Growing Greener II Report

Legislative Budget and Finance Committee

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OINT

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OMMITTEE OF THE

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ENNSYLVANIA

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ENERAL

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SSEMBLY

Offices: Room 400 Finance Building, 613 North Street, Harrisburg

Mailing Address: P.O. Box 8737, Harrisburg, PA 17105-8737Tel: (717) 783-1600 • Fax: (717) 787-5487 • Web: http://lbfc.legis.state.pa.us

SENATORS

JOHN R. PIPPY

Chairman

JAY COSTA, JR.WAYNE D. FONTANAROBERT B. MENSCHDOMINIC PILEGGIJOHN N. WOZNIAK

REPRESENTATIVES

ROBERT W. GODSHALL

Secretary

DAVID K. LEVDANSKY

Treasurer

STEPHEN BARRARJIM CHRISTIANAH. SCOTT CONKLINANTHONY M. DELUCA

EXECUTIVE DIRECTOR

PHILIP R. DURGIN

Review of the Commonwealth’sGrowing Greener II Initiative

As Required by House Resolution 2009-17March 2010

Table of Contents

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Summary

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I. Introduction

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II. Growing Greener II Bond Issues and Debt Service

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5A. Bond Issues ............................................................................................ 5B. Debt Service ............................................................................................ 6

III. Uses of Growing Greener II Funds

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IV. Appendices

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A. HR 2009-17 ............................................................................................. 26B. Growing Greener II Projects .................................................................... 30

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Summary

In May 2005, Pennsylvania voters approved through a referendum borrowing$625 million for the Growing Greener II program “for the maintenance and protec-tion of the environment, open space and farmland preservation, watershed protec-tion, abandoned mine reclamation, acid mine drainage remediation and other envi-ronmental initiatives”. In July 2005, Governor Rendell signed Act 45, the GrowingGreener II legislation that directs how the Growing Greener II funds are to be dis-tributed.

Growing Greener II Bond Issues and Debt Service

As of January 2010, the Commonwealth had issued $384.5 million of the$625 million approved in Growing Greener II bonds. The bonds have interest ratesbetween 3.45 percent and 5.50 percent, with varying maturity dates through FY 2028-29. Of the $240.5 million principal amount of debt remaining, the Common-wealth anticipates issuing $120 million in bonds in FY 2009-10 and $121 million inFY 2010-11.The funds to make the principal and interest payments for the GrowingGreener II bonds come from the Environmental Stewardship Fund

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. The primarysource of revenue for the Environmental Stewardship Fund is the $4.25 per ton dis-posal fee for solid waste disposed of at any municipal waste landfill, which in recentyears has ranged from $65 million to $84 million annually (including earned inter-est).Of this amount, approximately $30 million is currently being used for debtservice to repay the principal and interest on the GGII bonds. The remaining $35-54 million is used to support other environmental initiatives. However, the amountneeded for GGII debt service will increase to approximately $50 million once theremaining $240.5 million in bonds is issued. The Governor’s Budget Office projectsthis will leave only about $15 million remaining for other Environmental Steward-ship Fund projects.

Use of Growing Greener II Funds

The Growing Greener Bond Fund was created by Act 2005-45 to receive anddistribute the proceeds from the sale of Growing Greener II bonds to Common-wealth agencies. The table below shows the uses of the GGII bond funds.

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Procedurally, the Environmental Stewardship Fund makes payments to the Growing Greener II Sinking (DebtRepayment) Fund. Principal and interest payment are then made from the sinking fund.

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