RSRT STDU.S. POSTAGE

PAID

HARRISBURG, PAERMIT NO. 432

Summer 2010

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Dear Neighbor:

As the representative for the 87thDistrict in the Pennsylvania Houseof Representatives, it is important tome to hear from you regarding issuesinvolving state government, especiallyhow it impacts your life.In early July, the General Assembly completed the spendingplan for the 2010-11 fiscal year. Ivoted against this proposal for manyreasons, including the reliance onfunding from the federal governmentthat is unlikely to fully materializeand the underfunding to the state’spension systems. Additional detailsregarding the state budget and thepension systems are provided in thisnewsletter and I am hopeful you findthe information beneficial.The House is scheduled toreturn to session on Sept. 13, andit’s expected that the main issueswill be transportation funding, thepossibility of taxing the extraction of natural gas in the Marcellus Shaleformation and the creation of anIndependent Fiscal Office to providereliable revenue estimates during theannual state budget process. This fallis shaping up to be a busy legislativesession and I am hopeful that mycolleagues in the General Assemblyremain focused on the taxpayersand how their decisions affect everyPennsylvania citizen.If I can be of assistanceregarding any state government-related matter, please contact me.Sincerely,Rep. Glen R. GrellState Representative87th District

In order to save money, thisnewsletter is being mailedprimarily to those who may nothave Internet access. You mayreceive this newsletter and otherregular legislative updates byvisiting my website at

RepGrell.com

and locate the “Get E-Mail Updates” area.

Aug. 30 Public Hearing Set for GamingFacility in Hampden Township

I learned of Penn Harris Gaming’s application for a resort gaming license atthe Holiday Inn West property in Hampden Township after it was submitted tothe Pennsylvania Gaming Control Board (PGCB). I was quite surprised to learnthat a resort gaming license application had been ﬁled for the Hampden Townshiplocation.The decision on this application solely rests with the PGCB and not with me orthe General Assembly.Since there appear to be four applicants vying for only one license, we shouldall hold our enthusiasm or concern in check, realizing that this project is far from adone deal. Prior to any licensing decision by the PGCB, a completeness review isconducted and an investigation of the applicant and its principals is performed.On July 9, the PGCB announced the schedule of public input hearings for thefour applicants vying for the remaining Category 3 license that would permit theoperation of up to 600 slot machines and a maximum of 50 table games at a resorthotel.Public input hearings provide a forum for individuals to voice their support oropposition to a proposed casino in their community, and permit those personswith an interest in the applicant’s proposal to learn more about the character;operational and ﬁnancial suitability; community impact; diversity plans; plans forthe prevention of compulsive gaming; and other issues about the proposed facility.Information received by the board during these proceedings will be included inthe record upon which the board will grant or deny licenses.The hearing on the Hampden Township location is scheduled for

10 a.m.on Monday, Aug. 30, at the Hampden Township Municipal Building,located at 230 South Sporting Hill Road in Mechanicsburg.

For additionalinformation, or to review the Local Impact and Diversity Reports, visit my websiteat

RepGrell.com

and click on “Hearing on Proposed Hampden Township GamingFacility.” Hearings regarding the other locations are scheduled to wrap up on Sept. 8.

2010-11 State Budget

General Fund SpendingGeneral Fund Revenue

* NOTE:

Fundingincludes $2.75 Billion infederal stimulus dollars.* NOTE: Revenue onlyreﬂects state dollars.Federal stimulus funds arenot included in this chart.

Budget Falls Short on Adequate Funding for Pension Systems

On June 30, the General Assembly passed the final spending plan for the 2010-11 fiscal year. The $28.04 billionbudget increases spending by $207 million, or 0.74 percent, over last year’s plan, and does not require any tax increases. Although it was $1 billion less than the governor had originally requested, there are several items contained in the finalplan that prevented me from supporting it.Most notably, this budget underfunds the Public School Employees’ Retirement System (PSERS) by $135 million. Forthe past several months, I have been diligently working to bring this issue to the forefront by educating my colleaguesin the House and Senate on the importance of this issue. On June 16, the House passed legislation (House Bill 2497) toaddress the long-term and short-term funding shortfalls facing PSERS; however, this bill remains in the Senate awaitingconsideration. The state cannot increase spending in other areas while shirking its responsibility to the pension system.Serious financial troubles are facing school districts and the state, which will have a negative effect on school propertytaxpayers. By artificially reducing the 2010-11 employer contribution to PSERS, the problem will only become worse.In addition, this budget relies on the federal government providing the state an additional $850 million in fundingfor Medical Assistance. This additional allotment has yet to be approved by Congress, and at this point, the full amountseems unlikely. The reliance on “phantom” revenue is of great concern because of the serious deficit that will be createdif this money does not come through. I believe it is wrong for state government to spend money it does not have.Next fiscal year, when the federal stimulus funding ends, Pennsylvania’s revenues will drop by nearly $3 billion. Wehave known since the stimulus program was enacted that it would last only two years yet overall state governmentspending has increased during this time. I believe the responsible course of action would have been to reduce spendingto prepare adequately for the financial challenges ahead.

Capital Budget Contains Questionable Expenditures

A major component of the 2010-11 state budget package is the Capital Budget embodied in House Bill 2289, whichwas signed into law by the governor on July 7. This legislation authorizes the Commonwealth to issue up to $1.55 billionin additional debt to pay for capital projects in the 2010-11 fiscal year. The Commonwealth’s total outstanding capitalprojects debt at the end of the current fiscal year will total nearly $9.6 billion.This law provides $890 million for public improvement projects, $212 million for transportation assistance projects,$200 million for bridge projects, $225 million for redevelopment assistance projects, $25 million for furniture andequipment, and $35 million for flood control projects. Among these projects are the controversial funding of $10 millionfor the Arlen Specter Library and $10 million for the John P. Murtha Center for Public Policy.To assist in financing these projects, it was necessary for the General Assembly to approve and the governor tosign House Bill 2290. This legislation amends the Capital Facilities Debt Enabling Act (Act 1 of 1999) by permitting theCommonwealth to increase its borrowing capacity by $600 million. The state’s borrowing authority was increased from$3.45 billion to $4.05 billion. This measure increases the amount of debt payments the state pays on an annual basis. According to analysis of this additional borrowing, $963 million in principal and interest will be paid over the next 20 yearsto pay off this additional debt.Additional borrowing during an economic downturn is not fiscally prudent, especially when revenues are barelykeeping pace with projections. I am extremely concerned about the Commonwealth becoming over-extended, which hasthe possibility to negatively impact taxpayers in the short term; for these reasons I could not support the Capital Budget.Detailed information about the 2010-11 state budget is available on my website,

RepGrell.com

, by reviewing the “Final Spending Plan” documents within the “Appropriations Committee” link.

Pension Reform Bill Awaits Action by Senate

For the past few years, school districts and theGeneral Assembly have known about the financialburden scheduled to strike school property taxpayers in2012 when the jump in payments to PSERS is projectedto increase from the 2009-10 fiscal year rate of 4.78percent to nearly 30 percent of a school district’s total payroll.In December 2009, thePennsylvania School Boards Association (PSBA) and Icollaborated on legislationthat would focus on long-termbenefit reforms to PSERS inan effort to stop the financialbleeding that is occurring.This bill would limit taxpayers’ exposure by placing all newemployees into a “hybrid” pension plan with features of a “defined benefit plan” and a “defined contribution plan.” Following introduction of House Bill 2135, I participatedin public discussions at manyschool districts to provide anoverview of the funding problem and share with themproposals to address future costs.As a member of the PSERS Board since February2009, I have been a vocal advocate of taking action thisyear to address the issues facing PSERS and SERS. Asa result, in early June, I met with Democrat leaders inthe House to develop a series of reforms targeting theshort-term funding shortfalls and addressing the long-term costs of the state’s pension systems. I was pleasedto work with the leadership of the House Republican andDemocrat caucuses to force long-term reforms as partof any short-term relief measure. Doing anything lesswould merely defer the day of financial reckoning. Thefinal product, although not everything I had hoped for,is the work of rare bipartisan cooperation to bring aboutsubstantial changes.On June 16, by a vote of 192-6, the House passed anamended version of House Bill 2497that would reduce the short-termcosts of funding PSERS and SERS,and restructure benefits for futureemployees, the latter being a step inthe right direction. These changeswould apply only to new employeeshired in 2011 and beyond, andinclude:• Reducing the multiplier usedto determine retirementbenefits from 2.5 percent to 2percent. The legislativepension multiplier is rolledback from 3 percent to 2percent.• Increasing the vesting periodfrom five years to 10 years.• Maintaining current employeecontribution rates of 6.5 percent (SERS) and 7.5percent (PSERS).• Increasing the full retirement age to 65.• Eliminating the option for employees to take a lumpsum withdrawal of contributions upon retirement. Although this bill must clear the Senate and beapproved by Gov. Ed Rendell, I am optimistic that leadersin both chambers can work together to take action ona responsible pension reform package. I was furtherencouraged by Gov. Rendell’s recent letter to the Senateleaders urging passage of this reform legislation.

New Committee Assignment:House Appropriations Committee

Earlier this year, I was appointed by House RepublicanLeader Rep. Sam Smith (R-Jefferson) to serve on the House Appropriations Committee to represent the RepublicanCaucus.I have been excited for this opportunity to advance fromthe rank-and-file and have a more active and substantive rolein the annual budget process. I appreciate the confidenceRepublican Leader Smith has shown in me through thisappointment and I have been representing the interests of the residents of the 87th District on this committee.As one of the busiest committees in the House, the Appropriations Committee is responsible for consideringlegislation that deals with raising or expending taxpayerdollars. With the potential of at least a $3 billion deficit atthe end of the current fiscal year, the General Assembly mustbe proactive in controlling costs and reining in spending.With the current economic climate at the state and nationallevels, fiscally conservative spending policies are prudent toweather the financial storm. As noted in the budget articleon page 2 of this newsletter, we must tightly control expenses at the state level. Due to the loss of $2.75 billion in federalstimulus funds next year, we must review every line item in the state budget to ensure it meets the needs of the citizensof Pennsylvania.“Having a seat on the Appropriations Committee gives Representative Grell a stronger hand to fight for on-timebudgets and other budgetary process reforms,” Smith said. “Furthermore, his elevation to the committee shows theconfidence his peers have in him to help craft responsible spending plans for the state.”

During the Camp Hill School District School Board meeting on May 17, Rep. Glen Grell made a presentation to board members and the public regarding the funding issues facing the Public School Employees’ Retirement System (PSERS). Rep. Grell made similiar presentations at Cumberland Valley School District and East Pennsboro Area School District.In May, the Cumberland Valley High School’s Symphonic Winds Band performed in the Capitol East Wing Rotunda under the direction of R. Scott Ainscough.