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House of Representatives
Session of 2013 - 2014 Regular Session


Posted: January 15, 2014 04:33 PM
From: Representative Steven J. Santarsiero and Rep. Stephen McCarter
To: All House members
Subject: Building Blocks PA
Across Pennsylvania, school districts are faced with inadequate facilities. We all know of school buildings in our districts that are in need of repair or replacement. Indeed, PDE has acknowledged that full funding of the current PlanCon program, through which districts are reimbursed for part of their construction costs, would require $1.2 billion. And yet, in this fiscal year, only $296 million was budgeted for that line item.

We need to change that for two reasons.

First, despite PDE’s incredible statement last spring that it is not certain whether there is a link between the condition of school buildings and educational outcomes, the environment in which our children learn does indeed matter. No parent, teacher or child needs an expensive study to tell them that. Put simply, no child in Pennsylvania should have to learn in a dilapidated school.

Second, building or rebuilding schools – just like building or rebuilding roads and bridges – creates jobs at a time when we are still in dire need of them and at a time when the cost of construction and money remains low.

As a consequence, in the near future, I will introduce a legislative package comprised of two bills intended to address this issue.

The first bill will reform the existing PlanCon program with a new act that I call Building Blocks PA. It is intended to make changes and improve the financing of public school construction in Pennsylvania by:

  1. removing the existing moratorium on reimbursement for new construction projects;

  1. creating a new, dedicated fund for the reimbursement of construction costs;

  1. creating a commission to study public school construction financing issues;

  1. exempting certain types of projects from the current 20-year rule (regarding eligibility for reimbursement) if they improve health and safety, technology, energy efficiency and /or environmental quality of schools, or if they address school repair projects resulting from a storm or other emergency-related damages;

  1. requiring school construction work to be performed by a proven, skilled workforce at a stable, living wage; and
  1. Ensuring that all work performed is conducted by established, qualified, well-trained craftsmen, rather than by fly-by-night contractors seeking to game the system.

The second bill will be a severance tax on natural gas extraction calculated on a per-volume rate of 29 cents per MCF extracted. It is very important that a taxing mechanism be implemented that develops a partnership with the natural gas industry, by assessing the tax on the volume of gas produced and not the industry’s ability to make a profit. This approach would not be linked to income, but rather volume, so we can focus on enabling the production of more natural gas with fewer wells that are more efficient. Unlike the income based approach, we can confidently and accurately predict revenue from a per-volume approach of at least $600 million in the first full year with the ability to grow that amount significantly as the volume of production grows.

Revenues from the severance tax would provide essential funding to public school construction that would more than double current funding levels in the first year alone and would grow significantly after that. Public schools across the Commonwealth would benefit from this significant new source of revenue and it would provide an important incentive to school districts to address needed projects.

The bill also would add revenue to a number of other important programs, including a significant infusion of funds into technology investment in our schools under the former Classrooms for the Future program. The full breakdown of revenue distribution would be as follows:

50% - Building Blocks
25% - Host Local Governments
11% - Marcellus Legacy Fund (includes all counties share, ESF and other drilling related impact programs)
5% - Classrooms for the Future
3% - State Conservation District Fund
2% - DEP
2% - HASCA
1% - Fish & Boat Commission
1% - Game Commission

Please join me in working toward improving our system of school construction financing and construction work in Pennsylvania. Our children deserve a safe and clean environment in which to learn.

Document #1

Introduced as HB2050

Description: This first proposal will reform the existing PlanCon program with the new Building Blocks PA program.

Document #2

Introduced as HB2051

Description: This second proposal will fund the Building Blocks PA proposal, along with other important programs by enacting a reasonable severance tax on natural gas extraction calculated on a per-volume rate of 29 cents per MCF extracted.