and ninety three million dollars at this point in time

22:09 - but the.

22:12 - When.

22:14 - By april fifteenth we're expecting

22:17 - this program to benefit almost a million pennsylvanians so.

22:21 - As of right now the only thing we can say in regards to

22:24 - what the programs doing it's it's benefiting a lot of

22:26 - pennsylvania.

22:27 - Citizens that

22:28 - they'll need that type of assistance when it comes to rising costs and

22:32 - the

22:33 - you meant and a

22:34 - jogger contribution or the dependent care credit dependent care.

22:38 - Credit carecredit is.

22:43 - Working similar has in prior years

22:45 - we had over two hundred thousand

22:48 - beneficiaries that program in two thousand the prior tax year.

22:53 - Benefits distributed about eight million dollars.

22:56 - The expansion to from thirty percent to one hundred

22:59 - percent I would see was a significant change nj

23:01 - but.

23:03 - From the

23:03 - first year of that.

23:05 - We saw that the.

23:08 - Those.

23:09 - That

23:09 - follow pennsylvania income tax return and qualify both for the federal and state

23:13 - credit are utilizing it and it's benefiting

23:15 - over two hundred thousand bucks.

23:17 - Yeah it's a tremendous success as a a

23:19 - member with a young family I can even see it how

23:22 - affects me and I I have to believe that it affects

23:24 - people in.

23:27 - Less financially secure footing than me even more and so

23:32 - I hope that we can continue that good work and

23:34 - you know I have heard all good things about what revenues been able to do with

23:38 - driving out those credits and advertising them and

23:40 - and make

23:41 - the public more aware that those available because.

23:44 - It's a worthwhile investment by the state invest in families that way so thank you

23:49 - because of the action number of ages add to that because of the action of

23:52 - this committee the assembly and the governor we had

23:55 - set up a special unit for these credits because.

23:57 - The our

23:58 - personal tax system didn't have many of these up until most recently

24:02 - it was special

24:03 - special credit unit

24:05 - with twelve people that are there dedicated to it.

24:08 - For this year

24:09 - if you

24:10 - qualify for the federal credit you'll get the state credit automatically will

24:13 - incorporate that in the form next year but it's

24:17 - it's required us to dedicate a significant amount of digital resources to it

24:21 - but obviously it's it's very important to do that

24:23 - I was not aware of that and I commend you for setting that up because

24:26 - as excessive ability some of these credits is

24:28 - half of the battle

24:30 - in many ways people don't know about them

24:31 - they don't know how to take advantage of them.

24:33 - Nobody likes filing taxes so

24:36 - it's difficult to get people to even think

24:38 - about what might be available to them and so

24:40 - having

24:41 - as least friction as possible when dealing with

24:43 - the department or you know filing your taxes is is

24:47 - as advent

24:47 - advantageous to the.

24:50 - Pennsylvanians as it can be because we want to make that as seamless as the process.

24:55 - Thank you

24:56 - and

24:57 - the next question I have is related to the lottery

24:59 - and the lottery faces a lot of competition competition here in pennsylvania and those

25:04 - pressures

25:05 - only continue to grow

25:06 - and so.

25:08 - Can you talk a little bit of what the lottery can do

25:12 - to be more competitive with some of it's competition and also

25:15 - to contain anew provide that critical funding

25:17 - for senior programs here in pennsylvania.

25:22 - Thank you yes at first

25:23 - just want to

25:24 - thank you for passing profit margin relief last summer.

25:28 - That was really beneficial to the lottery

25:30 - it passed just in time as we were working on the holiday

25:33 - games for that year so we were able to boost payouts

25:36 - for those games and scratch off games going forward.

25:39 - However like you said you know the lottery continues

25:42 - to face an incredible amount of competition

25:44 - in this market

25:46 - that's

25:46 - negatively

25:47 - affecting our ability to continue to grow at the rate that we would like to grow.

25:52 - I would say that the biggest threat to the lottery

25:54 - and it's mission right now to generate revenue for

25:58 - senior programs

25:59 - continues to be unregulated games of skill

26:03 - and last year when we were here before the committee.

26:06 - We reported that.

26:08 - Games of skill worrying about thirty six percent of our lottery retail locations.

26:12 - Now that number is over fifty percent.

26:15 - So that number you know the continue to grow

26:17 - the number of locations the number of machines

26:20 - and the biggest impact we've seen are directly on our scratch off sales

26:24 - or the governor's budget proposal.

26:27 - Would help the lottery

26:28 - and the reason being

26:30 - if you

26:31 - want

26:31 - to regulate games of skill and treat them like vg teeth.

26:35 - Vg teas are already required by law to be lottery retailers

26:39 - so this would help the lottery

26:41 - expand our

26:42 - points of distribution are our number of retail locations.

26:46 - Thank you

26:47 - and I know it

26:48 - only have a minute left here mr chairman I appreciate it.

26:51 - Do I have a minute left.

26:53 - I was going to just try and start talking and see if you'd stop it

26:56 - thank you

26:57 - it.

26:57 - Was a good try though.

27:00 - Even account

27:01 - that.

27:03 - Senator ferry followed by

27:05 - senator carney.

27:08 - Secretary thank you for being here

27:10 - and the governor in his budget has proposed to eliminate several tax credit

27:14 - programs can you explain which ones and why they were selected.

27:23 - Should be able to do that by now

27:24 - and.

27:26 - The reason why they select as a matter of utilization

27:28 - and

27:29 - trying to reconfigure them to something that we know.

27:33 - Is being utilized the marketplace across the country

27:35 - in order to invest in businesses that would potentially

27:38 - be applied part of.

27:42 - Working with d c d for investment

27:44 - and

27:45 - the

27:46 - credits that are part of this are the

27:48 - video game.

27:50 - Credit the.

27:52 - Waterfront

27:53 - tax credit.

27:54 - Is another one and.

27:57 - The manufacturing tax credit.

27:59 - Combine up to two thousand and twenty eight twenty nine that'll be ten million

28:03 - dollars at ten million dollars is going to be.

28:06 - Reallocated to a credit card advanced pa was essentially a job creation tax credit.

28:12 - We had to eliminate that tax credit several years ago because per

28:16 - the performance review by the ifo it was not producing anything

28:20 - but the advance

28:21 - pa tax credit was

28:23 - specifically be tied to payroll

28:25 - so that the amount of application will.

28:28 - Be directly connected to the amount of.

28:31 - Payroll tax taxes and wages that are being paid

28:33 - in order

28:34 - to.

28:35 - Respond to the reason why it was repealed

28:37 - but will.

28:39 - What we hear from

28:40 - commerce folks around the state as this is something that is usually

28:43 - a very strong component

28:45 - of an investment deal in order to attract investment pa

28:48 - so it's it's

28:50 - it's coming from those who work on the field and making sure this stuff happens.

28:54 - So is that all part of the pa edge reforms or is that something different

29:00 - something separate from that

29:01 - can you explain the ph reforms that are proposed as well in the pa edge tax credits

29:05 - you know where they were originally developed and

29:08 - promulgated and implemented in order to accommodate.

29:11 - Specific deals

29:13 - that were on the table at the time

29:14 - and

29:15 - that for.

29:17 - Semiconductors and for milk processing

29:21 - and

29:22 - they there was.

29:24 - Potential

29:25 - large investments that are going to remain those

29:28 - credits were formulated in order to accompany that they didn't happen.

29:32 - Any

29:33 - the amount of investment needs to happen in order for

29:36 - a company to receive it is is enormous at five hundred million dollars.

29:41 - For the milk processing credit.

29:44 - That's

29:45 - eight hundred toll jobs

29:47 - so we're looking to re

29:49 - formulate these credits into a way that they can be applied.

29:53 - More generally

29:54 - we actually utilized

29:56 - the

29:56 - local resource manufacturing credit is being reconfigured to

30:00 - energy specific credit adequate energy investment credit.

30:03 - The semi

30:04 - conductor credit the

30:06 - the investment is being dropped to one hundred

30:07 - and fifty million for one hundred jobs.

30:11 - The milk processing credit

30:13 - fifty million for one hundred jobs rather than

30:16 - five hundred million for eight hundred jobs

30:19 - so it's just a it's just a effort to try to reformulate these so they can be used.

30:24 - Are they

30:25 - industries as well or.

30:27 - Are the same

30:28 - same.

30:30 - The existing credits in the edge program will be maintained

30:33 - so we're just reconfiguring.

30:35 - All those credits to make them more practical.

30:39 - Thanks chair.

30:43 - Thank you senator of next senator carney followed by senator vogel.

30:50 - Good afternoon

30:51 - thank you

30:51 - secretary thank everybody

30:53 - for coming today.

30:55 - I'd like to ask about how

30:57 - america's.

30:58 - K shaped economic recovery since the pandemic is affecting the commonwealth's revenue

31:03 - collections and budget projections.

31:06 - One of the things I've noticed is that the stock market.

31:09 - Is doing very well mainly because of artificial intelligence and the

31:13 - manga has a

31:13 - magnificent seven

31:15 - biggest tech companies but at the same time.

31:18 - Consumers are more pessimistic

31:21 - about the economy and the vast majority of americans are spending less

31:25 - on vacations dining out other discretionary purchases.

31:29 - More and more people's

31:31 - incomes are being eaten up by housing utilities groceries

31:35 - basically by the necessities.

31:37 - It's coming to the point where the wealthiest

31:39 - americans spending on luxury goods and services.

31:42 - Which is driven by the growth of their stock portfolios

31:45 - is masking the weakness of everyone else's pocketbooks

31:49 - to quote the wall street journal the

31:51 - the risk is that the u s economy becomes increasingly dependent

31:54 - on a narrow group of very rich households

31:56 - whose spending is tied to the performance of the stock market.

32:01 - This risk has really been supercharged by the

32:03 - two thousand and seventeen federal corporate

32:05 - and billionaire tax cuts and now by the big beautiful bill

32:09 - which specifically

32:10 - is related to some of the fiscal

32:12 - fiscal challenges that the commonwealth is facing.

32:15 - As a related dhs is budget and the ability to serve

32:18 - pennsylvania and

32:20 - so for my constituents the ability of the state to provide basic services goes hand

32:25 - in hand with the concentration of wealth

32:27 - we're seeing in the economy

32:29 - and how tax policies are encouraging that

32:32 - concentration.

32:34 - My question is does pennsylvania's revenue system keep pace with the growth of the

32:38 - economy if the economy gains are overwhelmingly concentrated

32:42 - in a small slice of the one percent through their ownership of

32:45 - stocks

32:46 - bonds and

32:47 - other assets.

32:50 - If you look at them.

32:53 - Real gdp as

32:54 - compared to the actual revenue collections on our primary sources is p I t

32:58 - and consumption taxes.

33:01 - As of now our

33:03 - growth in those levies.

33:05 - Is exceeding

33:06 - what real gdp is so there's various strength in those

33:10 - no doubt

33:11 - some of that strengthen the p a t non withholding payments are from stock market

33:16 - and across

33:17 - economic interests there's a lot of concern about.

33:20 - As you said an ai bubble on the stock market

33:22 - and because it's the the amount of growth in the stock market recently

33:27 - and this is not

33:28 - and things are working in a way that

33:31 - do you usually don't see you'd see the stock market growing.

33:35 - People.

33:36 - Those who

33:37 - do.

33:39 - Analyze those.

33:40 - Those trends

33:41 - tend to believe that it's

33:43 - primarily driven by growth in ai which is

33:46 - if you look at what

33:47 - happened in two thousand and one

33:49 - where the exuberance over technology in general their adventure was a correction

33:52 - so we are we are concerned

33:54 - about a potential correction there

33:56 - and.

33:57 - The the one thing that working at cross purposes

34:01 - in our overall

34:02 - revenue capacity is

34:05 - and this wasn't the case until recently.

34:08 - Is the

34:09 - growth of

34:10 - personal income tax and consumption based taxes as opposed to the

34:13 - reduction of corporate income taxes

34:16 - now that there was a reason for that.

34:18 - Right now

34:19 - on a static basis

34:20 - we're seeing consistent declines

34:22 - on the revenue passing covenant

34:24 - levy because the rates are going down

34:26 - but thought was that.

34:29 - That by doing that

34:31 - you would be able to

34:32 - see overall increases in p I t and sales tax that's something

34:36 - on a more macro basis we're hoping to see over time and

34:41 - he won't

34:42 - probably won't see that in the corporate income tax itself because there's

34:46 - there's no reason

34:47 - just by itself to invest austin pa any more because it's

34:50 - all driven by markets not driven by investment anymore

34:53 - sales is what drives it

34:54 - people are not going to

34:56 - decide not to sell the pennsylvania residents because the taxes too high

35:00 - when it needs to do is it needs to communicate

35:02 - overall

35:03 - at pennsylvania is a strong place to do business

35:07 - and investing in pa is smart thing to do because they recognize the value of

35:12 - our competitive business structure

35:13 - so that's

35:14 - that's something those two items

35:17 - are.

35:18 - The where the capital markets sits now.

35:22 - Not only in equities but in in precious metals which is

35:25 - are skyrocketing they tend to move in opposite directions that move being.

35:29 - They're both moving in the same direction right now.

35:32 - As opposed to what the decisions of this

35:35 - this government has made

35:36 - which i.

35:38 - Feel

35:38 - totally supported I think are important you can't sit

35:41 - at the most costly

35:42 - jurisdiction in the country from a corporation

35:44 - perspective and expect that is not going to

35:46 - that's not going to do something to grow.

35:49 - That average is retracting in our revenue capacity are we going to see growth.

35:55 - In the

35:55 - personal income tax

35:56 - and consumption taxes

35:58 - because of that.

36:00 - Don't you think that there's a there's really does seem

36:03 - to be a disconnect between main street and wall street

36:06 - in terms of

36:07 - the money and in terms of where it is

36:09 - I mean we have a snapshot of a situation where.

36:13 - We saw the effects of

36:15 - government checks that went out to directly to people during the pandemic

36:18 - and what we saw as a result of that is that money going into the middle lower income.

36:25 - Bracket folks

36:26 - those people spent it and they places where they spent the day spent and then

36:31 - so on and so on the money circulated and we saw

36:34 - you remember we had how many quarters of

36:37 - above expected.

36:39 - Revenue came into the commonwealth as a

36:41 - result of it

36:42 - what I'm concerned about is that with the.

36:45 - Amount of capital which is now

36:47 - in that sort of.

36:49 - Top one percent of the top one percent kind of thing

36:52 - that money is not being circulated that money is being hoarded and that's

36:57 - that's.

36:58 - Concerned about what that's going to mean for the commonwealth

37:01 - as we kind of

37:02 - move forward and try to.

37:04 - It just seems like it's going to be exasperated or

37:06 - made even worse

37:07 - if if there is a significant correction because of it

37:10 - it absolutely will

37:11 - we're not seeing that yet we're seeing growth

37:14 - across the

37:15 - personal income tax system because of the.

37:17 - Because of growth in wages

37:19 - growth in the equity markets.

37:22 - The

37:23 - growth in

37:23 - all capital markets actually

37:26 - do.

37:26 - The thing in the end of the day which is going to drive growth

37:29 - in those

37:30 - those two primary levers levies

37:32 - is.

37:33 - A growth in our population.

37:35 - Getting four percent

37:36 - five percent.

37:38 - From the existing population on personal income.

37:42 - Is.

37:44 - You can defend that a strong because wages tend not to go up

37:48 - by four or five percent every year

37:50 - what's going to

37:51 - counter that

37:52 - that cap

37:54 - on those two

37:55 - revenue sources

37:56 - is our ability to attract.

37:59 - More more people into the commonwealth that are paying them

38:02 - and that's

38:03 - the war.

38:05 - The larger challenge for this government.

38:08 - I would agree with that and.

38:10 - Keeping that in mind.

38:13 - Is there any way for the commonwealth to basically.

38:16 - You know we're not going to change the fact of where the the

38:19 - the

38:20 - income shifting is already occurring.

38:22 - In terms of

38:24 - is there any way to for the commonwealth to share

38:26 - the gains accrued to the wealthiest to the billionaires and the other one percenters

38:31 - or does the uniform

38:32 - cause prevent the legislators from ever

38:35 - really debating policy to

38:37 - to generate revenue from passive income.

38:40 - Or from wealth rather than from salaries or

38:42 - or other kinds of income you're speaking about a different rate on unearned income

38:47 - that

38:48 - at least in terms of the

38:50 - core present from the seventies that wasn't the test it's

38:53 - the

38:53 - is just a general rate difference amongst parties

38:56 - so if

38:57 - if there was a consideration of by this assembly

39:00 - to establish a different rate for.

39:03 - Like

39:03 - like is in the federal system

39:05 - capital gains

39:06 - are

39:06 - taxed unlike most days.

39:09 - Then and

39:10 - then earned income as.

39:12 - That

39:13 - that.

39:15 - Constitutional question really that has not been tested yet

39:18 - so I

39:19 - it's hard to answer that question.

39:21 - If there was a consideration of it.

39:26 - Thank you secretary rigor

39:27 - yeah if I can just add on.

39:28 - I think.

39:29 - I think it's important though to

39:31 - to highlight the pro pennsylvania policies

39:34 - that

39:34 - the

39:35 - administration and the general assembly have enacted

39:37 - to be able to put

39:38 - dollars back into the

39:40 - pockets of.

39:42 - Pennsylvania ones

39:43 - secretary brown had mentioned the working pennsylvania tax credit

39:46 - I think that's

39:47 - a perfect example

39:48 - of things that we can do at the state level to ensure that we're putting money back

39:51 - and giving money back to pennsylvania where they can further reinvest it

39:54 - and generate additional revenues.

39:57 - Just as well and

39:59 - on the.

40:00 - Corporate income tax cuts and

40:02 - economic climate that

40:03 - I referenced earlier I think

40:05 - you know obviously creating those

40:07 - new jobs

40:08 - as a result of bringing companies here and.

40:11 - Also you know

40:12 - helps to provide

40:13 - for additional wages and

40:15 - helps to stimulate some of our revenue growth as well so I think

40:19 - you know we've been doing a lot of things even if the fed and

40:21 - the federal government are making changes

40:23 - that otherwise impact.

40:25 - Pennsylvanians I think we've been doing some things at the state level that have been

40:29 - helpful to between.

40:31 - Okay.

40:33 - Thank you both

40:34 - thank you determine.

40:36 - Thank you senator up next senator vogel followed by senator street.

40:40 - Thank you chairman good afternoon secretary brown secretary ribera

40:43 - glad to have you here today.

40:45 - Secretary ramon start with you here on in the

40:48 - governor's budget to dp special funds is

40:50 - receiving another twenty million dollars for the

40:54 - hazardous sites cleanup fund can you explain

40:57 - is that twenty million a one time deal or is that going to be

41:00 - twenty twenty twenty twenty down the road or

41:02 - how's that going to

41:03 - work

41:03 - as we had proposed it's a one time deal.

41:06 - So we are proposing to transfer twenty million

41:08 - dollars into the hazardous sites cleanup fund

41:10 - to help with solvency in the budget year.

41:12 - The way that this program was funded

41:14 - historically was through the capital stock and franchise tax

41:17 - obviously that

41:18 - tax was repealed

41:20 - and collections while have been holding on are starting to diminish so I think

41:25 - we would welcome a conversation with the general assembly on what a new permanent

41:29 - revenue.

41:30 - Replacement would be for that

41:32 - to keep that fund

41:33 - solvent and providing the resources that people are across two.

41:37 - Are going to be my question to you

41:38 - you mentioned new revenues what is a new revenue

41:40 - stream I guess or where to where we think we

41:43 - could go to.

41:44 - Find that money to be able to

41:46 - do that

41:47 - yeah.

41:48 - I mean I think there's been several proposals out there

41:50 - in the past as it relates to

41:52 - new funding for hazardous sites cleanup.

41:55 - You know any

41:56 - incr leases and fees which I think are eggs are

41:58 - some existing revenue sources for those types of programs

42:01 - is obviously a larger conversation with the general assembly.

42:04 - Or if

42:05 - the general assembly is open to providing direct

42:07 - funds from the general fund into that fund will reopen the conversation as well

42:11 - and that goes back to the well plugging count as well you're pulling money out of the

42:14 - general fund for the well plugging account is or.

42:17 - How much we pulling out this year we have a we have an idea what

42:20 - the

42:21 - is going to be.

42:22 - We.

42:23 - The last few years we've proposed the general

42:25 - fund transfer into the well plugging account we've

42:28 - we have enacted some appropriation out of the general

42:30 - fund and dwell plugging but then have utilized.

42:33 - Balances in certain restricted or other funds

42:36 - to help

42:37 - offset those costs so we are.

42:40 - Proposing to fully fund

42:41 - that out of the general fund this year

42:44 - but envision will have further conversations with the

42:46 - general assembly on what the funding for that looks like.

42:49 - Is there any other chance of

42:50 - not pulling out of the general fund at some point in time.

42:54 - I mean there's who knows there's thousands of these

42:56 - wells out there across the state I mean it'd take

42:58 - the

42:58 - rest of our lifetimes and then some prior to plug them all I mean.

43:01 - Is there.

43:02 - A

43:02 - Number or something we can

43:04 - look forward to.

43:06 - Proposing

43:07 - that we could use for that

43:09 - you mean a number for the actual capping

43:11 - and.

43:12 - I mean they're not

43:13 - most of our capping is done with federal resources and federal grants the funds that

43:17 - we're proposing for the well plugging counter for the

43:20 - operations of the staff a dp to make sure that those plugins can occur.

43:24 - So I think

43:26 - now open to conversation with the general assembly

43:28 - on state dollar specifically to well plugging

43:30 - but what we're proposing is just to make sure that the office can continue

43:34 - I mean.

43:35 - I think otherwise.

43:38 - That

43:38 - the conversation as it relates to the operations of that office comes down to.

43:43 - Potential fee increases on industry so.

43:46 - Okay thank you for that and also.

43:48 - Next the governor also proposes to it as.

43:51 - His budget address he stated that twenty percent of the consumers typical

43:54 - electric bill associate with generation

43:56 - is that a correct number

43:59 - and I believe that number

44:01 - get arrived at I guess and

44:03 - it is my understanding that

44:05 - this is way more technical than me and I

44:07 - also tried to follow the pfc hearing yesterday

44:10 - where there was

44:10 - an inkling that as well yeah.

44:14 - But

44:15 - I don't

44:16 - I don't know the specifics of how that twenty percent

44:18 - was generated I can certainly get back to you but

44:20 - okay.

44:21 - Appreciate thank you chairman I

44:22 - have courses right this time thank you.

44:24 - Thank you senator up next sen street followed by senator pennycook.

44:30 - Good afternoon.

44:31 - Mister secretaries.

44:34 - Deputy secretaries.

44:36 - Thank you for your service thank you for being here.

44:41 - The southeast region of the commonwealth.

44:44 - As law as well as the southwest

44:46 - are big economic drivers for the commonwealth in terms of revenue

44:51 - is that correct.

44:54 - That is correct

44:55 - and

44:56 - mass transit

44:57 - is.

44:58 - Is critically important to

45:01 - the economic health and vitality

45:03 - of those regions.

45:05 - Septa and prt are really important.

45:09 - But

45:09 - mass transit impacts a number of other regions as well.

45:13 - The governor.

45:15 - Has proposed

45:16 - has suggested that we need sustainable revenue and I agree

45:20 - one of the one of the things that the governor has discussed as a possible

45:24 - revenue source for the commonwealth that I think could be used

45:27 - for

45:28 - mass transit revenue

45:29 - would be the legalization of adult use cannabis

45:32 - can you discuss the potential revenue impacts of.

45:36 - The legalization of adult use cannabis.

45:45 - Think.

45:46 - Bear with me a minute.

45:51 - The estimates.

45:54 - For the.

45:56 - Current budget

45:57 - for the budget cycle twenty six twenty seven

46:00 - seven hundred and thirteen million and.

46:03 - Most of that

46:05 - for adult use cannabis is from

46:06 - fees.

46:08 - From fees paid by.

46:11 - Growers and processors and

46:13 - dispensaries

46:14 - and.

46:15 - The numbers after the fees are paid or are

46:18 - significantly lower twenty seven twenty eight

46:20 - estimated thirty three million hours

46:23 - but it's.

46:24 - It is a

46:25 - significant.

46:27 - Dollar amount

46:28 - in relation to the

46:29 - what we believe are the fees that

46:31 - existing dispensaries medical dispensaries

46:34 - at twenty eight there were

46:35 - estimating will

46:37 - will carry over to a recreational platform too.

46:40 - For this current cycle

46:41 - and that would be

46:42 - and and and and subsequent in subsequent.

46:46 - Budget cycles that will be anticipated that as revenues

46:49 - are generated from those

46:51 - those industries that there would be more tax revenue generated the commonwealth is

46:54 - as well correct have a twenty percent wholesale rate

46:58 - on the sale of adult-use cannabis plus the sales tax rate.

47:02 - A combined are to be around.

47:05 - Thirty three million dollars wouldn't resume right now.

47:09 - For your one.

47:11 - For twenty seven for year

47:13 - for twenty six twenty seven.

47:16 - Along with all of the fees are paid

47:19 - and then twice seven twenty eight or thirty three.

47:22 - Thank you.

47:25 - Turning to another

47:26 - another topic.

47:28 - Can we.

47:29 - The.

47:32 - The commonwealth is.

47:33 - The kabul's revenue position has also been impacted by

47:36 - the

47:37 - potential federal cuts I think you talked about that a little bit

47:40 - and

47:41 - particularly the cuts to the way

47:44 - medicaid has been

47:45 - implemented

47:46 - he discussed the additional.

47:49 - Key discuss the impact of the realm of

47:51 - of.

47:52 - The big ugly bill

47:53 - or beautiful depending on your perspective

47:56 - and

47:58 - and it's

47:58 - and how it is impacting the commonwealth fiscal position.

48:02 - Because my understanding is it is having some pretty

48:05 - dramatically adverse impacts on our fiscal position.

48:11 - They

48:11 - give you a little more information on your prior question the question is

48:15 - the the feds pet

48:17 - bip did a bunch of changes that a bunch of changes with the

48:21 - but

48:21 - I guess hr one.

48:25 - And I my understanding is that

48:27 - that has an adverse impact on the commonwealth's fiscal position

48:31 - for instance

48:32 - the commonwealth is expected to.

48:35 - Pay a bunch of additional fees

48:37 - around and.

48:39 - Medicaid.

48:41 - Where

48:41 - there are other places where it is their feet there was

48:45 - fishing acting from the fed through the commonwealth

48:47 - can we talk about little bit what the aggregate impact

48:49 - of that bill was on the commonwealth's fiscal position.

48:54 - So.

48:55 - As a relates to the impacts of hr one

48:58 - as you noted there are some specific medicate impacts there are also

49:01 - snap

49:03 - impacts to the commonwealth potentially.

49:05 - We have a requirement to get our

49:08 - error rate under

49:09 - six percent

49:10 - otherwise some of the benefit costs would.

49:13 - Switch off to the commonwealth in future years so I have full faith in

49:17 - secretary cushion I believe she's in front of this committee talking about her

49:20 - efforts to make sure that we're underneath that threshold and there are also costs

49:26 - and

49:26 - as it relates to the administration of snap benefits

49:29 - that are being pushed off onto the state

49:31 - and then

49:32 - secretary brown has has certainly touched on some of the tax

49:35 - benefits that are otherwise could impact and will impact the

49:39 - revenues of the commonwealth.

49:43 - Better to follow up

49:45 - they wanted to follow up on the adult use cannabis

49:47 - numbers I was I was calling the wrong members.

49:49 - The thirty three is the wifi number for the second year

49:53 - taxes one hundred and fifteen on the wholesale side

49:55 - eighty seven on the sales tax side.

49:58 - I was I was just calling the phone number so the total

50:00 - we're looking at

50:01 - estimated for twenty seven twenty eight is two hundred and eight million dollars.

50:05 - Thank you on the amount of time look I appreciate your responses

50:09 - I think we gotta have revenue for mass transit and certainly we need to

50:13 - look at

50:13 - all the damage that the

50:15 - that hr one has done to the commonwealth's fiscal position thank you so much I yield.

50:20 - Thank you our center pennycook followed by senator kim

50:23 - thank you mr chairman mr secretary secretary reaper

50:27 - and the question about the department of health budget

50:30 - and.

50:31 - In the geo approach there was a two million dollar timmy.

50:36 - Two million dollars to maintain the pennsylvania immunization electric

50:39 - registry system

50:41 - and

50:42 - how long have we have that is.

50:44 - I've never heard of it.

50:46 - No I don't believe it's new I believe.

50:48 - It has been

50:50 - historically funded by federal dollars

50:52 - which have been

50:53 - impacted by the changes at the federal level

50:55 - so we're

50:56 - shifting costs into the state.

50:58 - Okay.

51:01 - Can you

51:02 - after the hearing can you follow up and let me know like

51:04 - how big it is what it does sure

51:06 - if you don't mind

51:07 - and

51:08 - I have another question

51:09 - there's a

51:10 - additional two point five million dollars in the department of health's budget

51:14 - to expand maternal health programs can you expand on that.

51:18 - Yes and

51:19 - so.

51:20 - One of the requirements of the

51:22 - department of health is to.

51:24 - Receive recommendations from child death review panels

51:28 - and.

51:30 - It's my understanding that

51:31 - the information is to be sent back to the commonwealth

51:35 - and and.

51:37 - What we're proposing to do is provide additional staff to the department of health to

51:40 - be able to take that information that we receive from

51:43 - child death review panels and come up with recommendations.

51:46 - For

51:47 - potential

51:48 - changes

51:49 - and

51:49 - in guidance and or legislation

51:52 - to to give out to counties to to be able to help

51:54 - to help with

51:56 - child

51:57 - infant.

51:58 - Mortality rates

51:59 - yeah

52:00 - can you tell me.

52:01 - How we rank in child mortality as compared to other states across the nation

52:06 - I do not know that personally back in quebec.

52:09 - Thank you.

52:10 - I have no more questions.

52:14 - Senator kim followed by senator culver.

52:17 - Good afternoon.

52:18 - We just had a great conversation with

52:20 - sarah

52:21 - secretary sager

52:22 - with dcd

52:23 - talking about the new businesses eli lilly coming at

52:28 - j and j r restart of t m i.

52:33 - Where do you see.

52:35 - The benefits when we have these huge companies coming into pennsylvania.

52:43 - Yeah so

52:44 - when companies choose to invest in pennsylvania and as I hinted at a little earlier

52:49 - it provides for

52:50 - additional investment opportunities for us to make

52:53 - in return those investments into

52:55 - to the people of pennsylvania in addition to

52:57 - obviously the jobs that those businesses create and

53:00 - provide benefits to the the workers of pennsylvania as well

53:03 - and.

53:04 - I think.

53:06 - From a

53:07 - just a global economic standpoint.

53:10 - Having those companies locate here

53:12 - and

53:13 - you know

53:14 - hopefully also in tracks new

53:16 - attracts new residents

53:18 - or individuals to move into the calm of

53:21 - further expanding on

53:22 - our economic benefits that we receive

53:24 - and

53:25 - you know

53:25 - and

53:26 - the those businesses also

53:28 - obviously choose to invest whether that's an infrastructure.

53:31 - Rounds

53:32 - and their location

53:34 - and

53:34 - or.

53:36 - You know.

53:37 - I think by creating the jobs we we often

53:40 - also see.

53:41 - Other

53:42 - social amenities or.

53:44 - Healthcare needs follow those people as well and they'll locate where

53:48 - the people are so

53:49 - I think just overall the the governor standpoint on economic policy.

53:53 - Has been an intense

53:56 - with creating the economic development strategy the first one and

53:59 - I think twenty years

54:00 - and the focus on permitting reform

54:03 - in working with the general assembly to enact those changes

54:06 - as well as just overall bettering our business climate

54:08 - I think all of that

54:10 - generates.

54:12 - A variety of

54:13 - benefits for pennsylvania

54:15 - and then building on that you know I think

54:17 - secretary brown said you know more people in pennsylvania more p I t.

54:22 - Helps raise revenue.

54:25 - My question is as you know we have an ageing population so the number of folks

54:29 - coming out of work

54:30 - or retiring.

54:32 - What is the ratio in terms of filling back those positions with

54:36 - the

54:36 - workers and

54:37 - do you know what the ratio would be like you know

54:39 - one hundred thousand leave

54:41 - but he felt

54:42 - twenty thousand

54:43 - do you have that ratio.

54:45 - I don't have the ratio we can certainly get back to you I do know that and you know

54:51 - at least just from the

54:52 - even those bigger job

54:54 - creating announcements that we've seen

54:56 - and

54:57 - we've created

54:57 - tens of thousands of jobs

54:59 - under this administration

55:00 - and

55:01 - and

55:02 - you know I I

55:03 - I think we've.

55:05 - Also had

55:06 - I really focused on.

55:08 - A variety of investment areas that helped to generate

55:11 - workforce

55:12 - to help fill those positions

55:14 - you know whether it's the investments in our schools

55:16 - pre k.

55:18 - Increases in childcare rates

55:20 - and

55:20 - across a variety of different child care programs

55:23 - as well as the governor's

55:24 - focus

55:25 - on.

55:26 - C t e funding infotech funding

55:28 - and other internship and an apprenticeship programs

55:31 - so I think

55:32 - you know we've done

55:33 - enough have tried to make sound strategic investments in

55:37 - all areas a workforce

55:38 - from

55:39 - at any age

55:41 - and I think that's

55:42 - beneficial as well when companies are making

55:44 - decisions on whether or not to move here.

55:47 - Speaking of jobs.

55:48 - The governor proposed

55:49 - a fifty dollar minimum wage for folks

55:53 - and then.

55:54 - I

55:55 - Predict that there'll be a savings can you explain that.

56:01 - Yeah on the savings part

56:02 - specifically that is directly tied to.

56:05 - The.

56:07 - Medicaid eligibility rate.

56:09 - So.

56:11 - And

56:11 - the

56:12 - especially with the work requirements that the

56:14 - federal government is going to be putting in place

56:16 - where folks will need to find employment

56:19 - in order to potentially stay on.

56:21 - Benefits.

56:23 - You know the governor's viewpoint is making sure that

56:25 - when those people are going to find jobs that they're finding jobs that

56:29 - pay an honest wage

56:31 - and so.

56:33 - That is tied into that specifically

56:36 - but

56:36 - the the correlation to the number of folks that would

56:39 - do.

56:40 - You know

56:41 - income off the rolls is directly related two the

56:44 - income eligibility limits that are directly state

56:46 - set by

56:47 - the

56:47 - federal government

56:48 - and

56:49 - a fifteen dollar minimum wage puts.

56:52 - You know

56:52 - an individual above that threshold.

56:55 - Thank you secretary bair thank you mr chairman.

56:58 - Thank you up next we have sen kovar followed by senator haywood.

57:04 - Thank you mr chairman thank you all for being here today

57:07 - to talk about the pennsylvania lottery

57:09 - and

57:10 - as you know the lottery continues to be the only state

57:12 - lottery system that generates funding solely for programs

57:15 - that benefit our older pennsylvanians

57:18 - and as you know

57:19 - pennsylvania is an aging state

57:21 - and I've always been proud to say that mama out and about that we solely fund it

57:26 - through that or at least we did at one time

57:28 - so.

57:29 - Some of the important things they support our prescription assistance are free and

57:33 - reduced transportation fare meals

57:35 - senior centers and so many other critical

57:37 - programs vital to our seniors

57:40 - so according to information provided by the administration

57:44 - the law lottery fund is expected to see a significant

57:46 - multiyear reduction in it's ending cash balance.

57:49 - Hopefully leveling out in the twenty eight twenty nine fiscal year

57:53 - why is the lottery fund in such a difficult position for the immediate future.

57:59 - Going back to the

58:01 - er.

58:01 - Stephanie or director's.

58:04 - Statements before.

58:06 - Pennsylvania is.

58:08 - The number one in terms of volume to gaming the number one state in the country

58:12 - and.

58:14 - Back twenty years ago

58:15 - the lottery and horse

58:17 - horse racing was the only things that were in pennsylvania now.

58:20 - The offerings are analysts

58:22 - and the ability of the lottery to continue to grow

58:26 - it'd be

58:27 - a competitive part of that.

58:30 - The.

58:31 - Gaming environment is becoming more difficult every day

58:34 - and

58:35 - and

58:36 - that's something I believe collectively.

58:39 - Executive legislature

58:41 - needs to.

58:42 - Recognize a relation to the future the lottery that if it's going to

58:46 - survive

58:47 - and be as important as you mentioned in regards to the programs that had fun it's.

58:52 - There needs to be some activity from

58:54 - this government to protect it

58:56 - and as of right now we have

58:58 - a significant unregulated market out there that's causing

59:02 - the lottery significant stress can ask the question

59:04 - what effects have the unregulated skill games

59:07 - had on the lottery

59:08 - it's just that you only have a certain amount of disposable income and when someone's

59:11 - going into one of the convenience stores as a choice

59:13 - of playing the lottery or playing skill games.

59:16 - That the choices are they're making or significantly

59:19 - and directly impacting the lottery it's not something

59:22 - you'll five years ago that.

59:24 - A choice like that was available now it is

59:27 - and that's not

59:28 - it's not a statement that

59:30 - that game activity shouldn't have

59:32 - there just needs to be some

59:34 - level playing field that's out there relation to those games

59:38 - so the waters protected

59:40 - so last july act thirty seven of twenty twenty five

59:43 - signed into law

59:44 - after receiving bipartisan support in both legislative chambers

59:48 - at the law reduced the lottery my profit margin requirement an effort to increase

59:52 - the sale of lottery tickets if

59:54 - I read

59:55 - I'm not sure whose testimony correctly

59:57 - 906 were already showing an impact or showing improvement.

01:00 - 02.276 Yes

01:00 - 05.451 and so that law passed in july like I said we were

01:00 - 08.276 just starting to work on the christmas holiday games

01:00 - 11.186 so we were able to put it to good use

01:00 - 15.686 immediately so we bumped up the payout of those seven holiday scratch-off games

01:00 - 17.786 and now scratch off games going forward

01:00 - 22.556 so prior to this for four straight years which was on precedent we had

01:00 - 24.506 declining scratch off sales

01:00 - 28.086 we are just now starting to see some growth.

01:00 - 29.426 Some of that it's a

01:00 - 33.122 little early right with the the scratch off games only about our third of the games

01:00 - 34.766 in market now have boosted payouts

01:00 - 37.976 and we also had some jackpot luck earlier in this.

01:00 - 40.116 Fiscal year

01:00 - 42.576 but yes we are starting to see.

01:00 - 45.086 You know some signs of growth again in that

01:00 - 46.326 very important

01:00 - 47.436 category because

01:00 - 49.226 scratch off sales make up

01:00 - 52.196 about sixty seven to seventy per cent of our

01:00 - 53.006 our sales

01:00 - 54.896 but that's also where we're seeing

01:00 - 55.976 the biggest

01:00 - 56.786 direct

01:00 - 00.236 impact from games of skill because scratch offs are

01:01 - 02.376 largely an impulse purchase.

01:01 - 05.142 And also it's you know you want to have

01:01 - 07.722 a lot of points of distribution and have

01:01 - 09.522 a wide retail network

01:01 - 11.982 and we have had we've struggled

01:01 - 14.804 where going into retail where if they have games

01:01 - 17.202 of skill they said no we don't want the lottery

01:01 - 18.792 can you tell me

01:01 - 20.562 did the administration factor in

01:01 - 23.712 this marginally from forecasting few usher ticket sales

01:01 - 26.562 and the lottery fund model that was provided to the committee

01:01 - 27.737 yes it did

01:01 - 31.522 incorporate the estimates on profit margin relief yes.

01:01 - 33.312 So do you believe just

01:01 - 36.102 what we're forecasting for the future year

01:01 - 39.252 the department will be able to continue to support the programs

01:01 - 41.482 that we have historically funded.

01:01 - 43.939 The

01:01 - 45.262 institute.

01:01 - 46.482 Yes we do believe

01:01 - 47.412 that will

01:01 - 49.515 will continue to be able to support the aging

01:01 - 51.762 programs that are funded out a lottery fund

01:01 - 53.442 in addition to the

01:01 - 55.552 profit margin relief.

01:01 - 57.392 Action that was taken by the general assembly

01:01 - 00.642 and we have also in last year's budget enactment

01:02 - 03.892 did some other things to shore up a lottery fund with some other transfers

01:02 - 05.122 that are recurring

01:02 - 05.622 so

01:02 - 06.372 I think

01:02 - 07.672 based on our estimates

01:02 - 11.622 with all of those things in in consideration I think we're in a good place on those.

01:02 - 12.612 Thank you

01:02 - 15.592 and thanks for your time and thank you mr chairman.

01:02 - 19.342 Thank you senator of next owner he would follow by senator dutch.

01:02 - 21.742 Thank you everyone.

01:02 - 23.892 Two questions was kind of

01:02 - 24.552 comment

01:02 - 26.840 first on our retirement

01:02 - 30.915 so some time ago we were really concerned about fully

01:02 - 34.852 funding the retirement programs for our employees

01:02 - 39.412 then we went from defined benefit approach to now a mixed approach.

01:02 - 45.592 Cause you tell us what the status is of funding to retirement for

01:02 - 49.482 our employees are we in good shape we are in bad shape

01:02 - 50.902 and

01:02 - 54.852 I know that municipal governments were having a hell of a time but where are we here

01:02 - 55.362 in.

01:02 - 56.812 The state.

01:02 - 58.092 Yeah

01:02 - 01.692 as a relates to the certain and pieces I do think

01:03 - 03.972 that we have been making some inroads on r

01:03 - 05.302 and you know

01:03 - 09.442 covered liabilities and requirements there I don't have the specifics on.

01:03 - 12.282 Where each of those systems sits currently

01:03 - 12.942 but I'm

01:03 - 15.382 I'm happy to get that information back to you.

01:03 - 17.842 Yeah I would appreciate that.

01:03 - 18.732 The circuit

01:03 - 19.852 is.

01:03 - 23.272 The comment that was raised about.

01:03 - 26.352 Corporate taxes only take a step back

01:03 - 30.202 some years ago the corporate tax level

01:03 - 33.162 and the phc levels were more similar

01:03 - 36.342 or received a graph that showed that maybe

01:03 - 38.032 twenty years ago

01:03 - 40.722 and it over time the corporate level

01:03 - 42.672 the corporate year has gone down

01:03 - 44.112 the prt has gone up

01:03 - 48.342 which I understand is part of the strategy which is to shift

01:03 - 51.712 the tax is to everyday people.

01:03 - 55.182 Hope doesn't more everyday people

01:03 - 57.402 more population that can absorb

01:03 - 59.392 these tax shifty.

01:04 - 02.112 Is what I described accurate

01:04 - 03.462 or inaccurate

01:04 - 06.192 because I thought that's what was said

01:04 - 07.602 but maybe I didn't hear

01:04 - 08.722 accurately

01:04 - 10.632 part of their diet that dynamic

01:04 - 12.012 center was the fact that.

01:04 - 13.792 We were sitting at.

01:04 - 15.882 For a very long time sitting at

01:04 - 19.912 nine point nine percent rate on non pass-thru.

01:04 - 23.272 Corporate taxation where the.

01:04 - 25.602 Pastor rate was three point o seven

01:04 - 27.192 the choice to be

01:04 - 28.815 a c corporation

01:04 - 30.582 really wasn't a reason to be one.

01:04 - 32.932 If you weren't widely held.

01:04 - 36.862 Then if you're why the hell do too many orders you can qualify for.

01:04 - 39.072 S corporation status that's a

01:04 - 42.022 primary reason why that shifted like that.

01:04 - 44.150 But the.

01:04 - 48.252 The shift down now because that stabilize over time has gotta be wedding to the.

01:04 - 50.572 Rain to rate.

01:04 - 52.062 I don't think that the

01:04 - 54.792 amount of corporate receipts because we're

01:04 - 00.262 are based on sales now there's no no reason to not sell to pennsylvania

01:05 - 03.918 is not going to continue to trend down but the whole business was a thought all along

01:05 - 05.352 for a long time talking about this.

01:05 - 07.122 That because of that

01:05 - 08.452 significant

01:05 - 11.212 change in overall tax policy.

01:05 - 13.732 Places like eli lilly

01:05 - 17.262 will see pennsylvania as a more attractive place to invest more invest

01:05 - 21.192 the p I t and the sales tax consumption taxes will continue

01:05 - 22.872 to go up and go up more than

01:05 - 24.472 they otherwise would.

01:05 - 25.872 Thank you

01:05 - 28.062 and I was only referring to

01:05 - 33.522 our tax rate but know we we got rid of the corporate franchise tax as well which was

01:05 - 34.822 the.

01:05 - 42.468 I received a report that a corporate franchise tax but lost revenue is something like

01:05 - 45.257 several billion dollars when you compare what we

01:05 - 48.012 have now vs what we would have had with that rate

01:05 - 51.415 and so it's not just the change in the rate structure

01:05 - 54.642 but it's the elimination of some corporate taxes as well

01:05 - 55.752 that

01:05 - 58.162 his report that I have received.

01:05 - 01.162 You're correct that will in part of it as well.

01:06 - 03.282 Part of our system for a long time

01:06 - 05.352 phased out over fifteen years

01:06 - 05.892 and

01:06 - 06.732 there was a

01:06 - 07.572 pretty

01:06 - 11.742 strong consensus though that tax was something that didn't really promote

01:06 - 13.722 economic growth because it wasn't based

01:06 - 17.172 on a company's ability to pay it was entirely based on their equity

01:06 - 18.522 the reason why

01:06 - 19.732 we continued

01:06 - 22.179 to talk about the bank's shares taxed for the same

01:06 - 24.762 reason it's not based on how much cash you have

01:06 - 26.302 so it's

01:06 - 30.732 the whole reason for the reforms and movements over time in the corporate system

01:06 - 32.532 was to follow the cash

01:06 - 33.312 I understand

01:06 - 38.202 but there are consequences that the distribution of whose pay

01:06 - 41.832 is now on more on the poi tisa

01:06 - 43.032 which is the

01:06 - 44.862 like the people in this room

01:06 - 48.072 as opposed to the corporate side and that that's

01:06 - 51.952 that's the case not only for individuals for businesses as well.

01:06 - 00.202 Senator dash

01:07 - 02.152 followed by sandra capillary.

01:07 - 04.162 Thank you.

01:07 - 05.022 Mention was

01:07 - 07.402 made about the wall plugging.

01:07 - 10.392 Accounts has any discussion been had

01:07 - 11.662 regarding

01:07 - 14.352 opening up the trolling operations again on state lands

01:07 - 17.802 as were the state owns the actual mineral rights

01:07 - 21.232 I mean we're sitting on billions of dollars in revenue

01:07 - 21.852 and

01:07 - 23.002 has any discussion

01:07 - 23.472 made

01:07 - 24.732 on that because I could go

01:07 - 27.442 part of that can go too well plugging.

01:07 - 29.472 Yeah so we we have had

01:07 - 32.392 an internal conversations about the.

01:07 - 34.692 Level of capacity in the existing leases

01:07 - 37.252 so I think that needs to be taken into consideration

01:07 - 39.072 when we're talking about any

01:07 - 40.212 expansion

01:07 - 41.332 of.

01:07 - 43.002 Drilling on state lands

01:07 - 44.952 and I believe secretary dunn

01:07 - 46.482 had indicated before that.

01:07 - 47.772 There is

01:07 - 50.052 existing unused capacity in

01:07 - 50.561 in.

01:07 - 54.222 The existing leases so I think any broader conversation around

01:07 - 56.742 new drilling would have to take that into consideration as well

01:07 - 56.946 well

01:07 - 00.192 and even drilling under neath from pads off of the.

01:08 - 03.882 Commonwealth property because they're doing five miles plus

01:08 - 05.622 laterals now

01:08 - 07.362 that's revenue that

01:08 - 10.350 we're not getting an it's just

01:08 - 11.662 appalling to me

01:08 - 14.602 with the budget situation that we're in.

01:08 - 16.702 That we're not looking.

01:08 - 20.632 At that as direct revenue to the commonwealth.

01:08 - 21.852 As.

01:08 - 22.272 As.

01:08 - 23.902 To your point on.

01:08 - 25.402 Lateral drilling

01:08 - 26.452 I do believe that

01:08 - 27.982 there have been conversations

01:08 - 30.492 with some existing companies around

01:08 - 32.542 and that.

01:08 - 33.952 As a.

01:08 - 37.872 Potential avenue I can't speak to the status of those

01:08 - 40.312 conversations but I do know that.

01:08 - 41.682 I know the the.

01:08 - 45.352 Drillers are ready willing and able we need to get beyond

01:08 - 47.472 talking about it and into the doing it

01:08 - 49.402 so that we've got.

01:08 - 51.652 Money to address the shortfalls.

01:08 - 53.422 Secretary river

01:08 - 55.152 you had mentioned earlier

01:08 - 57.252 that you have a statutory

01:08 - 59.512 responsibility to.

01:09 - 01.782 With construction of the budget

01:09 - 06.762 when actually it's constitutional responsibility under article eight section twelve

01:09 - 09.022 of the pennsylvania constitution.

01:09 - 10.662 And

01:09 - 13.356 that section specifically mandates that the governor

01:09 - 15.822 submit a balanced budget and a financial plan

01:09 - 19.362 it was adopted april twenty three nineteen sec sixty eight

01:09 - 23.202 and largely because of the rapid expansion of government at the time

01:09 - 28.012 and the need for the legislature to be able to deal with costs of all the programs.

01:09 - 30.522 Going beyond the future yeah years

01:09 - 31.362 it was

01:09 - 33.102 a critical need and

01:09 - 34.672 that requirement.

01:09 - 40.002 And specifically the language says annoying at times set by law the governors

01:09 - 43.122 shall submit the general assembly a balanced operating budget

01:09 - 47.352 for the ensuing fiscal year set forth in detail proposed was

01:09 - 51.888 proposed expenditures classification by department or agency and by program and

01:09 - 54.202 estimated revenues from all sources.

01:09 - 55.632 If estimated revenues

01:09 - 58.822 and available surpluses are less than the proposed expenditures

01:09 - 01.155 the governor shall recommend specific additional

01:10 - 04.252 sources of revenue sufficient pay for the deficiency

01:10 - 07.762 and the estimated revenue to be derived from each source.

01:10 - 09.492 Part visa is a capital.

01:10 - 12.192 Budget for the ensuing fiscal year

01:10 - 15.162 setting forth a detailed proposal of expense

01:10 - 19.522 expenditures to be financed from the proceeds of the obligations of the commonwealth.

01:10 - 21.612 Or of its agencies or authorities

01:10 - 24.172 from operating funds and.

01:10 - 29.622 A financial plan for not less than the next succeeding five five fiscal years

01:10 - 33.382 which plan shall include for each fiscal year.

01:10 - 35.852 The projected operating expenditures classified

01:10 - 38.782 by department or agency and by program

01:10 - 40.122 in reasonable detail

01:10 - 45.022 and estimated revenues by major categories from existing and additional sources

01:10 - 50.172 and projected expenditures for capital projects specific weekly itemized by purpose

01:10 - 51.762 and the proposed sources

01:10 - 53.842 of financing each.

01:10 - 55.222 Now that's.

01:10 - 57.472 A constitutional mandate

01:10 - 59.512 is very simple to understand.

01:11 - 03.882 As is I think the purpose behind it and yet

01:11 - 07.552 every year since governor shapiro has been on in an office.

01:11 - 09.462 We have not received

01:11 - 12.022 we're basically getting flat funded.

01:11 - 13.872 Projections

01:11 - 15.622 for five years.

01:11 - 16.702 All the time

01:11 - 17.592 and yet

01:11 - 19.072 the ifo

01:11 - 20.962 and this committee's.

01:11 - 22.102 I.

01:11 - 27.382 Financial team have been doing some pretty good projections

01:11 - 29.722 on where we were going to be.

01:11 - 35.839 And we've projected how much we're drawing down on the rainy day fund we're in

01:11 - 37.932 projecting where we are right now

01:11 - 40.002 but the governor's budgets

01:11 - 42.412 continue to fail

01:11 - 44.502 to report those outlying years

01:11 - 46.392 I know you're new to the office

01:11 - 48.672 but it can't be new to you what is

01:11 - 50.832 what is the reason being hind this

01:11 - 53.082 other than hiding it for the purpose

01:11 - 54.922 of the budget address.

01:11 - 57.822 So yeah senator I've

01:11 - 59.712 read that section of the constitution

01:11 - 00.992 and and

01:12 - 02.099 and.

01:12 - 03.412 I believe.

01:12 - 04.962 That we

01:12 - 06.142 the way that we

01:12 - 07.692 provide the information

01:12 - 11.212 to the committee as well as the way we present that information

01:12 - 13.092 in the budget proposal and.

01:12 - 15.732 I believe meets that criteria and

01:12 - 17.152 and.

01:12 - 18.712 You know I've.

01:12 - 20.032 I also have

01:12 - 21.282 looked back at a

01:12 - 23.512 selection of of.

01:12 - 27.612 Other budget proposals since that effective date in nineteen seventy

01:12 - 30.312 and I have I have been able to find

01:12 - 35.106 it's not just the way that this administration has budgeted it but it's the way that.

01:12 - 36.552 The budget has been proposed

01:12 - 39.442 since that constitutional amendment was effective

01:12 - 40.602 but

01:12 - 41.352 you

01:12 - 42.892 know i.

01:12 - 46.752 My the way that I read the constitution is that we have to provide for a budget

01:12 - 49.672 a balanced budget in the budget year

01:12 - 51.743 and to your point and what I had said

01:12 - 53.052 stated earlier if there

01:12 - 57.472 is not enough surplus or or current revenues to.

01:12 - 00.858 Cover the expenditures then we have to provide for new revenue sources and we've done

01:13 - 04.852 that and then as as a relates to the financial planning.

01:13 - 07.512 For the commonwealth as a result of our budget proposal

01:13 - 08.322 and

01:13 - 10.192 you know it.

01:13 - 12.322 The way that that we presented.

01:13 - 14.542 Is that we.

01:13 - 16.062 Provide for what our

01:13 - 18.252 proposed investments are in the commonwealth

01:13 - 19.842 and then we show

01:13 - 23.412 what we believe and the the impacts of those we'll be

01:13 - 25.372 over that five year period.

01:13 - 26.422 Well.

01:13 - 29.262 I'll just close with us because we know my time's up but

01:13 - 33.792 when you know that you've got caught contracts word which was your biggest

01:13 - 35.752 expense in personnel

01:13 - 40.398 that give consistently five percent increases per year between the step increases in

01:13 - 42.822 the contract release that's a minimum

01:13 - 44.242 five percent

01:13 - 45.882 and you're not even projecting that.

01:13 - 48.192 I have a hard time accepting what you

01:13 - 49.512 what you've just stated

01:13 - 51.172 thank you.

01:13 - 55.792 Sen capital letter followed by senator phillips hill.

01:13 - 59.512 Here you go

01:13 - 01.182 thank you chairman martin and

01:14 - 05.598 thank you to the secretaries who are here with us today I think most of my questions

01:14 - 08.332 have been touched on by many of my colleagues

01:14 - 10.812 but like my colleague from allegheny

01:14 - 13.122 counties as a therapist guitar now

01:14 - 15.052 I have a

01:14 - 17.772 young family that is expanding and

01:14 - 18.942 the child

01:14 - 21.672 and dependent care enhancement tax credit is

01:14 - 22.782 beneficial

01:14 - 25.272 for somebody that has resources like me and

01:14 - 28.482 so I can only begin to imagine how beneficial it is

01:14 - 31.463 for so many of the individuals that we all represent

01:14 - 34.972 that don't have the same resources that we do.

01:14 - 39.918 Can you tell me how many pennsylvania families since we've passed us had taken

01:14 - 43.582 advantage of this credit and what the average benefit has been.

01:14 - 49.662 Our s are amounts from last year

01:14 - 50.782 and.

01:14 - 52.212 Were over two hundred thousand

01:14 - 52.602 the

01:14 - 54.402 total amount of dollars got out

01:14 - 59.242 around eight million and since is built off the.

01:15 - 03.822 The federal dependent care credit there's maximums and minimums

01:15 - 06.642 the minimum amount for one child is

01:15 - 07.812 one thousand

01:15 - 10.602 six hundred hours the maximum minimum amount for

01:15 - 12.562 two children is.

01:15 - 14.772 Twelve hundred hours so for

01:15 - 17.142 since it's one hundred percent of the federal credit

01:15 - 18.832 that would be the minimum a family

01:15 - 21.292 would receive pay based on their.

01:15 - 22.672 Number of dependents.

01:15 - 26.022 Thank you for that and when our

01:15 - 29.502 people have more money in their pocket like this tax credit and.

01:15 - 33.772 Working pennsylvania tax credit that you've all been talking about.

01:15 - 37.045 What does that do for our economy like what does that do

01:15 - 40.222 for our revenues when people have more money to spend.

01:15 - 43.092 Of.

01:15 - 44.242 The.

01:15 - 45.766 The experience of two thousand

01:15 - 49.942 twenty and twenty one relating to our budgets then have any.

01:15 - 51.682 Any bearing on this.

01:15 - 54.022 When you interject the.

01:15 - 57.262 A lot of additional cash into the marketplace

01:15 - 58.122 our

01:15 - 00.222 our budgets benefit substantially

01:16 - 01.572 and that was

01:16 - 03.592 something we probably.

01:16 - 07.152 Couldn't have predicted how much that would be but when

01:16 - 12.132 there was a tremendous amount of infusion of cash during those two budget cycles

01:16 - 15.012 that was the prime driver of our current

01:16 - 17.622 financial position so the same thing applies here

01:16 - 21.732 if you're putting additional cash into the marketplace for families that will

01:16 - 25.942 spend it on their daily needs both for their children and for.

01:16 - 27.942 For the general family it's

01:16 - 29.332 obviously going to

01:16 - 33.112 benefit the commonwealth's financial position as well.

01:16 - 36.262 Thank you secretary brown.

01:16 - 36.762 Yes.

01:16 - 37.203 I

01:16 - 38.622 Think that that is

01:16 - 42.852 incredibly fair to say and it's one of the reasons I'm really proud to have supported

01:16 - 44.772 both of those tax credits

01:16 - 48.712 here in pennsylvania and helping families being able to.

01:16 - 50.832 Reach their basic needs and provide

01:16 - 54.922 maybe a little bit of fun in their lives for their kids in their family as well.

01:16 - 58.968 The only other piece that I'm going to drill down on that I'd like to just get more

01:16 - 02.497 information about make sure people understand is that working pennsylvania

01:17 - 03.372 tax credit

01:17 - 07.452 I know it's still relatively new probably still gathering data considering

01:17 - 10.212 tax day has not upon us and we just passed it

01:17 - 13.728 but could you just talk a little bit about the work that your department is doing to

01:17 - 15.753 ensure that taxpayers who are allowed before

01:17 - 19.312 this credit know about it and will receive it.

01:17 - 22.492 We are.

01:17 - 24.142 Having

01:17 - 25.812 and planning to have

01:17 - 27.262 many.

01:17 - 30.041 Events throughout the state collaborating

01:17 - 32.742 with legislative offices to get the word out

01:17 - 34.162 and.

01:17 - 35.172 We are

01:17 - 37.032 making sure that our

01:17 - 38.182 electronic

01:17 - 39.892 media includes

01:17 - 42.832 advertising of the credits.

01:17 - 44.442 We are

01:17 - 45.062 one of

01:17 - 46.422 one of the major

01:17 - 51.852 points of information is going to be software companies turbo tax and tax act

01:17 - 53.332 because.

01:17 - 55.558 There's a significant number of folks who do

01:17 - 57.912 their taxes online through the software's and

01:17 - 01.762 we've had a tremendous amount of cooperation from them to include.

01:18 - 04.342 A a

01:18 - 06.112 on the software

01:18 - 08.592 a banner that will tell the

01:18 - 09.156 the

01:18 - 10.552 person who is

01:18 - 12.222 utilizing the software that

01:18 - 14.292 pennsylvania now has it's own

01:18 - 17.722 model of the earned income tax credit that's probably the.

01:18 - 21.052 Most significant way we'll be able to get the information out.

01:18 - 22.372 Using.

01:18 - 24.432 Platforms that people already use

01:18 - 25.242 but we do

01:18 - 27.162 recommend for folks who

01:18 - 28.182 need a

01:18 - 32.572 means without that software we also have the capabilities within our own system

01:18 - 33.492 to file

01:18 - 36.952 their personal income taxes to myanmar my past system.

01:18 - 38.842 Just to ensure that they.

01:18 - 41.292 Attached their federal returns so we can

01:18 - 45.622 make sure they qualify and receive the pennsylvania portion of that credit.

01:18 - 48.642 Well thank you secretary it's really

01:18 - 51.702 heartening to hear that you're getting a lot of cooperation from

01:18 - 53.992 private partners in.

01:18 - 55.452 The tax industry

01:18 - 57.372 so to speak and that

01:18 - 59.982 I just want to say I look forward to partnering with

01:19 - 04.398 you or your department and getting that information out specifically in parts of my

01:19 - 08.752 community that could really benefit from taking advantage of that so thank you.

01:19 - 15.172 Thank you senator up next we have senator phillips hill followed by senator coleman.

01:19 - 17.262 Good afternoon

01:19 - 20.502 secretary brown secretary reaver members of your team

01:19 - 22.672 thank you for being here today.

01:19 - 24.102 At secretary reaver

01:19 - 26.112 congratulations on your new position

01:19 - 31.762 as the budget secretary you wear several hats one of those is that you are also

01:19 - 35.869 the chair of the pennsylvania broadband development authority legislation that we sat

01:19 - 38.032 at across the table from the negotiated

01:19 - 42.312 and crete that entity when the federal government instructed us to do so

01:19 - 43.882 so.

01:19 - 45.112 Pb da

01:19 - 48.119 it's board and the general assembly have done.

01:19 - 49.462 A lot.

01:19 - 52.272 We've done everything that we need to do to roll out

01:19 - 53.422 broadband

01:19 - 54.162 and

01:19 - 55.032 here

01:19 - 58.642 in the commonwealth of penn continue with those federal dollars.

01:19 - 59.592 Right now

01:19 - 03.142 we have about seven hundred million dollars.

01:20 - 08.932 On the line and we have new requirements that have come to us from nts

01:20 - 11.142 and we need

01:20 - 12.642 to accept

01:20 - 14.752 that new agreement

01:20 - 18.372 do you believe that the gov owner is willing to make the necessary

01:20 - 22.872 salary changes in order for us to accept this seven hundred million dollars

01:20 - 25.102 and so that we can have.

01:20 - 30.712 The connectivity and the jobs that come along with it.

01:20 - 32.938 Senator and

01:20 - 37.672 I do believe that we've heard at least verbally from and cia that they have.

01:20 - 39.102 Given us conditional approval

01:20 - 39.912 and

01:20 - 44.452 to my knowledge to date we have not received the notice of award from iniesta

01:20 - 46.632 and I.

01:20 - 47.812 I.

01:20 - 49.362 I would like to see

01:20 - 50.622 and I believe that

01:20 - 52.782 the authorities should see what the language says

01:20 - 56.482 as it relates specifically to any of the conditions on the award

01:20 - 57.712 to make sure that

01:20 - 00.052 any conditions align with

01:21 - 01.912 federal law obviously

01:21 - 04.032 you know the the policies and procedures

01:21 - 05.452 of the

01:21 - 07.572 bead program as well as

01:21 - 09.432 any state law requirements as well

01:21 - 09.822 so.

01:21 - 12.762 I appreciate that seven hundred million dollars

01:21 - 15.502 we pay a lot of taxes to the federal government.

01:21 - 18.282 If that doesn't come to us is probably going to go to another state

01:21 - 20.292 and my taxpayers

01:21 - 23.418 tell me the same thing they don't care what level of government that money is going

01:21 - 25.122 to it comes out of that same wallet.

01:21 - 28.512 I think sending back that money to the federal government along with

01:21 - 31.870 absent in that connectivity that pennsylvania's need

01:21 - 35.740 is a missed opportunity and I look forward to working with you on that

01:21 - 36.520 and.

01:21 - 37.510 I

01:21 - 38.870 I'm also hopeful that we'll get

01:21 - 40.100 guidance on the

01:21 - 42.490 additional roughly four hundred million dollars

01:21 - 44.070 that we could potentially drive out

01:21 - 46.576 through the broadband development authority as well that

01:21 - 47.980 we should hopefully be getting

01:21 - 49.670 sometime in march

01:21 - 51.736 and I'll look forward to working with you on

01:21 - 54.040 that as well thank you very much mr secretary

01:21 - 55.850 secretary brown

01:21 - 56.620 have

01:21 - 01.970 some questions about the technology and process modernization appropriation

01:22 - 07.510 and it's had an increase of sixty four percent now earlier today

01:22 - 09.670 you spoke to the

01:22 - 13.220 I believe the fast file pilot program

01:22 - 16.030 that your department has been engaged with

01:22 - 21.466 working to simplify modernize the state tax filing process I'm sure that everyone

01:22 - 25.600 will appreciate that reduced processing times lower administrative costs

01:22 - 26.410 and of course

01:22 - 32.776 improve operational efficiency so is the fast file initiative part of that broader

01:22 - 36.820 technology and process modernization effort funded through through

01:22 - 38.360 this appropriation.

01:22 - 39.730 Yes it's a

01:22 - 42.100 wireless system improvements are part of that yes

01:22 - 45.472 so how much has been spent in total since the

01:22 - 48.980 technology and process modernization initiative

01:22 - 51.140 program began.

01:22 - 55.109 I'd have to get to the total number of the twelve million

01:22 - 57.430 that we've had across the board for the last several years

01:22 - 59.680 that's a contractual amount with

01:23 - 00.670 of.

01:23 - 05.270 With our vendor for purposes of maintenance upgrades enhancements

01:23 - 06.790 and any

01:23 - 08.590 any additional modifications we

01:23 - 13.160 made to accommodate new things that includes two major enhancements

01:23 - 17.410 to accommodate the dependent care credit the working families tax credit

01:23 - 18.890 and.

01:23 - 20.480 If we.

01:23 - 22.810 Receive an amount from

01:23 - 24.230 for that

01:23 - 26.020 technology enhancement that

01:23 - 28.490 is consistent with prior years.

01:23 - 30.760 We won't be able to meet just the

01:23 - 32.230 contractually

01:23 - 35.230 contractual yearly amount for maintenance and enhancements

01:23 - 36.130 but the

01:23 - 37.960 total amount of I'll make sure I get

01:23 - 38.680 to use however

01:23 - 41.329 I would very much appreciate that and would love to

01:23 - 43.840 know if you believe that the significant investment

01:23 - 46.790 over the years has resulted in measurable

01:23 - 48.380 budget savings

01:23 - 51.880 and or improved efficiencies.

01:23 - 54.130 It absolutely has

01:23 - 56.890 in terms of our user personnel being able to.

01:23 - 00.650 Use personnel for new initiatives major.

01:24 - 07.246 New initiatives are wasted the number of taxpayers that would benefit I couldn't see

01:24 - 09.550 how we'd use the legacy cobol system

01:24 - 12.832 and adjust accordingly to accommodate a program

01:24 - 17.180 and a couple of months that would provide benefits to a million folks.

01:24 - 18.190 So this is

01:24 - 19.910 this is possible

01:24 - 21.880 from the fed's standpoint we have a ma modern

01:24 - 23.090 compliance system.

01:24 - 28.180 Having learned to code in cobol as a child I can understand that for certain

01:24 - 32.956 when do you anticipate the project to be complete and when do you think the need for

01:24 - 35.860 funding for this program will cease

01:24 - 39.916 while we'll always have an appropriate for purposes maintenance and enhancement this

01:24 - 42.769 is a contractual amount now that is been negotiated

01:24 - 44.050 but they'll always be

01:24 - 45.130 because this is a

01:24 - 48.610 combined system that accommodates every single tax we have

01:24 - 50.990 so we have dedicated staff.

01:24 - 52.240 From our vendor

01:24 - 53.360 that helps us

01:24 - 54.470 maintain

01:24 - 55.180 and

01:24 - 58.640 enhances system as time goes on so.

01:24 - 00.295 What we know now is what we have an economy

01:25 - 03.410 contract is the amount that we're budgeting for.

01:25 - 06.220 Can we renegotiate a lower amount the future absolutely

01:25 - 07.430 won't have to do that

01:25 - 10.940 thank you very much mr secretary thank you mr chairman.

01:25 - 12.137 Thank you senator up next

01:25 - 14.780 are coleman followed by senator brown.

01:25 - 16.580 Thank you mr chairman.

01:25 - 19.270 Thank you secretary brown thank you secretary rework today

01:25 - 20.560 my questions are for

01:25 - 22.250 secretary river.

01:25 - 25.960 Secretary reward last week I asked the state police commissioner or the

01:25 - 28.520 should say the acting state police commissioner.

01:25 - 29.950 Why the may sixteenth

01:25 - 32.710 two thousand and twenty five spring budget update provided

01:25 - 36.110 to the appropriations and leadership offices disclosed

01:25 - 38.226 the additional personnel and certain operating

01:25 - 40.720 costs for the executive services detail but did not

01:25 - 43.349 include the security improvements to the governor's

01:25 - 45.670 personal residence even though the state police

01:25 - 49.550 had already issued the emergency declaration to complete those improvements

01:25 - 52.090 freshener told us that he could not answer because it

01:25 - 53.410 he did not prepare

01:25 - 54.640 that update

01:25 - 55.790 according

01:25 - 59.500 to the october twenty fourth letter from dgs and state police

01:26 - 02.890 to leadership updating them on the official residence project

01:26 - 05.980 and finally disclosing the personal residence the

01:26 - 07.720 personal unofficial residents

01:26 - 10.270 improvements the spring budget update

01:26 - 11.450 had been provided

01:26 - 12.980 by your office.

01:26 - 18.080 Can you explain why the personal residence improvements were not disclosed.

01:26 - 20.472 By the budget office in may of two thousand and

01:26 - 22.616 twenty five along with state policing the official all

01:26 - 26.780 residents updates and and why the general assembly was not informed

01:26 - 29.980 that more than one million dollars in public funds was in

01:26 - 33.280 tended to be used for this purpose we have

01:26 - 34.640 questions over

01:26 - 36.440 broken procurement

01:26 - 37.390 and other

01:26 - 40.880 questions right now that these bills may not even be able to be paid

01:26 - 42.140 but.

01:26 - 44.420 Why were we not informed.

01:26 - 46.750 When it relates specifically to the

01:26 - 47.500 may

01:26 - 50.270 update or as we call it the spring update.

01:26 - 52.354 The the information that we provide in the spring

01:26 - 55.280 update is for increased costs that we are expecting

01:26 - 56.420 to.

01:26 - 57.370 Propose

01:26 - 00.650 and in our budget submission in our budget proposal.

01:27 - 02.470 It is directly related to

01:27 - 04.120 a follow up to our

01:27 - 05.390 february proposal

01:27 - 06.680 so what we had

01:27 - 11.560 when we had increased or proposed and submitted that information in the spring update

01:27 - 13.670 we were adding costs.

01:27 - 16.070 Specifically for the new personnel

01:27 - 19.090 member utilizing existing resources that were already budgeted for

01:27 - 21.280 in in some repairs as well right

01:27 - 22.829 to the residents I think

01:27 - 23.960 official residence

01:27 - 26.621 yes we had proposed a new appropriation in the

01:27 - 30.385 department general services for the official resume but

01:27 - 31.180 at that point you

01:27 - 33.037 were you were made aware that there were going

01:27 - 34.810 to be improvements the unofficial residents

01:27 - 36.770 private property.

01:27 - 39.670 I don't recall when I was

01:27 - 42.140 brought into conversations on.

01:27 - 45.460 The totality of the project I wasn't in my position

01:27 - 46.820 during those times

01:27 - 49.396 and unfortunately that's got a lot of what we heard last week wasn't

01:27 - 50.420 it wasn't me

01:27 - 51.250 but

01:27 - 52.960 I appreciate the answer nonetheless

01:27 - 54.370 I will turn back to.

01:27 - 57.250 A broad-based tax increase on not

01:27 - 59.620 games of skill that I hear.

01:28 - 02.470 Huge taxes on small business that in your

01:28 - 04.990 budget presentation I notice that

01:28 - 05.980 you you

01:28 - 09.020 indicate an amount that you believe will be brought in.

01:28 - 11.860 Is there a world where

01:28 - 16.150 you have the taxes not like is that the only outcome that the tax comes in

01:28 - 18.080 have you ever.

01:28 - 21.530 Considered a world where if that.

01:28 - 23.860 Such a large broad based tax increase

01:28 - 27.460 across small business veterans organizations etc comes to fruition

01:28 - 28.910 that the games would

01:28 - 30.400 simply turn off

01:28 - 33.050 and no revenue would come in and in fact

01:28 - 36.710 a loss of revenue may occur to have do consider another option.

01:28 - 41.750 We had proposed the regulation and.

01:28 - 45.140 Obviously the taxation then as a result of that of those.

01:28 - 47.650 Skill game machines I do believe that

01:28 - 49.100 there are ongoing

01:28 - 50.920 court cases as it relates to

01:28 - 55.450 the potential legality of those machines I think just from our perspective

01:28 - 58.750 while they are out there and existed better to have them regulated

01:28 - 03.700 and provide benefits to the calmer I guess the question is do you is there a world

01:29 - 06.460 are you only considering that if you put this

01:29 - 08.780 one of the largest tax increases

01:29 - 10.180 in history on on this

01:29 - 10.870 this

01:29 - 12.160 industry that

01:29 - 15.440 essentially they will pay it is that.

01:29 - 19.130 Or have you considered the impact that they will just leave the state.

01:29 - 21.080 And.

01:29 - 24.290 I do believe.

01:29 - 27.220 There is always a potential when a new regulatory market

01:29 - 28.670 regulation

01:29 - 30.050 is in place that

01:29 - 33.280 businesses could choose to no longer operate

01:29 - 34.690 in the commonwealth I think

01:29 - 36.410 our projections

01:29 - 38.590 and regulatory framework that

01:29 - 40.100 we have proposed.

01:29 - 41.680 Would be a net

01:29 - 42.950 and.

01:29 - 43.570 A net

01:29 - 45.380 benefit to the commonwealth.

01:29 - 48.850 That would take into consideration the businesses that we believe would

01:29 - 52.780 he would be here and would operate is there ever world regulation and taxation are not

01:29 - 54.440 in the same conversation.

01:29 - 58.390 You mean regulate the games but don't tax them

01:29 - 00.410 or vice versa.

01:30 - 04.390 I think just from a

01:30 - 07.090 historical standpoint on how we've treated gaming

01:30 - 07.900 and

01:30 - 09.310 across the commonwealth

01:30 - 10.420 and I

01:30 - 11.690 do believe that

01:30 - 16.300 those two things go hand in hand giving the authority to the gaming control board to

01:30 - 19.160 be able to ensure that there is.

01:30 - 21.070 A fairness across the entire industry

01:30 - 22.580 would be beneficial.

01:30 - 24.210 Thank you secretary river thank you

01:30 - 25.670 mister chairman.

01:30 - 30.830 Center brown followed by senator robinson.

01:30 - 37.180 Thank you mr chairman

01:30 - 42.110 good afternoon secretary brown secretary river and team thank you for being here.

01:30 - 45.910 So it looks like this is going to be directed to secretary reaper

01:30 - 47.270 and that

01:30 - 50.900 the budget projects a significant decline

01:30 - 55.100 in the state's stores fund transfer to the general fund.

01:30 - 56.290 Typically

01:30 - 00.010 eight brings about one hundred and eighty million over to transfer

01:31 - 03.830 looks like it's declining by one hundred million.

01:31 - 05.050 For the year

01:31 - 05.950 a year that's

01:31 - 06.220 a.

01:31 - 08.630 Decrease of fifty five percent.

01:31 - 10.380 Pretty big number

01:31 - 12.160 if you look out over

01:31 - 13.750 the planning years for the budget

01:31 - 17.119 it's about a half a billion of lost profit plus

01:31 - 20.290 on top of that the I cbs showing a six percent

01:31 - 22.300 cost increase as well

01:31 - 26.180 can you describe what's happening there a little bit on this end.

01:31 - 29.450 Yes senator so.

01:31 - 30.790 As it relates to the

01:31 - 32.510 profit transfer.

01:31 - 35.140 From the stay stores fund to the

01:31 - 36.830 general funds.

01:31 - 38.380 Historically

01:31 - 40.390 over the last few years that that

01:31 - 42.856 transfer did increase to one hundred and eighty million

01:31 - 46.010 a number it has not always historically been that high.

01:31 - 46.660 So.

01:31 - 49.120 Transfer unfortunately is starting to

01:31 - 52.520 come back down towards it's more historical levels

01:31 - 54.580 but I think there's a few things

01:31 - 56.020 that can point to as a

01:31 - 57.430 for the reason for that.

01:31 - 58.690 Certainly

01:31 - 59.830 defer to the

01:31 - 01.360 delivery control board on their

01:32 - 04.640 internal operations and the efficiencies that they undertake

01:32 - 07.030 but I think just from a general policy standpoint

01:32 - 08.810 the general assembly.

01:32 - 09.790 As well as

01:32 - 10.900 through an act meant

01:32 - 13.930 by the governor have made some substantial changes to the way that

01:32 - 15.670 liquor can be accessed

01:32 - 18.650 from pennsylvania it's you know it's good for consumers

01:32 - 22.310 not necessarily good for the operations of.

01:32 - 23.780 That system

01:32 - 25.790 but the.

01:32 - 26.320 You know

01:32 - 30.706 we've had conversation ends with the liquor control board about their intentions and

01:32 - 34.170 their ability to make the transfers in what we think those will look like in the future

01:32 - 35.210 and

01:32 - 39.020 you know what they've told me specifically some of the cost efficiencies

01:32 - 40.960 that they're trying to undertake to

01:32 - 42.770 make sure that.

01:32 - 45.526 You know whether it's from an inventory standpoint making sure that they're not

01:32 - 48.916 holding onto inventory that they otherwise would not need to those kind of things so

01:32 - 51.901 I do know that they are working to try to maximise

01:32 - 53.980 profits and will continue to work with them.

01:32 - 55.000 I mean

01:32 - 59.350 do you think that's enough for one hundred million dollars difference those types of

01:32 - 00.800 turnaround.

01:33 - 04.160 I think just based on our projections and.

01:33 - 05.650 As we've put it in the

01:33 - 07.730 budget proposal we're.

01:33 - 09.850 Being conservative in thinking that it'll

01:33 - 10.630 drop it

01:33 - 13.580 we won't be able to get back to that level over the five year period

01:33 - 13.930 right

01:33 - 15.550 so historically much higher

01:33 - 16.780 it's come down

01:33 - 18.460 you feel it might go up a little bit

01:33 - 22.210 but not to the levels of where it was that previously correct and I think

01:33 - 23.860 it's it's just important that

01:33 - 25.900 you know we work with the liquor control board

01:33 - 28.690 on their ability to manage cash flow so that we don't

01:33 - 30.010 ever have to come to the

01:33 - 30.820 you know

01:33 - 32.944 go to the general fund to give any kind of loan for

01:33 - 35.026 operations we definitely don't want to go down that road

01:33 - 36.050 we have in the past so

01:33 - 37.330 thank you on that note

01:33 - 39.500 and how do you feel

01:33 - 44.150 often times you know the conversation one of cannabis and alcohol.

01:33 - 47.375 You know get mixed in there a little bit together what

01:33 - 50.870 do you feel the legalization of adult use cannabis

01:33 - 51.980 would have on that

01:33 - 55.250 plcb system and also

01:33 - 57.580 could it be a competing at competing product

01:33 - 59.960 where the alcohol as well.

01:34 - 02.540 I think too.

01:34 - 05.860 To sen brown's previous comment about

01:34 - 08.440 there's only a finite amount of resources of choice

01:34 - 09.590 and I think

01:34 - 11.080 you know the trends of

01:34 - 11.590 do.

01:34 - 15.500 You know what products whether liquor or adult use cannabis.

01:34 - 17.550 Is something that would certainly be up to

01:34 - 18.770 the population

01:34 - 20.210 to choose.

01:34 - 21.800 I know there are

01:34 - 25.930 there are proposals out there while we haven't proposed it to run through the lcp

01:34 - 28.090 there are proposals that I've seen an adult use and

01:34 - 29.810 operating through

01:34 - 32.560 the liquor control board so you know I think

01:34 - 36.580 whatever the final regulated product and

01:34 - 38.590 place of where the

01:34 - 39.890 sales would happen

01:34 - 40.720 I think

01:34 - 42.370 it's a it's a competitive market

01:34 - 43.790 and

01:34 - 45.490 we would just want to make sure that

01:34 - 46.940 that we're providing.

01:34 - 48.320 Safe.

01:34 - 49.610 Safe products

01:34 - 50.950 for pennsylvanians to

01:34 - 52.540 potentially utilize

01:34 - 54.430 and just make sure that

01:34 - 55.970 you know we're

01:34 - 58.490 working closely with whatever the regulatory.

01:34 - 00.020 Structure is

01:35 - 01.490 whether that's la occur

01:35 - 04.870 combined or liquor in a separate event and I know it's hard to

01:35 - 07.750 you know plan and see where things are going to go

01:35 - 10.420 but any other states that you know of that you have

01:35 - 11.540 looked at

01:35 - 13.360 the I cb and

01:35 - 15.070 cannabis and seen that

01:35 - 16.430 that market.

01:35 - 18.620 Change as far as budgeting.

01:35 - 21.371 Not specifically that I have looked at

01:35 - 23.920 and not sure if there's anything in the taxation

01:35 - 25.070 space.

01:35 - 28.640 Alright something to think about thank you very much thank you mr chairman.

01:35 - 32.660 Thank you cetera or close out round one senator robinson.

01:35 - 34.910 Thank you mr chairman.

01:35 - 36.430 Secretary

01:35 - 38.150 nice to see it again.

01:35 - 42.950 The film industry and video game production industry

01:35 - 47.030 are both key pieces of pennsylvania's economic competitiveness

01:35 - 51.710 and we should be encouraging these businesses to open and continue.

01:35 - 53.410 Their operations here.

01:35 - 56.265 I'm concerned with the governor's budget proposal

01:35 - 58.960 that seems to cut video game product product one

01:35 - 00.830 tax credit.

01:36 - 02.620 Can you explain why this

01:36 - 04.370 budget process

01:36 - 06.040 to eliminate a tax credit

01:36 - 09.740 that is being fully utilized currently.

01:36 - 14.020 Yeah senator so this and

01:36 - 15.560 this proposal

01:36 - 17.601 was actually part of our proposal in last year's

01:36 - 19.960 budget and that was as a direct result of our

01:36 - 21.140 remap initiative

01:36 - 22.970 which was

01:36 - 24.880 essentially to take a look at

01:36 - 28.000 all of the authorizations provided to an agency

01:36 - 30.070 and in those specific agencies

01:36 - 33.640 and look at whether or not those programs are meeting the

01:36 - 34.600 and

01:36 - 35.870 you know.

01:36 - 37.100 The.

01:36 - 39.730 Either the statutory mission or the mission of the agency

01:36 - 40.450 and

01:36 - 43.660 so specifically for d c d

01:36 - 45.070 what they looked at was

01:36 - 47.180 the tax credits that they.

01:36 - 50.560 That they manage and operate as well as put a lens on it of

01:36 - 52.310 what are the investments we're trying to

01:36 - 53.540 to make sure there were

01:36 - 56.170 no bolstering and and continuing to.

01:36 - 57.370 Build up

01:36 - 58.270 and

01:36 - 58.870 it.

01:36 - 03.170 I think for that one specifically it's more just a very targeted.

01:37 - 05.150 Tax credit

01:37 - 06.200 and think that

01:37 - 06.880 you know

01:37 - 08.770 the the commonwealth would benefit from

01:37 - 09.910 just having a

01:37 - 10.810 tax the

01:37 - 12.790 environment a better tax environment

01:37 - 13.660 as we have

01:37 - 16.180 worked towards and I've mentioned several times as well as

01:37 - 18.850 credit programs that are more catered towards

01:37 - 20.120 hitting.

01:37 - 21.100 A

01:37 - 22.790 More broad base.

01:37 - 24.250 If I may I

01:37 - 27.070 will have to cross notes on this but

01:37 - 29.350 our information on the video game

01:37 - 30.640 utilization

01:37 - 32.590 with a ten million dollar cap was

01:37 - 35.450 twenty four twenty five was a million dollars.

01:37 - 36.340 So.

01:37 - 37.211 It's one of

01:37 - 38.080 always one of the

01:37 - 39.730 evaluation tools to see

01:37 - 41.750 whether something's worth carrying.

01:37 - 46.240 If our information is correct only ten percent of the hour kitty cats been used

01:37 - 48.591 so utilization isn't the issue.

01:37 - 50.230 Okay

01:37 - 52.090 I dunno if it was because

01:37 - 53.740 the information was not there

01:37 - 54.430 or.

01:37 - 56.510 You know maybe we could.

01:37 - 59.980 Try to help advertise or talk to some of the the

01:38 - 00.820 companies

01:38 - 02.440 but I know that you know

01:38 - 04.190 we want to stay competitive.

01:38 - 05.920 With

01:38 - 08.380 states like georgia and countries like canada

01:38 - 10.540 that have g generated over a billion

01:38 - 12.290 dollars in revenue.

01:38 - 15.170 Hundreds of jobs with these.

01:38 - 16.690 Particular tax credits

01:38 - 17.890 in their areas so.

01:38 - 19.580 That's why I was I was

01:38 - 20.930 looking at it

01:38 - 22.220 and.

01:38 - 23.800 Same goes

01:38 - 26.007 though with the.

01:38 - 28.610 The film tax credit.

01:38 - 30.580 For a number of years we've

01:38 - 32.390 been trying to.

01:38 - 34.640 Increase that tax credit.

01:38 - 37.700 That I do believe has been fully utilized

01:38 - 38.870 and

01:38 - 40.120 but it's it's

01:38 - 40.900 now

01:38 - 42.680 becoming a.

01:38 - 44.680 The trajectory has become flat

01:38 - 45.880 and

01:38 - 46.600 you know

01:38 - 47.320 I know

01:38 - 49.670 especially on western pennsylvania.

01:38 - 53.300 It's a very unique location to film.

01:38 - 56.420 You know.

01:38 - 57.890 Places like

01:38 - 58.330 er.

01:38 - 00.820 Productions like mayor of kingstown

01:39 - 02.500 you know they look for something

01:39 - 03.520 unique

01:39 - 04.600 we have

01:39 - 05.110 a.

01:39 - 07.580 Western penitentiary.

01:39 - 08.530 They're

01:39 - 09.580 they've been filming

01:39 - 10.730 and

01:39 - 11.590 and so

01:39 - 13.100 you know that's something that.

01:39 - 16.044 I'm just wondering why we don't want to

01:39 - 19.420 cultivate that type of business and continue to

01:39 - 20.750 grow.

01:39 - 23.620 That industry in western pennsylvania or actually

01:39 - 25.430 across the commonwealth.

01:39 - 29.570 Yeah sen so

01:39 - 32.230 as you noted we we have proposed to keep that

01:39 - 35.380 film the film tax credit flat in our budget proposal

01:39 - 35.950 and.

01:39 - 38.560 I am happy that we have increased

01:39 - 40.060 that tax credit

01:39 - 44.200 over the last few years up to one hundred million and it is an important

01:39 - 45.010 tool

01:39 - 47.746 that is available to the administer ration in the commonwealth

01:39 - 48.950 in attracting

01:39 - 50.470 those businesses and the

01:39 - 51.700 the impacts

01:39 - 52.240 that

01:39 - 53.470 that industry has

01:39 - 57.220 so you know we're always open to conversations with the general assembly on

01:39 - 58.420 what changes

01:39 - 01.310 to existing caps or tax credits are

01:40 - 02.200 but you know

01:40 - 04.130 we we are.

01:40 - 09.436 We had proposed a budget that we believe again is balanced and have to take all

01:40 - 11.770 considerations of revenue impacts

01:40 - 15.406 and expenditures into consideration when we put our proposal forward but again happy

01:40 - 18.680 to have conversations with the general assembly on expansions of programs.

01:40 - 19.180 Okay

01:40 - 19.684 yeah

01:40 - 20.560 would

01:40 - 21.460 welcome

01:40 - 22.820 those conversations

01:40 - 25.090 I could just tell you you know I've seen first hand and

01:40 - 25.840 how

01:40 - 28.150 the film industry has benefited

01:40 - 29.890 a lot of the local economy

01:40 - 32.540 and you know.

01:40 - 34.010 Not just.

01:40 - 35.570 The production.

01:40 - 40.370 Workers but you know the caters the truck drivers the teamsters union.

01:40 - 43.420 The electricians carpenters I mean they all benefit from it

01:40 - 45.880 so that it's definitely so something that

01:40 - 46.456 that

01:40 - 48.070 has far reaching

01:40 - 49.750 implications so

01:40 - 50.530 but

01:40 - 53.200 I appreciate it and I see that amount of time so I yield my time

01:40 - 54.410 thanks.

01:40 - 57.250 Okay we've have a

01:40 - 01.306 handful of people that just asked for a round two will give five minutes for standing

01:41 - 03.310 committee chairs and three minutes for members

01:41 - 05.595 I will start first with a standing committee

01:41 - 08.900 chair sen pisco tano followed by senator carney.

01:41 - 10.640 Thank you mr chairman

01:41 - 11.410 and

01:41 - 12.250 I just want to follow

01:41 - 13.460 or finish my

01:41 - 16.570 discussion from earlier and touch upon the I fo and.

01:41 - 18.040 We are

01:41 - 19.660 as the secretary knows

01:41 - 21.770 given his unique background

01:41 - 22.245 and

01:41 - 23.470 in his current position

01:41 - 27.310 we as legislators rely a lot on the ifo

01:41 - 29.480 especially their perspective.

01:41 - 32.240 Projections into the future

01:41 - 33.410 and.

01:41 - 40.660 Now that the ifo has somewhat of a track record we are seeing that necessarily their

01:41 - 43.270 their long term projections have not been accurate and

01:41 - 45.790 there's a lot of examples but I'll give you one

01:41 - 46.630 quickly

01:41 - 49.980 in the january twenty twenty one the iphone five year

01:41 - 53.110 fiscal outlook included its first revenue forecast

01:41 - 54.400 for this for the car

01:41 - 56.346 we are twenty five twenty six

01:41 - 01.216 their estimate for the general fund revenue was forty two point three two billion

01:42 - 02.136 and

01:42 - 04.897 that estimate was then changed over ten times

01:42 - 07.986 including earlier this year in january twenty six

01:42 - 10.785 whereas when it changed that projection to forty

01:42 - 13.686 eight point three two so that's a difference of six

01:42 - 14.896 billion dollars

01:42 - 16.126 fourteen percent

01:42 - 19.056 higher than their original estimate five years ago

01:42 - 20.256 and so

01:42 - 20.976 you know

01:42 - 23.936 it's easy to beat up the ifo and some of this

01:42 - 26.766 modelling and projections are based on assumptions that

01:42 - 28.416 necessarily don't come true and

01:42 - 33.196 the global local and state economy are are complex organisms

01:42 - 33.876 do.

01:42 - 35.496 But secretary b brown

01:42 - 39.706 given your unique history here as a member and now as the secretary

01:42 - 42.774 are there things that the legislature can do to help

01:42 - 45.786 the ifo be more accurate in some of these projections or

01:42 - 50.356 be a more reliable yardstick or or even to communicate

01:42 - 52.812 this is a there's a huge amount of uncertainty five

01:42 - 56.076 years out right the numbers that we may be directing now

01:42 - 58.536 are very uncertain five years in a row because

01:42 - 02.226 a lot of our folks on our side of the table here use those numbers

01:43 - 06.766 and in my opinion sometimes those numbers are used without identifying

01:43 - 09.339 the significant amount of uncertainty that some of

01:43 - 11.706 them can contain especially many years in the future

01:43 - 13.506 I just I think just like

01:43 - 15.066 you do here.

01:43 - 15.687 I

01:43 - 18.196 Keep questioning the assumptions.

01:43 - 21.136 Oversight regards the results.

01:43 - 23.896 Is the best thing you can do

01:43 - 26.376 and this community can do in regards to

01:43 - 28.626 the accuracy of our forecasts

01:43 - 32.296 consistent with the accuracy of the iphone because they are accountable.

01:43 - 36.136 Both us any iphone accountable to you so.

01:43 - 37.476 That

01:43 - 41.776 that I believe is the in terms of their accuracy is the best thing you can do.

01:43 - 44.329 Has your department ever done a comparison between

01:43 - 47.136 kind of what revenue ends up collecting vs whatever

01:43 - 51.216 fo has projected I mean we can obviously do it looking backwards but has the

01:43 - 54.346 department of revenue ever taken a look at that.

01:43 - 57.216 We haven't in a cumulative basis and

01:43 - 59.286 one thing I can say this year

01:43 - 01.056 much of this provides

01:44 - 02.196 a level of certainty

01:44 - 02.976 and

01:44 - 04.506 or not but the

01:44 - 07.446 the delta between the iphone us where this current

01:44 - 09.766 cycle and the delta.

01:44 - 11.116 In terms of.

01:44 - 12.246 Estimates for the

01:44 - 14.836 budget cycle are extremely close.

01:44 - 17.646 And the goal the goal of

01:44 - 20.136 the parallel estimates is to give credibility to both

01:44 - 21.529 so.

01:44 - 24.606 An exercise to go back

01:44 - 26.026 and.

01:44 - 27.616 Twelve years now

01:44 - 28.756 in terms of where

01:44 - 32.196 things stood at a five year projection is supposedly where where they are now

01:44 - 33.546 we'd be happy to do that

01:44 - 34.476 and get to the

01:44 - 35.826 kitchen those results

01:44 - 38.550 yeah and a financial modeling is always going to be uncertain

01:44 - 41.742 the further you get into the future right just because that's the nature of the way

01:44 - 43.686 the statistically you're going to model

01:44 - 44.586 but

01:44 - 47.070 I think it it bears repeating that at in those

01:44 - 49.656 five years between twenty one and twenty six

01:44 - 52.190 the iphone was basically off by thirty six

01:44 - 55.296 billion in revenue collections cumulatively and so

01:44 - 59.106 it's a tough job and I'm not trying to beat up the ifo but I think that

01:44 - 00.736 it would be beneficial

01:45 - 05.112 for the legislators and the discussion around the budget to understand that those I

01:45 - 07.026 have phone numbers are very very very.

01:45 - 09.946 Complex and not necessarily

01:45 - 12.451 extremely accurate in the long term especially

01:45 - 14.466 when you get the three and five years out

01:45 - 16.836 one thing I do know in terms of keeping things in

01:45 - 20.356 perspective a two billion dollar delta essentially between.

01:45 - 23.706 Our revenue estimates the imf over the next five years

01:45 - 28.116 it's important to keep that in context the size of the world base

01:45 - 30.286 you know revenue accuracy

01:45 - 35.136 accepted standard is plus or minus two percent two billion over five year period

01:45 - 37.776 you know as in nominal dollars may not seem

01:45 - 39.586 may seem like a lot

01:45 - 42.446 but that's over two hundred and forty two billion dollar revenue base

01:45 - 43.476 so it's

01:45 - 46.606 really always important to keep in context

01:45 - 47.196 so.

01:45 - 48.246 So.

01:45 - 49.926 Those who observe

01:45 - 54.526 and participate in our process don't come to the wrong conclusions thank you.

01:45 - 00.053 Senator carney followed by senator vogel.

01:46 - 03.196 Thanks to chairman.

01:46 - 06.456 I'll be very brief I just want to circle back to where we kind of were before

01:46 - 09.036 and maybe be a little more direct and in my

01:46 - 09.876 in.

01:46 - 11.286 What the question actually is

01:46 - 13.156 so if.

01:46 - 13.746 You know

01:46 - 16.396 constitutionality aside and.

01:46 - 19.266 Trust me I understand how difficult the constitutional amendment is

01:46 - 20.736 in the in the commons

01:46 - 21.756 and

01:46 - 24.486 if we were to use a graduated income tax

01:46 - 26.256 instead of the flat tax

01:46 - 27.276 can you

01:46 - 30.676 discuss at all what the effect would be on revenues.

01:46 - 32.956 It depends on what the grades are.

01:46 - 35.226 I understand that but I mean relative to.

01:46 - 38.046 I mean certainly relative to states that are

01:46 - 40.176 around us for example I mean I know that's a

01:46 - 41.926 mile an hour for you

01:46 - 42.336 to.

01:46 - 45.126 You know there's there are progressive systems around us

01:46 - 47.086 mostly right.

01:46 - 49.686 New york I think marilyn's flat

01:46 - 51.006 new york has

01:46 - 52.726 jersey has

01:46 - 53.286 the

01:46 - 54.246 most half

01:46 - 55.366 a mile on what

01:46 - 57.876 essentially washington went

01:46 - 59.326 and.

01:46 - 03.096 Piggybacking a lot of them off of washington's approach for years

01:47 - 03.606 and

01:47 - 05.166 we've stayed with rio

01:47 - 08.916 we've stayed with a flat system mainly coming out of our

01:47 - 11.376 seventy one adoption p I t

01:47 - 14.496 and the constitutional limitations that are provided but the court

01:47 - 16.726 ruled on that.

01:47 - 18.216 Constitutionality

01:47 - 21.216 uniformity of that rate against different classes

01:47 - 22.206 early on

01:47 - 24.436 it was in the early seventies

01:47 - 28.242 a conversation I don't think in in regards to the ph tea

01:47 - 32.056 system different classes of income that different people.

01:47 - 34.216 Is not something that's.

01:47 - 36.432 As far as I know it's not something they've addressed

01:47 - 38.346 so it's an

01:47 - 42.076 it's a it's an interesting question regarding that original premise

01:47 - 43.246 whether whether

01:47 - 46.546 it would be something the court would see because obviously.

01:47 - 48.136 What would happen if you have a

01:47 - 51.216 graduated rate against non earned income

01:47 - 52.576 where that's going to go

01:47 - 54.526 and where it's going to be finally decided

01:47 - 56.056 but it is

01:47 - 58.726 my understanding that has not been tested yet.

01:48 - 03.126 It's I mean we're obviously struggling because we know we have a

01:48 - 06.036 we have a revenue problem in many ways and

01:48 - 09.576 in terms of we care a lot about the structural deficit etc

01:48 - 10.996 and

01:48 - 12.436 to I

01:48 - 15.296 I would appreciate any kind of discussions we could have maybe you're

01:48 - 16.636 trying to figure.

01:48 - 17.226 At least

01:48 - 20.046 the hypothetical understand what we can possibly dealing with

01:48 - 26.836 weed like an modeling of our revenue base on a progressive system that's in place.

01:48 - 29.946 What would circle back together we can

01:48 - 31.066 choose which one

01:48 - 31.416 okay

01:48 - 32.196 the best one

01:48 - 34.306 probably one of our neighboring state.

01:48 - 35.586 Legislator

01:48 - 36.940 for texture.

01:48 - 42.586 Senator vogel followed by senator dutch.

01:48 - 44.056 Thank you chairman a

01:48 - 45.816 secretary reaver

01:48 - 49.266 just a brief comment to follow up on senator brown was talking about I've read

01:48 - 52.302 comments and reports and stuff already where there's more people in this country

01:48 - 54.496 smoking marijuana and drinking alcohol.

01:48 - 56.266 So I think at bears.

01:48 - 58.876 Or something to keep in mind when you're talking about the.

01:48 - 00.846 Plcb and where the

01:49 - 01.776 revenues from

01:49 - 03.836 alcohol drinking are going because I think it's.

01:49 - 07.196 Pretty obvious that more and more young people aren't drinking alcohol the way

01:49 - 09.816 maybe older generations did so I just wanted to

01:49 - 10.896 say that but

01:49 - 12.636 also in the governor's budget

01:49 - 15.276 he proposes to earn one point four million dollar increase

01:49 - 18.526 in the voter registration and education line item.

01:49 - 20.796 Why is that such a large increase this year it's

01:49 - 23.826 like a two hundred fifty percent increase why is that necessary this year

01:49 - 26.196 typically how we have proposed

01:49 - 27.276 increases in that

01:49 - 28.426 appropriation

01:49 - 29.746 over the past

01:49 - 32.836 have been specifically as it relates to the.

01:49 - 33.867 Election cycle

01:49 - 34.936 so.

01:49 - 36.456 There is a

01:49 - 37.836 sense that a

01:49 - 39.156 even year

01:49 - 39.996 and

01:49 - 41.676 it's a non gubernatorial year

01:49 - 42.916 we do provide

01:49 - 44.256 additional resources

01:49 - 44.946 just for

01:49 - 46.296 voter education

01:49 - 48.336 and typically that appropriation

01:49 - 50.086 as we have proposed

01:49 - 52.896 has been a little less in and more of the odd

01:49 - 54.106 odd years

01:49 - 55.756 and then as always.

01:49 - 59.536 Typically historically been a higher appropriate even in a.

01:50 - 00.996 In a presidential year

01:50 - 02.116 so.

01:50 - 04.996 She's given whatever the elections are.

01:50 - 07.506 Okay what were these outreach dollars be spent for just

01:50 - 09.316 giving people.

01:50 - 11.646 I think I dunno just devote and stuff as I just get

01:50 - 14.226 out the vote like thing is that what it's basically for

01:50 - 14.766 yeah.

01:50 - 17.226 I mean I I broadly defer to the departments date

01:50 - 19.266 on what tack and

01:50 - 20.656 what.

01:50 - 23.316 Uses of those dollars that they provide

01:50 - 26.856 to make sure that everyone is aware of

01:50 - 29.016 folks who are on the ballot and or

01:50 - 31.576 polling places those sorts of things

01:50 - 34.116 but typically that's what's envisioned

01:50 - 35.476 when having to do with

01:50 - 37.366 letting people know about id

01:50 - 40.392 voter id or anything like that is that part of this it would be part of a

01:50 - 41.496 conversation as well or.

01:50 - 44.856 Again I would have to check with department of state specifically on

01:50 - 46.006 what their

01:50 - 47.616 proposed use of those dollars would be.

01:50 - 49.876 Thank you very much thinking german.

01:50 - 54.076 Thank you senator to close out round to senator dutch.

01:50 - 55.516 Thank you chairman.

01:50 - 58.426 Secretary river.

01:50 - 00.356 As part of the budget proposal the governor said

01:51 - 01.116 suggested

01:51 - 03.186 reform of the ph initiative

01:51 - 05.440 which is a collection of tax credit programs designed

01:51 - 07.966 to attract critical businesses in pennsylvania

01:51 - 09.336 according to page a

01:51 - 10.636 won twenty one

01:51 - 16.756 of the budget book the pa edge credits have not been used since being signed into law

01:51 - 17.556 and

01:51 - 19.626 the financial statement provided that

01:51 - 22.355 by the administration does not appear to show any change

01:51 - 25.536 in revenue related to the repurposing of the credits

01:51 - 27.460 have you booked those.

01:51 - 29.616 In any way one way or the other

01:51 - 33.456 they have not been the one that I would anticipate an agenda for

01:51 - 38.406 potentially his secretary around here but eli lilly I believe doesn't tend to utilize

01:51 - 40.966 one of the existing credits in that announcement

01:51 - 44.256 and commitment was after the production of our book so I think we would

01:51 - 45.906 revise estimates based on that.

01:51 - 49.306 Okay any estimate on how much seventy.

01:51 - 52.066 You have any idea.

01:51 - 55.306 Dns one hundred and fifty million.

01:51 - 57.076 Total I think.

01:51 - 59.201 Will confirm that with the cetera but I think that's

01:51 - 00.942 what was was one hundred one hundred and fifty

01:52 - 01.966 in that range.

01:52 - 03.276 A significant amount

01:52 - 03.816 government

01:52 - 05.496 and that will be utilized over

01:52 - 07.746 overtime that would not be in one tackle ks

01:52 - 08.956 that helps

01:52 - 10.036 and.

01:52 - 11.866 How does this department.

01:52 - 13.416 Wait

01:52 - 14.536 I'll just skip to the

01:52 - 15.706 last part of this

01:52 - 18.306 since they have not been used except for lily.

01:52 - 21.936 I can we simply eliminate those credits is there any

01:52 - 24.406 thought towards eliminating them.

01:52 - 27.916 I mean they've been around for six years for years now.

01:52 - 31.356 They have they have been around and I believe and

01:52 - 33.256 you know as we had proposed.

01:52 - 35.116 We think it would be.

01:52 - 35.736 A good

01:52 - 38.316 economic benefit to the commonwealth to reform them

01:52 - 39.676 to potentially

01:52 - 40.296 provide

01:52 - 41.946 additional incentives for

01:52 - 45.376 larger scale projects to to locate in pennsylvania.

01:52 - 47.026 Ultimately

01:52 - 48.696 since they are laugh it would be a a broader

01:52 - 51.586 conversation with the general assembly on.

01:52 - 53.706 The future status of those programs

01:52 - 55.896 and on the revenue side again

01:52 - 56.796 the government

01:52 - 59.466 since it was already brought up I don't think there's any

01:52 - 01.876 stomach for it here but

01:53 - 02.466 the

01:53 - 04.326 legalization of cannabis

01:53 - 07.909 I've been following this since I got into the legislature what the costs are are you

01:53 - 10.476 at aware of any other any states that have passed this

01:53 - 12.046 where the costs

01:53 - 13.186 aren't.

01:53 - 17.286 At least double sometimes three times what the revenues are

01:53 - 19.408 I'll give you an example just today in an

01:53 - 21.336 article in the los angeles times.

01:53 - 24.876 I a cannabis businesses owe four hundred million dollars

01:53 - 27.426 the city may only get thirty million of that

01:53 - 28.876 there.

01:53 - 31.756 The cost of enforcing the legal.

01:53 - 33.766 Cannabis

01:53 - 34.506 when

01:53 - 36.516 as soon as they set up a legal shop

01:53 - 38.946 at the business owners are saying that

01:53 - 41.106 at each street in the

01:53 - 43.116 whichever direction the four corners

01:53 - 45.750 somebody sets up an illegal shop there are

01:53 - 49.276 mimicking the packaging of the legal product

01:53 - 52.746 and the police are overwhelmed they can't they can't shut them down and

01:53 - 54.910 everytime they do they just move a couple of

01:53 - 57.246 doors down and there's a brand new one opened up

01:53 - 01.576 are you aware of any states where the costs don't exceed the revenues.

01:54 - 05.826 And I haven't specifically looked at that but I do know that there are

01:54 - 10.206 obviously costs to the commonwealth being born right now from an illicit market.

01:54 - 12.036 I do also know that

01:54 - 14.536 there have been several states that had.

01:54 - 16.396 Introduced

01:54 - 17.946 or have regulated cannabis

01:54 - 21.796 and have been off on their revenue estimates as well so I think.

01:54 - 23.386 You know.

01:54 - 25.096 I think the.

01:54 - 27.316 The benefits to the commonwealth.

01:54 - 29.116 From a

01:54 - 30.096 from a

01:54 - 31.896 choice perspective from

01:54 - 33.546 individuals as well as

01:54 - 36.127 new business opportunities as it relates to the

01:54 - 38.736 way that we had structured it in the agricultural

01:54 - 39.606 industry

01:54 - 40.936 I think

01:54 - 43.086 also need to be considered when it comes to

01:54 - 44.656 those discussions.

01:54 - 46.216 Well I think the clock.

01:54 - 48.886 When the costs exceed the revenues

01:54 - 51.036 and the societal costs as well.

01:54 - 52.986 I think we need

01:54 - 57.006 anybody that is considering this needs to consider all of those factors

01:54 - 00.396 again I don't know of a single state where the costs don't exceed the

01:55 - 01.846 revenues.

01:55 - 03.736 Thank you.

01:55 - 05.344 Saturday

01:55 - 06.516 may at the

01:55 - 09.576 one hundred one fifty number was the entire

01:55 - 12.706 incentive package I was provided the lily.

01:55 - 13.566 The

01:55 - 16.596 edge component of that was fifty million over

01:55 - 18.076 over five years

01:55 - 18.756 thermonuclear

01:55 - 20.486 I appreciate that thank you who are

01:55 - 21.946 going to think.

01:55 - 24.936 Close out round to senator colton

01:55 - 28.456 they give us a chairman secretary robert how how did you book that.

01:55 - 31.476 Are broad-based tax increases on the skill

01:55 - 34.086 games at seven sixty five how did

01:55 - 37.956 last year it was like half that in the budget I think proposal last year how

01:55 - 40.086 did you book them at seven sixty five

01:55 - 40.926 yet

01:55 - 43.566 so the estimates as it relates to the

01:55 - 44.986 skill game proposal

01:55 - 45.846 are

01:55 - 48.436 are relatively close to the same

01:55 - 50.496 structure as what we had proposed last year

01:55 - 54.396 the key differences in the revenue estimates for

01:55 - 56.616 this bit for this budget proposal

01:55 - 59.376 are in two areas one is the number of machines

01:55 - 01.206 so last year we had proposed

01:56 - 02.676 thirty thousand machines

01:56 - 03.246 and

01:56 - 06.276 being regulated with a slow step up to forty thousand machines

01:56 - 07.296 this year we are

01:56 - 08.916 proposing right to forty thousand

01:56 - 11.626 and then the other key difference.

01:56 - 14.386 Is just in the timing so.

01:56 - 16.456 When we.

01:56 - 18.306 When we had work on the revenue estimate

01:56 - 21.696 just given the the volume of the conversations that we have had

01:56 - 22.716 with

01:56 - 24.336 the general assembly on

01:56 - 25.966 the proposal.

01:56 - 27.556 We believe.

01:56 - 28.296 You know that

01:56 - 28.866 that

01:56 - 30.736 we think we can.

01:56 - 32.316 You know if we get this

01:56 - 33.276 enacted

01:56 - 34.396 in a timely manner

01:56 - 35.136 and

01:56 - 36.156 and

01:56 - 38.266 start the regular regulation

01:56 - 39.636 we believe that we can get

01:56 - 41.086 machines up and running quickly

01:56 - 42.336 and generating

01:56 - 46.536 revenue to ear estimating right now fifty is it what was the number machine's

01:56 - 47.706 overall number

01:56 - 50.510 overall forty thousand but the estimate for the budget

01:56 - 53.076 year has a ramp up so it's not forty thousand in year one

01:56 - 55.296 afford but an ok

01:56 - 00.376 okay thank you and one of our shared goals in recent years has been to improve.

01:57 - 03.654 That actually.

01:57 - 04.296 Wouldn't want to

01:57 - 07.696 cut change gears or the governor's budget cuts funding.

01:57 - 11.046 For the transfer to the school safety and security fund

01:57 - 15.336 for targeted grants under pccd by nine point seven million or

01:57 - 16.876 almost half.

01:57 - 18.876 Half by almost fifty per cent

01:57 - 22.216 this appropriation provide support for family please.

01:57 - 23.106 For safety and

01:57 - 25.716 security needs for our non public schools and the

01:57 - 26.946 families that they the

01:57 - 28.056 families they serve

01:57 - 29.206 kids that they send their

01:57 - 31.665 however similar funding provided our public schools

01:57 - 34.576 for safety and security needs remains intact

01:57 - 38.106 do you think it's justified to treat the safety and security of our students in a non

01:57 - 39.636 non public school is different

01:57 - 41.436 than those attending public schools and

01:57 - 44.836 why did the governor choose to cut this funding.

01:57 - 48.186 As a relate specifically to that appropriation and

01:57 - 49.726 we have.

01:57 - 51.816 Just proposed to restore it to

01:57 - 53.468 a more a historical

01:57 - 54.796 appropriation level

01:57 - 58.002 again always open to conversations with the general assembly on what a final

01:57 - 01.236 negotiated product looks like I will also say that that is

01:58 - 02.166 and

01:58 - 05.226 as part of our overall approach and review of budgeting

01:58 - 09.066 and what I've heard loud and clear from this committee is looking at existing dollars

01:58 - 12.306 from prior years that are in place and that is an appropriation where

01:58 - 14.916 it is just a slower process to

01:58 - 15.966 think

01:58 - 16.476 and

01:58 - 19.566 spend those dollars so I think that's all part of a broader conversation

01:58 - 21.126 because it is important to keep that

01:58 - 23.206 that funding right.

01:58 - 24.616 Again I think it's it's

01:58 - 25.361 it's

01:58 - 28.812 important to have conversations with the general assembly on what every appropriation

01:58 - 30.706 in the budget looks like at the final.

01:58 - 31.326 Thank you

01:58 - 32.556 integrity rerun on

01:58 - 35.982 october twenty second twenty seventh and again on november twelfth I invited your

01:58 - 39.036 predecessor to participate in a joint public hearing

01:58 - 42.426 of the senate or governmental operations and finance committees for the purpose

01:58 - 43.656 of a hearing

01:58 - 47.796 to give testimony on senate bills two two three two two two and nine thirty seven

01:58 - 50.536 as well as the common laws policies and practices

01:58 - 52.966 regarding grant awards administration

01:58 - 55.146 and reporting particularly in cases where public

01:58 - 58.932 benefits are provided to private interests your office did not respond to either of

01:58 - 02.862 those invitations I'd like to again extend another opportunity where you commit to

01:59 - 05.646 participating a hearing on this issue in april or may

01:59 - 07.386 work at my office to schedule it.

01:59 - 09.366 I was not aware of the

01:59 - 10.296 invitation

01:59 - 13.926 and you'd said it had gone to my predecessor I'm also not familiar with those

01:59 - 16.956 specific legislation pieces of legislation so I have a need to review those

01:59 - 17.646 okay

01:59 - 19.036 alright.

01:59 - 20.106 And

01:59 - 21.462 we'd like you to attend the hearing

01:59 - 21.936 talk about it

01:59 - 23.548 I just want to push on the on the

01:59 - 25.096 cannabis as well.

01:59 - 28.056 So just I hear from a lot of folks I just want to understand that so

01:59 - 30.286 if you're going to if we regulate

01:59 - 31.206 legal use

01:59 - 33.316 cannabis and you make it legal.

01:59 - 36.106 Why and it's legal to have it.

01:59 - 37.236 Why would someone

01:59 - 39.556 go spend more money.

01:59 - 41.776 Go to a store to buy it.

01:59 - 44.626 Where would they get it if it's.

01:59 - 46.872 They would go to the store to buy it

01:59 - 50.056 what what why why would why wouldn't they just.

01:59 - 55.756 Like what what would be the benefit how would it eliminate the the black market.

01:59 - 58.006 These are questions that I get from folks.

01:59 - 00.216 Like why wouldn't people still get it

02:00 - 02.716 somewhere else to not have to pay tax.

02:00 - 03.876 I mean I.

02:00 - 04.266 I

02:00 - 05.536 I would think

02:00 - 06.126 and

02:00 - 09.486 most taxpayers would would certainly want to follow the law

02:00 - 11.676 under a regulated market and go to

02:00 - 15.576 and a place where they can ensure that the product that they're purchasing is

02:00 - 17.656 regulated and therefore safe.

02:00 - 19.596 Thank you very much

02:00 - 21.256 thank you mr chairman.

02:00 - 26.926 Okay I'm now going to turn it over to senator hughes.

02:00 - 31.366 And as.

02:00 - 44.926 There it is.

02:00 - 47.086 And as.

02:00 - 50.776 Secretary brown would know his former chairman.

02:00 - 53.976 When it gets to me we're white wrapping up alright everybody's

02:00 - 57.556 everybody's happy usually when it usually when it gets to me.

02:00 - 59.266 I.

02:01 - 01.456 So.

02:01 - 04.806 So I just want to make sure that we do

02:01 - 06.516 we don't lose sight

02:01 - 08.326 of a couple of things.

02:01 - 12.036 Governor shapiro and his team

02:01 - 13.446 which you represent here

02:01 - 14.556 and

02:01 - 15.916 are again.

02:01 - 17.746 Asking

02:01 - 22.066 for a tax reduction not a tax increase correct.

02:01 - 25.386 Correct this budget continues

02:01 - 27.526 tax cuts that are in place.

02:01 - 28.386 Okay

02:01 - 31.696 so it's tax reduction no tax increases

02:01 - 33.336 and and that

02:01 - 34.846 in addition.

02:01 - 36.406 For

02:01 - 38.566 the second year in a row.

02:01 - 40.176 There's

02:01 - 44.656 projected to be a billion dollars in school district properties actually right.

02:01 - 45.876 Correct

02:01 - 46.356 right

02:01 - 47.476 okay.

02:01 - 48.616 I.

02:01 - 52.636 Again there's a increase

02:01 - 54.736 I requested for.

02:01 - 57.076 The minimum wage.

02:01 - 58.086 Right

02:01 - 59.866 correct okay

02:02 - 00.606 and

02:02 - 01.476 because we're trying to

02:02 - 02.196 trying to

02:02 - 03.586 deal with

02:02 - 05.519 the affordability crisis here

02:02 - 06.276 isn't

02:02 - 07.426 is a thing.

02:02 - 08.536 I.

02:02 - 09.156 Just

02:02 - 13.996 saw just a few minutes ago that the the war in iran is now costing.

02:02 - 18.348 It is now projected for natural gas prices to soar

02:02 - 19.128 alright

02:02 - 22.828 so that's going to mean something and.

02:02 - 27.294 There is an increased his call for an increase in funding for the childcare

02:02 - 29.627 recruitment and retention grants to thirty five

02:02 - 32.968 million dollars to stabilize the child care workforce.

02:02 - 33.948 Greg

02:02 - 37.528 described as a ten million dollar increase in the appropriation okay.

02:02 - 38.968 I

02:02 - 42.048 Will favorite of mine student teacher stipend program

02:02 - 42.588 did

02:02 - 44.548 provide a little assistance because you know

02:02 - 46.258 teachers are important.

02:02 - 47.028 Right

02:02 - 51.058 correct okay not because of the tv show abbott elementary.

02:02 - 53.028 Again shameless plug

02:02 - 53.718 you know

02:02 - 57.028 but my wife likes it when I do that all right.

02:02 - 01.308 But that's that still there is a teacher crisis and we gotta respond to that

02:03 - 02.928 it is an increase they're

02:03 - 03.498 correct

02:03 - 04.648 right.

02:03 - 06.088 I.

02:03 - 10.458 To help our our young people and

02:03 - 14.038 continue the the governor and his team are proposing

02:03 - 15.178 universal free

02:03 - 17.368 breakfast at schools

02:03 - 19.098 so parents can save money

02:03 - 20.669 and children.

02:03 - 22.288 Can get fed.

02:03 - 22.758 Right

02:03 - 27.538 correct but continues funding for that program continues to fund for that program.

02:03 - 28.768 I

02:03 - 30.448 And

02:03 - 30.978 the

02:03 - 32.188 child and dependent

02:03 - 35.898 care tax credit the employer child care contribution tax credit

02:03 - 38.698 the student loan interest tax deduction

02:03 - 41.358 and and I'll save the the

02:03 - 43.038 the newest one for last

02:03 - 46.938 and all of those are in the governor's budget proposal

02:03 - 47.658 goes correct

02:03 - 51.418 you and a team of everybody across administration

02:03 - 52.758 advised the governor

02:03 - 54.138 to offer these

02:03 - 55.468 ideas right

02:03 - 57.448 correct no taxes

02:03 - 59.128 tax reductions

02:03 - 02.028 and putting direct money back into folks'

02:04 - 07.398 pockets secretary brown again thank you for participating in my telephone town hall

02:04 - 09.558 with respect to talking to

02:04 - 11.848 several thousand of my constituents

02:04 - 16.558 about the working families tax credit and the importance that that means.

02:04 - 21.598 I think I heard you talk about earlier the uptake and the interest that people.

02:04 - 22.273 Are

02:04 - 24.078 participating in that program

02:04 - 25.318 can you kind of walk

02:04 - 27.348 walked the committee through that again please

02:04 - 28.798 as of yesterday.

02:04 - 31.468 Over three hundred thousand returns

02:04 - 33.298 over one hundred million dollars claimed

02:04 - 33.888 okay

02:04 - 34.638 as of yesterday

02:04 - 35.758 and learn on

02:04 - 37.668 march fourth blog

02:04 - 39.148 most returns.

02:04 - 42.828 Rerun returns tend to be fought earlier but most returns are filed in april.

02:04 - 44.428 So.

02:04 - 46.008 So so

02:04 - 49.348 so we're getting real close to.

02:04 - 52.168 Getting to that number that was projected.

02:04 - 54.508 For that program greg.

02:04 - 57.348 We have about nine hundred and forty thousand projected

02:04 - 58.798 so we're about a third

02:04 - 00.438 about a third they're ok

02:05 - 02.278 but it's a.

02:05 - 05.068 Of a november budget.

02:05 - 07.878 For three hundred thousand folks to respond

02:05 - 10.498 this quickly to a brand new program.

02:05 - 12.604 I think it's pretty extraordinary

02:05 - 13.628 so it's great

02:05 - 15.258 doing a lot of education lot of

02:05 - 16.068 folks

02:05 - 19.968 in the work of this assembly along with the governor I guess that's where it starts

02:05 - 23.238 as we want to make sure people to take advantage of that and

02:05 - 24.198 so.

02:05 - 25.618 On.

02:05 - 27.618 In terms of

02:05 - 32.898 these kinds of efforts these programs too and

02:05 - 33.768 poof

02:05 - 36.238 put dollars back and folks' pockets.

02:05 - 42.108 You are I'm sure do some reflecting or some analysis around

02:05 - 45.708 what this means to the overall economy right you know cause

02:05 - 46.578 this

02:05 - 48.288 these folks are.

02:05 - 51.418 As way I've always understood it.

02:05 - 53.008 My constituents.

02:05 - 57.588 For the most part when they get breaks like this they're spent there there

02:05 - 02.388 that money is not going into swiss bank accounts or anything like that right is not

02:06 - 04.488 vested in the cayman islands or

02:06 - 06.238 any other.

02:06 - 07.348 Tax shelter

02:06 - 10.138 alright is going right back into the community.

02:06 - 14.878 When we do stuff like like this what does this mean for local communities.

02:06 - 16.348 Either one of you could

02:06 - 18.568 could respond to that.

02:06 - 20.068 Yeah

02:06 - 22.518 some senator the I think that

02:06 - 26.478 what the benefits that we're seeing as a result of the investments that we've made

02:06 - 29.548 collectively with the general assembly and the administration

02:06 - 32.628 and whether it's on the tax side and putting dollars back

02:06 - 34.218 into the people's pockets

02:06 - 35.698 or it's through our programming

02:06 - 37.558 efforts I mean.

02:06 - 38.568 You've heard that

02:06 - 41.194 you heard the gov boehner in his speech talk specifically

02:06 - 42.138 across a

02:06 - 43.258 wide variety

02:06 - 43.968 of.

02:06 - 45.831 Policy areas and the impacts that our investments

02:06 - 49.018 have made and that's why we have proposed to.

02:06 - 51.393 Continue investing in those so you had noted a few in

02:06 - 53.808 student teacher stipend and child recruitment retention

02:06 - 55.188 I would also

02:06 - 56.658 note obviously the

02:06 - 58.848 violence intervention programming that we've

02:06 - 01.258 invested in and the rate the direct impacts

02:07 - 04.288 and correlations that we've seen on reduced.

02:07 - 06.538 Violent crime and gun crimes.

02:07 - 07.888 Across pennsylvania

02:07 - 09.468 so I think I

02:07 - 11.038 just.

02:07 - 15.768 You know a large theme of of our our budgeting and our policy platform has been just.

02:07 - 19.848 Focus on the investments that we know are working and are having

02:07 - 22.828 positive impacts on the lives of pennsylvanians

02:07 - 23.568 and

02:07 - 28.048 and you know on the revenue side is as the secretary and I both said.

02:07 - 29.874 Providing those direct investments back to the

02:07 - 32.238 people of the commonwealth to be able to invest

02:07 - 34.008 and we've seen that.

02:07 - 35.088 You know

02:07 - 36.388 we've seen that impact

02:07 - 37.758 I think directly on.

02:07 - 39.468 Sales tax growth

02:07 - 40.648 which is a

02:07 - 42.168 a direct indicator of that

02:07 - 45.798 but I think just generally our revenue growth over the last couple of years has been.

02:07 - 47.398 Above three percent

02:07 - 48.708 historically so I think

02:07 - 50.368 you know where we're certainly seeing

02:07 - 52.578 the investments that we're making in the economy

02:07 - 53.988 and again that's

02:07 - 56.518 that can be and just abroad global.

02:07 - 59.058 Tax reform space that we've done whether it's in

02:07 - 00.708 property tax or if it's.

02:08 - 01.938 In.

02:08 - 03.348 Corporate net income tax

02:08 - 04.398 or if

02:08 - 05.878 in the p I t

02:08 - 08.218 specific refunds that we provided.

02:08 - 09.418 Or if it's in

02:08 - 11.268 the permitting space

02:08 - 12.078 you know just

02:08 - 14.331 making government work more efficiently and

02:08 - 16.937 functionally for the people of pennsylvanians and

02:08 - 18.288 has impacts

02:08 - 19.768 in.

02:08 - 23.428 No noting that

02:08 - 24.468 and

02:08 - 25.938 before this reported

02:08 - 28.038 obviously referred to gov governor shapiro

02:08 - 30.438 talk about this pennsylvania is the only

02:08 - 32.718 growing economy in the northeast

02:08 - 33.708 sector

02:08 - 35.788 right isn't isn't.

02:08 - 37.218 Yes moody's

02:08 - 39.178 has as.

02:08 - 41.838 Has indicated that we are the only

02:08 - 44.058 economy that is growing in the northeast

02:08 - 44.808 is correct

02:08 - 46.228 and and

02:08 - 48.148 given these policies.

02:08 - 52.278 Gotta be a significant contribute to that reality.

02:08 - 54.678 I mean we had we had decent edi

02:08 - 55.668 here

02:08 - 57.078 and labour here

02:08 - 58.638 and that was this morning

02:08 - 01.848 obviously the economic activity that's happening there

02:09 - 06.288 is really positioning pennsylvania along with these policies as well

02:09 - 06.888 so.

02:09 - 11.808 Trying to create jobs and trying to minimize pressure on people's pocketbooks okay

02:09 - 15.898 and and and put more money back in folks' pockets.

02:09 - 16.908 Gotta be

02:09 - 19.048 the reason why that's happening.

02:09 - 20.238 Absolutely

02:09 - 21.358 ok.

02:09 - 21.948 Now

02:09 - 22.518 now

02:09 - 27.058 we've we've we've talked about skill games we've talked about.

02:09 - 34.108 Adult use cannabis combined reporting minimum wage and as ways to.

02:09 - 36.898 Respond to the reality

02:09 - 38.911 that people in pennsylvania are

02:09 - 43.488 or are looking for and but it's also a way to

02:09 - 44.478 make

02:09 - 46.458 investments and

02:09 - 47.638 address

02:09 - 49.078 no potential.

02:09 - 52.728 Resource issues that we may need to deal with I mean

02:09 - 53.448 you know

02:09 - 55.138 by doing

02:09 - 59.508 skill gains by doing adult use cannabis by raising minimum wage

02:09 - 01.138 we can bring.

02:10 - 06.378 Dollars in which we can then reinvest into some of these other kinds of ideas that we

02:10 - 09.298 all we we already have a track record of doing.

02:10 - 11.248 I am assuming that

02:10 - 13.692 you are collectively have looked at that and

02:10 - 16.278 and and thought through what could be done

02:10 - 18.118 going forward.

02:10 - 19.488 Any anything on it.

02:10 - 20.688 Yet

02:10 - 22.648 sen so.

02:10 - 23.893 You not.

02:10 - 24.978 As.

02:10 - 28.188 A from from me being new in this position

02:10 - 31.998 and I think the the approach that I have tried to take on this and again

02:10 - 34.049 just kind of highlighted in the governor's

02:10 - 34.668 speech

02:10 - 36.568 is looking at the investments we've made

02:10 - 38.688 and seeing what those impacts are

02:10 - 39.808 and I think.

02:10 - 40.488 I

02:10 - 41.901 You know.

02:10 - 42.948 The

02:10 - 44.418 the investments that we've made

02:10 - 47.898 and have made direct impacts in the lives of pennsylvanians across a

02:10 - 49.488 wide variety of policy areas

02:10 - 51.648 and I think it's I

02:10 - 53.668 think it's vitally important

02:10 - 56.668 that we continue to provide the investments

02:10 - 58.308 that we have all committed to

02:10 - 00.628 as an administration in the general assembly

02:11 - 01.938 and in our

02:11 - 04.168 prey this three enacted budgets.

02:11 - 07.458 To to back to the chairman's earlier point about

02:11 - 08.898 why these proposals

02:11 - 10.498 revenue proposals.

02:11 - 15.198 It is true that we have proposed these revenue proposals in some form

02:11 - 16.128 some of them

02:11 - 17.718 all for years now

02:11 - 18.528 others

02:11 - 20.926 are different years and they've changed just based on

02:11 - 24.168 conversations we've had with the general assembly and in.

02:11 - 27.078 Constructive conversations that result as a result

02:11 - 29.518 that come directly from these appropriations hearings

02:11 - 31.768 and I will say.

02:11 - 35.098 I think if we would have enacted those four

02:11 - 39.204 proposals from the time that we had enacted them based on our estimates again

02:11 - 42.188 understand that you know everybody makes different assumptions on estimates

02:11 - 44.358 but we believe we've left about

02:11 - 45.768 three billion dollars

02:11 - 47.128 out of the general fund

02:11 - 48.178 over that timeframe

02:11 - 48.858 so

02:11 - 50.998 I think it's I think it's important.

02:11 - 53.616 That we continue to have conversations not just on the

02:11 - 56.058 spending level but are on the spending side but also

02:11 - 59.844 and other common sense policies that we know can bring in revenues to the

02:11 - 02.298 commonwealth to continue to at least provide

02:12 - 05.368 the level of investment that we've committed to over the last few years

02:12 - 08.388 we're we're in I'll just finish up here now and I thank you

02:12 - 10.828 all of you for for.

02:12 - 15.208 Your service as in the work that you do and I'm going to underscore that word service

02:12 - 16.678 but we utilize.

02:12 - 20.848 Business practices to help us implement.

02:12 - 23.158 The.

02:12 - 26.068 Best ideas that we can come up with

02:12 - 27.208 but.

02:12 - 28.458 I want to make sure that

02:12 - 29.718 we understand that

02:12 - 30.048 the

02:12 - 32.578 government is not a business.

02:12 - 34.558 Government is a service

02:12 - 35.418 okay

02:12 - 38.488 how do we how do we help people.

02:12 - 40.128 Maximize.

02:12 - 41.998 Their potential

02:12 - 43.458 I and

02:12 - 46.241 do it with the resources that we have available

02:12 - 49.018 and those resources are both financial

02:12 - 50.788 and intellectual

02:12 - 51.898 okay and

02:12 - 53.488 some would suggest

02:12 - 54.198 and

02:12 - 57.447 whatever human capacity that we might possess

02:12 - 00.148 to be considerate of folks reality

02:13 - 01.878 and and

02:13 - 05.188 and unfortunately far too many people are struggling

02:13 - 09.108 and in desperate situations that we've got to figure out how to respond to them.

02:13 - 11.508 Consequently the housing proposal

02:13 - 12.108 alright

02:13 - 16.738 which we want to salute everybody for their participation in that.

02:13 - 19.768 The housing governance housing action plan because.

02:13 - 21.418 Certainly needed

02:13 - 23.358 and hopefully we he can bring that one home

02:13 - 25.338 in a lot of different ways because

02:13 - 27.838 it would have a huge impact.

02:13 - 30.228 On people's lives

02:13 - 32.128 I'm aware service

02:13 - 36.468 and we've got to be mindful of the service that we can provide to the people

02:13 - 38.128 of the commonwealth

02:13 - 39.168 and

02:13 - 40.378 the fact that

02:13 - 42.538 we're the only growing

02:13 - 44.098 the economy.

02:13 - 46.048 According to moody's.

02:13 - 48.648 In in this sector in this section

02:13 - 51.738 I'm sends a look sends a big message about

02:13 - 53.898 the path that we're going on

02:13 - 55.768 what we've done.

02:13 - 56.658 Both

02:13 - 00.125 reflected in this morning's conversation with their.

02:14 - 02.448 D c e d secretary and our labor secretary

02:14 - 04.138 and with your participation

02:14 - 05.028 this afternoon

02:14 - 07.998 something's right something's going in the right direction

02:14 - 08.628 okay

02:14 - 10.668 and we need to

02:14 - 12.108 stay that course

02:14 - 13.378 improve

02:14 - 15.648 maybe hopefully get a lot more aggressive

02:14 - 18.658 about the policies that we've been implementing

02:14 - 19.308 because

02:14 - 21.598 it's going in the right direction

02:14 - 24.228 we're beating the odds adds in a lot of different places

02:14 - 26.748 were putting more money back in people's pockets

02:14 - 30.198 will bring bringing more job creation and economic development

02:14 - 30.798 and

02:14 - 33.678 a lot of different spaces in in

02:14 - 36.858 in in rural parts of the commonwealth and

02:14 - 38.328 you know rough and tough

02:14 - 39.678 urban neighborhoods

02:14 - 43.056 were doing a lot of good work we need to keep keep that

02:14 - 46.068 up and I thank you all for your participation in that

02:14 - 47.148 and

02:14 - 50.088 secretary of labor in your short time

02:14 - 51.238 as secretary and.

02:14 - 53.118 Secretary brown

02:14 - 56.778 I'm not going to talk about how long we've been doing this okay I'd prefer

02:14 - 58.900 not to mention how many years we've been doing

02:14 - 01.112 this but all thank you all very much I I mean

02:15 - 02.248 thank you very much

02:15 - 03.568 mr chairman.

02:15 - 05.508 Thank you senator

02:15 - 06.258 alright

02:15 - 09.078 you're the close close out with me here and I'm a pickup of the

02:15 - 14.208 a couple of things before I really focus in on on secretary a rubber

02:15 - 15.898 you know buck.

02:15 - 18.328 Yeah.

02:15 - 18.798 I

02:15 - 20.709 I one thing I thought about when I was listening a

02:15 - 23.328 little bit earlier talking about impact on lottery is

02:15 - 23.838 is.

02:15 - 27.258 Our is lottery working on certain lot of people

02:15 - 30.098 may not realize that lottery is a lot more than just

02:15 - 32.808 scratch off games and gas the groundhog and all that stuff.

02:15 - 36.444 They obviously are looking through new things whether it's through technology or

02:15 - 39.078 other things but one of the products is lottery looking at

02:15 - 41.598 and in this world that

02:15 - 46.218 seems to have a lot of things competing back in local stores and communities

02:15 - 47.998 can you talk about that a little bit.

02:15 - 49.728 I'm sure yeah we

02:15 - 50.238 we.

02:15 - 52.818 Have a lot of different variety of products

02:15 - 56.478 for for players in pennsylvania scratch offs being

02:15 - 01.008 about six eighty seven to seventy percent of our sales but we have robust draw games

02:16 - 04.738 multistate draw games that we participate in ends day draw games.

02:16 - 06.044 Fast play

02:16 - 07.888 also we are authorized

02:16 - 09.618 to sell online from

02:16 - 12.088 the law that passed in two thousand and seventeen

02:16 - 15.918 and we have monitor games like keno so we have

02:16 - 17.328 you know a lot of the the

02:16 - 19.638 traditional lottery games

02:16 - 21.208 here in pennsylvania

02:16 - 21.768 and

02:16 - 23.818 we are working

02:16 - 26.148 you know we just launched a new draw game in

02:16 - 28.038 november called cash pop

02:16 - 32.848 we just launched a new multi-state draw game millionaire for life.

02:16 - 36.118 A little over a week ago so we are participating

02:16 - 37.318 in a lot in these

02:16 - 38.398 national.

02:16 - 39.978 Dragging efforts

02:16 - 40.788 and

02:16 - 44.358 we're also like you said modernizing we modernize our

02:16 - 47.628 our system and our equipment back in march of two thousand and four

02:16 - 48.588 where modern

02:16 - 51.718 knifing or online platform later.

02:16 - 53.038 In may

02:16 - 55.394 so we have we are we're doing all of those things

02:16 - 58.288 right when we look at the lottery industry.

02:16 - 01.346 We collaborate we're looking at best practices

02:17 - 03.528 but what's different about pennsylvania

02:17 - 05.038 is our market.

02:17 - 07.768 We have the most competitive

02:17 - 10.368 saturated gaming market in the u s

02:17 - 11.878 and so we're always

02:17 - 15.408 looking at those things there's the stuff we talked about today what games of skill

02:17 - 16.908 there's other things

02:17 - 21.598 we're just starting to hear and learn about things like predictive markets

02:17 - 22.308 and

02:17 - 24.348 and things that would

02:17 - 25.498 divert.

02:17 - 27.568 Attention.

02:17 - 32.218 Gaming revenue entertainment dollars away from the lottery.

02:17 - 33.348 So we're always keeping

02:17 - 35.308 an eye on those things.

02:17 - 38.398 I predict a market issue is.

02:17 - 40.288 Going to grow fast

02:17 - 41.728 and it's

02:17 - 42.948 kind of amorphous

02:17 - 45.048 and what it's presenting itself to be

02:17 - 47.632 would we have thought twenty years ago that

02:17 - 47.955 a.

02:17 - 50.578 Gaming product would be considered a derivative

02:17 - 52.978 and regulated by the fcc.

02:17 - 55.158 Yeah that's the argument for this now

02:17 - 56.328 even no

02:17 - 58.408 gaming is identical

02:17 - 01.138 to what you're seeing on draft kings.

02:18 - 04.408 As a means to not be within our purview

02:18 - 05.928 and we

02:18 - 08.878 collectively try to figure out.

02:18 - 12.768 How we protect our existing investments against things like that because that is

02:18 - 16.708 well beyond the pale but we probably ever consider this would be.

02:18 - 18.498 Yeah massively changing technology

02:18 - 19.738 outskirts crazy

02:18 - 21.388 and it's growing fast.

02:18 - 23.638 Will thank you for that.

02:18 - 25.038 I like

02:18 - 29.574 part of this is being able to sit back and listen to a lot of things and all be

02:18 - 32.238 software some commentary on on on some things and I

02:18 - 34.818 think there's no mistake that everyone in this room

02:18 - 36.258 will agree that

02:18 - 39.978 we've realized for for many years especially coming out of the cupboard that.

02:18 - 45.348 We need the position pennsylvania to be able to compete and for

02:18 - 47.699 probably one of the biggest reasons not just

02:18 - 50.238 you know for family jobs and other opportunities

02:18 - 53.548 was the fact that we all acknowledge we are aging rapidly.

02:18 - 56.620 And the number of young people our future

02:18 - 59.148 workforce our future tax base continues to shrink.

02:18 - 03.504 I know a lot of my colleagues have probably got really tired of me talking about this

02:19 - 06.558 over the last four five years but I really believe it's the largest threat

02:19 - 08.478 to to pennsylvania's future

02:19 - 10.468 there's no secret.

02:19 - 14.178 Birth replacement rates are nowhere they they need to be

02:19 - 17.788 it's no secret that other states have made it a real habit

02:19 - 19.488 to try to poach our kids

02:19 - 23.334 come down and enjoy sunny south carolina will you know give you a merit based

02:19 - 24.888 scholarship but you gotta stay here

02:19 - 27.738 I mean these things have been going on for a very long time

02:19 - 28.818 and

02:19 - 29.538 so

02:19 - 32.908 I try to look at everything through the lens of competitiveness.

02:19 - 34.978 For growth.

02:19 - 36.508 In people

02:19 - 37.308 and

02:19 - 40.728 whatever we're investing in or we're getting a return on investment

02:19 - 43.701 and an almost a commitment or loyalty on the back end

02:19 - 45.591 to to work we're not that

02:19 - 48.048 skilled at c dcd help pay for

02:19 - 48.618 ni.

02:19 - 53.304 That you know that you're actually putting that to good use here in pennsylvania and

02:19 - 55.048 you're going to raise your family here in pa

02:19 - 57.618 and that's how we can turn around we also have

02:19 - 00.468 to be very mindful when we're talking about tax policy

02:20 - 04.008 and you know we made a concerted effort realize when you have the second

02:20 - 06.498 highest core opponent income tax in the nation

02:20 - 10.368 we all realized back then that we need to do much better than this

02:20 - 12.324 what was the other thing we heard about

02:20 - 15.257 we realized that we are we're never been to tremendously

02:20 - 18.168 known to be friendly on the permitting or regulatory side

02:20 - 22.558 so we're even really focused on and and it's become more and more bipartisan

02:20 - 24.958 is doing those things better.

02:20 - 26.478 And

02:20 - 28.218 that will that will pay off

02:20 - 31.014 but you also have to be mindful of our our tax

02:20 - 33.498 policy is very structured in a way that that

02:20 - 35.748 we know we're one of two states doesn't

02:20 - 36.648 necessarily

02:20 - 38.478 go after retirement income

02:20 - 39.678 and

02:20 - 42.478 we have various poverty provisions

02:20 - 45.528 and people who make a certain amount that you don't have to pay pay

02:20 - 48.437 and we certainly can acknowledge yes there might be equality

02:20 - 52.428 in the percentage that people may pay an income tax and

02:20 - 56.808 that no way equates to equality and what people are actually paying

02:20 - 58.318 in taxes

02:20 - 04.044 and I worry when I hear the conversations about some of these progressive income tax

02:21 - 06.978 ideas like let's go after the billionaires and millionaires

02:21 - 08.958 has anyone been watching

02:21 - 10.698 what's happening in new york

02:21 - 12.118 and in california

02:21 - 14.728 they are fleeing the states.

02:21 - 18.061 And it's pretty fascinating when I read there

02:21 - 20.058 was about six people in california and it was a

02:21 - 22.938 large percentage of the revenue that the state generates

02:21 - 23.958 what happens if

02:21 - 25.978 they start leaving too.

02:21 - 29.598 So you have to be very fair in how we look at this

02:21 - 33.384 and because some of those people who are making money are also people that are

02:21 - 36.228 investing back in pa are keeping their businesses here and

02:21 - 38.557 and so we have to be very mindful what we're

02:21 - 40.938 projecting we are projecting to the corporate world

02:21 - 42.288 come invest

02:21 - 43.188 and

02:21 - 46.368 we want to have one of the most competitive rates and friendly permitting

02:21 - 48.778 but we want our families to stay here we want to have

02:21 - 53.124 people to know that you know we're not going to overdo it on the personal income tax

02:21 - 56.148 side too and so I I just wanted to lay that out there.

02:21 - 00.108 I know everyone comes at things from different perspectives and I'm not

02:22 - 01.968 questioning motivations but

02:22 - 04.133 we have to be really it's really important

02:22 - 06.618 right now especially with our demographic shifts

02:22 - 08.478 yeah we need to turn that tide

02:22 - 11.718 and make ourselves be more attractive and

02:22 - 13.228 so with that.

02:22 - 14.698 Secretary.

02:22 - 17.428 Like to have a little dialogue with you.

02:22 - 21.538 First and foremost congratulations on your your recent promotion

02:22 - 23.628 to take the role of secretary of the budget

02:22 - 26.928 I could save myself my team are very happy

02:22 - 30.261 and we believe the promotion was well deserved

02:22 - 33.436 whether you're a republican or a democrat

02:22 - 37.122 we've always appreciated your professionalism your knowledge and the way you approach

02:22 - 40.146 your job and that's something that's desperately needed in the process and

02:22 - 42.490 and you all know through the madness of whether they're

02:22 - 46.006 they're they're stalled budget negotiations or whatnot.

02:22 - 50.316 When you're all in the trenches together you get to see people's character and and

02:22 - 52.236 you know you've always been top notch

02:22 - 55.722 I know we may not always agree but you've been available partners we work through

02:22 - 00.676 these budget issues throughout the year and especially during budget negotiations

02:23 - 04.456 and I know you'll work in good faith with us

02:23 - 05.226 and

02:23 - 08.646 I think a lot of people do don't see the ten thirty at night calls

02:23 - 10.786 but going back and forth

02:23 - 12.924 throughout the weekends I mean it was pretty much

02:23 - 16.276 a non-stop thing you're you're always part of that.

02:23 - 18.563 So I'm just going to start with a few questions based

02:23 - 21.216 on the last two weeks of of budget hearings first

02:23 - 22.087 and

02:23 - 23.226 in first

02:23 - 23.826 because.

02:23 - 26.826 This is a really growing concern of mine mine

02:23 - 28.852 we all know that where agriculture stands is

02:23 - 31.876 terms of pennsylvania's industry and of course.

02:23 - 32.916 Poultry

02:23 - 34.156 layer hans

02:23 - 35.206 eggs.

02:23 - 37.236 We're in crisis mode right now

02:23 - 38.256 and

02:23 - 38.616 as.

02:23 - 40.900 High path avian influenza is already impacted

02:23 - 44.236 more than seven and a half million birds statewide

02:23 - 45.526 and

02:23 - 46.500 you know I I

02:23 - 48.876 I'm just stunned at how early this was

02:23 - 51.966 especially in this sub degree temperatures so hats off

02:23 - 54.096 to all the people who have been cleaning and

02:23 - 56.556 scrubbing and clinton doing all the things necessary

02:23 - 00.396 and this is really before the bird migrations have truly really started.

02:24 - 01.846 I mean I know middle

02:24 - 04.806 middle creek wildlife is now starting the team

02:24 - 07.463 you know and then we'll get calls in chester county

02:24 - 11.116 where we have fields and ponds full of dead snow geese.

02:24 - 12.606 It seems to be worsening can

02:24 - 15.106 do you anticipate having to transfer

02:24 - 17.384 at this point I I know we've made a concerted

02:24 - 19.806 effort to build up those funds to be prepared

02:24 - 22.253 I know we have one of the better programs in the

02:24 - 24.966 country that we've worked in strong fashion to do

02:24 - 28.296 including on the preparedness side and where we've staged equipment

02:24 - 29.656 and.

02:24 - 31.746 How are we doing with that fund

02:24 - 34.137 and does it look like we might potentially have to

02:24 - 36.876 make adjustments in the fiscal code to adapt two what's

02:24 - 40.476 really a growing issue when we haven't seen since nineteen eighty three

02:24 - 42.886 happening in our commonwealth.

02:24 - 44.526 Yeah and

02:24 - 45.036 you know.

02:24 - 49.242 I think specifically to that lee had the foresight both as the administration and the

02:24 - 52.426 general assembly last year to make it more of a reactionary

02:24 - 55.276 ability for the administration to react.

02:24 - 58.386 Rather than just having a straight appropriation an annual basis

02:24 - 00.456 which to your point has has been

02:25 - 02.286 accumulating over the years

02:25 - 07.416 and I think has us in a in an okay place now to react to this situation as it's going

02:25 - 08.406 on.

02:25 - 11.466 But you know the legislative language that we enacted

02:25 - 14.826 in our ability as the administration to to move quickly and react

02:25 - 16.266 I don't envision

02:25 - 20.016 at this point that we'll need to and that transfer just given

02:25 - 22.686 the amount of funds that are

02:25 - 25.206 currently available to the department of agriculture

02:25 - 26.038 and

02:25 - 27.256 certainly we.

02:25 - 27.936 Work

02:25 - 30.036 very closely with the the general assembly

02:25 - 33.486 on this and other types of disaster language that we have

02:25 - 35.106 and envision will

02:25 - 37.416 keep the general assembly apprised of

02:25 - 41.076 any such transfer not let us definitely stay in communication and

02:25 - 42.849 you know for anyone watching who to truly

02:25 - 44.856 understand if when you get to the point where

02:25 - 46.831 you have other states other countries or us

02:25 - 50.446 territories who are saying rift choosing to purchase

02:25 - 53.826 pennsylvania based chicken products or eggs or whatnot

02:25 - 56.004 just imagine what that means not just that a farmer

02:25 - 58.657 what's happening to them but the ripple effect of our menu

02:25 - 01.006 our food processing manufacturing

02:26 - 05.046 can be very devastating situation so it's something we all have to work very

02:26 - 06.996 well together on so

02:26 - 08.986 thank you for that.

02:26 - 11.659 As you may know last year the federal working families

02:26 - 15.226 act provided for the education freedom tax credit.

02:26 - 19.242 That provides taxpayers with about a seventeen hundred dollar tax credit for

02:26 - 22.666 contributions made the scholarship granting organizations

02:26 - 24.759 funds can be used for students to attend the

02:26 - 27.126 school of their choice public school tutoring

02:26 - 29.556 after school and summer pro grams

02:26 - 32.716 and support services for students with disabilities

02:26 - 37.206 the tax credit reduces the amount of federal income tax one dollar for dollar

02:26 - 41.202 and would not only provide students with additional educational opportunities but

02:26 - 44.922 would also likely save pennsylvania taxpayers and the commonwealth millions of

02:26 - 47.815 dollars however the law does require the governor or

02:26 - 51.876 other individual desi ignited under state law to opt in

02:26 - 56.616 and provide a list of scholarship organizations by january first twenty twenty seven

02:26 - 59.416 for our residents to be able to participate

02:26 - 02.856 does the governor plan to elect to opt in to the tax

02:27 - 05.496 credit program and if so when can we expect

02:27 - 07.686 the election to be made

02:27 - 10.696 as we're getting more and more more inquiries.

02:27 - 15.426 As to a the opportunity to contribute to a beef for the families

02:27 - 16.356 and

02:27 - 18.966 across all those spectrum I just laid out

02:27 - 20.676 whether or not they'd be able to use it

02:27 - 22.966 yeah and so.

02:27 - 24.706 We are monitoring.

02:27 - 28.746 The program and have been reviewing the legislation I do know that we've also

02:27 - 30.016 been advised jd.

02:27 - 32.136 From many stakeholders including the federal

02:27 - 34.596 government that we should be anticipating some guidance

02:27 - 35.436 from

02:27 - 36.796 us treasury

02:27 - 40.116 on the inner work the specific inner workings of that program.

02:27 - 44.956 I think it's going to be important to review the the program

02:27 - 46.176 just to see how it

02:27 - 49.536 specifically interacts with any of our existing programs at the state level.

02:27 - 52.516 I do know that there are some.

02:27 - 56.016 Taxation components about whether or not which credit gets taken first

02:27 - 59.146 but I think it's not there's not a whole lot of detail.

02:27 - 00.426 On the

02:28 - 02.206 other specific

02:28 - 04.776 potential double depths or any of those kind of things

02:28 - 06.196 and so

02:28 - 07.776 I I do think that the

02:28 - 11.136 you know obviously the prospect of being a able to assist students

02:28 - 12.666 in public and private schools

02:28 - 14.676 as a result of this program just

02:28 - 18.046 again given the way that the legislation is written.

02:28 - 20.086 Is you know optimistic

02:28 - 24.186 but I think it's going to be critically important to read the guidance so that we

02:28 - 25.536 we have an understanding

02:28 - 28.426 and can adequately advise.

02:28 - 31.746 Any taxpayers who are currently receiving any benefits

02:28 - 35.232 so are they are they sharing already that they're going to come out with further

02:28 - 39.246 final guidance on this front from us treasury correct we have heard

02:28 - 39.996 and

02:28 - 42.876 we have heard that there was a public comment period

02:28 - 46.332 while I do know that there was a public comment period where they were soliciting

02:28 - 48.616 comments from the state as well as stakeholders

02:28 - 51.006 my understanding is they are currently review knowing that

02:28 - 54.246 all of that and then intend to issue further final guidance

02:28 - 55.686 ahead of any election date

02:28 - 57.046 okay.

02:29 - 05.232 The governor's budget proposes to reallocate the caps within the e I t c program to

02:29 - 07.621 provide more credits to educational improvement

02:29 - 09.966 organizations which support public schools

02:29 - 12.156 can you please explain that plan

02:29 - 12.726 yes

02:29 - 13.596 so.

02:29 - 15.676 In this process both.

02:29 - 17.806 The administration has taken.

02:29 - 20.896 A very hard look at where we are.

02:29 - 24.246 Where are the allegations that the general assembly

02:29 - 28.756 provides in many different facets whether it be and you know from

02:29 - 32.176 allocations in tax credits or specific appropriations

02:29 - 33.396 to make sure that the

02:29 - 35.136 programs meet the mission

02:29 - 38.076 both statutory mission as well as the mission of the agency

02:29 - 39.796 but also are.

02:29 - 40.476 Being

02:29 - 42.006 used in there to reality

02:29 - 45.286 so what we've actually seen over the last few years.

02:29 - 49.086 Is while the caps at the overall cap for the programs have been increasing

02:29 - 50.016 and

02:29 - 51.286 the.

02:29 - 53.256 Specific caps underneath if

02:29 - 56.860 you recall there's four programs underneath the raleigh htc

02:29 - 58.036 ios

02:29 - 59.526 twelve and edi s

02:29 - 01.476 and what we're seeing is

02:30 - 05.656 e io is actually the only program where they're meeting the full.

02:30 - 07.686 Allocation of resources so there's

02:30 - 08.106 a.

02:30 - 09.930 While there might be more demand in some of the other

02:30 - 13.156 programs just based on eligibility criteria I think.

02:30 - 15.496 What we're seeing is the actual.

02:30 - 19.786 The actual program under iaea is being fully utilized.

02:30 - 23.232 So I think from our perspective it's just the nature of all of these ongoing

02:30 - 24.696 conversations of making sure that.

02:30 - 26.946 Resources that the general assembly

02:30 - 29.046 provides are being fully utilized

02:30 - 30.706 so we're proposing

02:30 - 32.896 to shift some of the caps around

02:30 - 34.246 to provide more

02:30 - 34.536 to.

02:30 - 36.636 Want more resources to the ea I hope oh

02:30 - 39.096 since that's what we're seeing the actual utilization

02:30 - 42.375 so that shift and caps more towards the the

02:30 - 46.966 the educational improvement organizations for the the public schools.

02:30 - 50.526 That wasn't connected to your thoughts on this other tax credit

02:30 - 52.584 and the opportunities in terms of whether you're

02:30 - 54.726 going to opt into it or not the federal tax credit

02:30 - 59.496 not specifically I think though as there are additional resources available that we

02:30 - 03.522 and that's obviously what we're waiting to see the guidance on on if we feel like

02:31 - 06.346 there's going to be impacts directly to the state programs

02:31 - 09.216 but we do know that the e I o program in it's current state

02:31 - 11.086 is in.

02:31 - 13.426 Is utilizing it's full amount of allocation.

02:31 - 15.669 A secretary last thursday we heard testimony

02:31 - 17.586 from the department of career actions about

02:31 - 19.266 significant budget increase

02:31 - 21.936 in fact the department agreed their budget increase was

02:31 - 25.356 around a four percent growth rate which they indicated typical growth

02:31 - 28.266 now while four per cent growth might be typical

02:31 - 31.606 you know that we're in the process of closing two facilities

02:31 - 36.546 which the budget shows is projected to save one hundred million dollars

02:31 - 40.346 so so I hope you understand what are concerned is spending over expecting that we're

02:31 - 42.512 going to save one hundred billion dollars in the budgets

02:31 - 44.652 being asked to increase by one hundred and fifty million

02:31 - 47.856 we see that as almost two hundred and fifty million dollar swing which will be

02:31 - 49.456 very historic.

02:31 - 52.056 In terms of an annual increase

02:31 - 53.476 and.

02:31 - 58.512 Spending at the typical four percent growth rate after you close little less than ten

02:31 - 59.976 percent of the facilities that just

02:32 - 01.786 doesn't really add up.

02:32 - 05.866 Seems a little excessive fill us even have to reconsider relatively small snapbacks

02:32 - 07.536 of residual coded

02:32 - 10.326 relief dollars I think it was about ten million dollars

02:32 - 12.753 so we need to dig into that in this budget and work

02:32 - 15.246 together collaboratively to find so solutions to get that

02:32 - 16.716 that budget under control

02:32 - 17.706 and

02:32 - 19.186 you know.

02:32 - 20.386 In terms of

02:32 - 23.946 excessive overtime we had about one hundred and sixty million last year

02:32 - 27.876 sixty individuals earned more than one hundred thousand dollars

02:32 - 31.516 just in overtime compensation alone

02:32 - 34.416 and the largest amount of overtime was about one hundred

02:32 - 35.664 three thousand

02:32 - 36.654 just in

02:32 - 38.604 overtime compensation alone

02:32 - 42.954 and surprisingly the department indicated it was unaware that one of it's employees

02:32 - 43.704 worked

02:32 - 45.184 two thousand

02:32 - 48.244 eight hundred hours of overtime.

02:32 - 52.284 While two thousand eight hundred hours overtime is an outlier

02:32 - 56.364 it does seem that many employees are working more than one thousand hours of overtime

02:32 - 57.664 annually

02:32 - 58.404 and

02:32 - 59.524 so.

02:32 - 01.605 People have managed anything before and of course

02:33 - 05.194 in a twenty four hour environment that obviously is.

02:33 - 07.234 Seems to be very concerning.

02:33 - 11.784 Are you aware of that at all or has that been on your radar

02:33 - 13.550 we can see it in the system they

02:33 - 14.874 claim that they did not

02:33 - 16.344 they did not know about it

02:33 - 17.304 and

02:33 - 19.254 but that kind of caused us greater concern

02:33 - 20.124 yeah I think

02:33 - 21.394 just generally

02:33 - 23.754 you know obviously one of the reasons why

02:33 - 25.764 one of the many reasons why there was

02:33 - 26.634 a.

02:33 - 28.254 Recommendation to the.

02:33 - 31.114 Close facilities was.

02:33 - 34.264 To better align the.