Post by pfsc on Mar 17, 2015 8:26:56 GMT -5
House Appropriations Committee budget hearing with DCNR (BH)
3/16/15, 1:30 p.m., 140 Main Capitol
By Mike Howells, PLS
The committee held a budget hearing with the Department of Conservation and Natural Resources (DCNR).
Cindy Adams Dunn, acting secretary of DCNR, offered comments along with Daniel Devlin, State Forester, and Pam Pasi, Director of the Bureau of Administration, in support of the governor’s proposed budget, and its overall increase of $8.3 million for the department.
Sec. Dunn reported the state’s award-winning park system generates more than a billion dollars a year in economic activity and supports 13,000 jobs, while the Bureau of Forestry manages 2.2 million acres of state forest land for a variety of uses including conservation. She noted Gov. Wolf signed an executive order reinstating a moratorium on new oil and gas leases in the state’s forests and parks, and said DCNR agrees with that approach.
Sec. Dunn discussed the economic impact of other programs under the department, including rail trails, of which she said the state’s larger ones generate more than $91 million in user-spending annually.
Speaking to the continued use of Oil and Gas Fund revenues for general government operations (GGO) over the years, Sec. Dunn reported the governor’s proposed budget restores $20 million from the General Fund to help the department focus Oil and Gas Fund dollars toward conservation and recreation projects.
Chairman Adolph noted the omission of funding for state Heritage Parks in the proposed budget. Sec. Dunn shared her support for the program and said it is owed to the fact that the proposed budget is very austere. She added the heritage areas do compete for environmental stewardship funds and competitive grants. Chairman Adolph expressed his desire to see their funding returned in the budget.
Rep. Maher, chairman of the Environmental Resources and Energy Committee, spoke to royalty payments due to the state for mineral extraction in state parks and forests, and remarked many concerns have been related to the sufficiency of payments. He asked if there has been internal auditing of the payments submitted by the industry. Sec. Dunn noted the Bureau of Forestry hired an accountant for that purpose and is considering an RFP for an outside consultant to conduct an audit. Rep. Maher suggested ongoing audits should be in place. Devlin said there is a three-part auditing process in effect, with an internal audit conducted first, after which a third-party, Penn State, conducts a volumetric audit, and then they are undertaking an RFP for a consultant to perform price audits. He said drilling companies in the past have been “pretty amenable” to paying what they owe.
Rep. Maher asked if the gathering lines necessary for existing leases are in place. Sec. Dunn said there are over 600 wells out of a potential buildout of 3,000 on state lands, even with the moratorium in place. Devlin said the infrastructure is in place on state forest land, though there is a bottleneck elsewhere.
Rep. Maher spoke to Point State Park and its proposed seven additional employees, which he called “essentially a large lawn” at the moment. He asked what the new employees would do. Sec. Dunn said the city has had employees on staff by contract with DCNR, and as they have retired the state has picked up the staff. She added it is a location where the public expects a high degree of maintenance. Rep. Maher questioned whether it would be appropriate just to ramp up staff on a seasonal basis rather than maintaining seven full time staff year-round. Sec. Dunn offered to discuss the matter further.
Rep. Maher noted 12 years ago as a budget impasse continued into the summer, the then-governor shut down parks and other public areas that didn’t previously have any access restrictions built into them. He asked how DCNR would approach the situation if it were to recur. Sec. Dunn agreed it would not be a wise use of resources to do that.
Rep. Vitali, minority chairman of the Environmental Resources and Energy Committee, expressed delight to see DCNR’s proposed increase in the budget. He contended the reinstatement of the drilling moratorium was a strong symbolic gesture on the part of the governor. He voiced concern in the proposed budget surrounding $117 million for use by DCNR from the Oil and Gas Lease Fund. He said it was not intended for use for operating expenses, particularly with a $600 million dollar backlog on infrastructure projects.
Rep. Vitali requested an update on Loyalsock State Forest. Sec. Dunn said it is a highly important place with a “mosaic” of ownership. She reported meeting with various stakeholders to determine a course moving forward, with an eye to conserving the most ecologically important places within its borders.
Rep. Vitali asked if there are any projects afoot in support of DCNR’s mission to enhance recreation and conservation. Sec. Dunn confirmed there are. She said the department looks to recreation with an eye to encouraging people of all ages to take advantage of the state’s outdoor areas, and explained they are working on a Get Outdoors Pennsylvania initiative to teach younger generations to fish, snowshoe and the like. She added the department has similar conservation objectives as well.
Rep. Vitali discussed the Enhance Penn’s Woods initiative. Sec. Dunn said it coupled various funding sources plus bond interest money from Growing Greener II funds to help whittle down the long-term backlog of capital projects. She confirmed, “it has made a dent.”
Rep. Vitali asked if there are adequate funds for gypsy moth spraying. Sec. Dunn said there are $2.5 million but said they do not know how bad the infestation will be. Devlin said there is a spray program lined up for 30,000 acres, and funds included in the proposed budget as well that anticipates an uptick in the northeast part of the state.
Rep. Milne requested clarity on the proposed $675 million bond issuance and its $55 million debt service annually. Sec. Dunn could not confirm whether the severance tax is intended to pay that debt service. Speaking to the Oil and Gas Lease Fund, Rep. Milne asked if the proposed severance tax does not get passed for whatever reason whether there have been discussions about that fund or the General Fund being used to pay back the debt service. Sec. Dunn said she has not been party to any such discussions.
Rep. Milne inquired whether Act 147 of 2012 gives DCNR sufficient resources and staff for its implementation. Devlin said there is a memorandum of understanding with the Department of General Services offering technical assistance but said while there was initial interest regarding gas activity, “all that has gone by the wayside” and there is nothing proposed on any other state land. He reported the only relevant activity has been a small patch of coal. Rep. Milne asked whether there will be activity by PASSHE relative to Act 147. Devlin said there is not a lot of interest, in part due to low gas prices.
Rep. O’Brien asked what the department is doing to expand its mission in urban areas. Sec. Dunn said it is critical to lend understanding of the outdoors to the next generation. She said there is a lot of interest and what is sometimes missing is a connection with someone who can introduce them to the opportunities on offer. She said what DCNR can do is continue to focus on partnerships that help increase programming, and invest in infrastructure. With respect to cities, she said they let them point the way to investment opportunities, such as TreeVitalize in Philadelphia.
Rep. Everett asked for an update on unconventional operations taking place on state lands. Sec. Dunn said a lot of extraction activity has shifted to the southwest portion of the state. Devlin said as of March 1, 1,020 sites have been approved for gas activity, of which 1,004 have received well permits from DEP. In total, he said there are 608 drilled wells on state lands, and 232 approved wellpads. He reported there are 517 wells reporting royalty production to date, with only one rig operating at the moment. Rep. Everett asked how that slowdown and the price of natural gas impacted the funds going to the Oil and Gas Lease Fund. Sec. Dunn said they expect the price of gas to remain low and relatively flat for the next several years, before going up. Devlin confirmed they are watching prices very closely. Rep. Everett spoke to the need to build out the state’s pipeline infrastructure, and asked if there is any of that work ongoing. Sec. Dunn said their stance is to be cooperative with companies that come in. Devlin noted there is a lot of interest in crossing state forests with pipelines, and the department has been approached by companies looking to negotiate passage. He added it is the department ‘s intent to look to co-locate with existing infrastructure. Rep. Everett noted the downside of pipelines is forest fragmentation. Sec. Dunn said it is an issue that needs attention and noted there are a lot of best practices that can be incorporated.
Rep. Everett questioned whether there has been a development plan submitted by the two companies with development rights in the Loyalsock State Forest and what the timelines look like. Sec. Dunn said it is still fairly in the process. Devlin said there hasn’t been a new plan since last year.
Rep. Kinsey spoke to the department’s GGO and cited documents showing the department expects one-third of its workforce to retire in the next four years and the department is looking to hire from out of state for certain positions including foresters. He asked if there are dollars being invested in training in-state workers. Sec. Dunn said there is a combination of efforts being undertaken to train and acquire the next generation of DCNR employees. She noted the vast majority of forestry staff come from Penn State’s forestry program, and the effort to recruit from out-of-state is in effect a diversity initiative. She reported DCNR does attend job fairs in urban areas, and works to connect with city-based conservation and recreation entities. Rep. Kinsey expressed optimism at working to promote more diversity in the organization.
Rep. Quinn said there is concern in her district surrounding the South Newark Basin Study commissioned in the Fiscal Code two years ago. Sec. Dunn said the study’s results have not been released yet but confirmed with respect to the department being interested in drilling in the south east, “the answer is no.”
Rep. Quinn noted the proposed increase to Washington Crossing State Park and requested details on its $2.2 million line. Sec. Dunn confirmed it is an increase and noted the funding in the budget is what triggers the department taking over the park, as people will expect a level of management in place for the area.
Rep. Daley discussed infrastructure, and listed the variety of dams, bridges, buildings, water treatment systems and other features under the purview of DCNR. She asked for an update on the department’s infrastructure needs. Sec. Dunn said the cost of projects has been whittled down to $650 million from $1 billion. She said that remains a daunting amount, though the investment yields annual tax revenue and jobs for the state.
Rep. Daley asked if less reliance on the Oil and Gas Lease Fund for GGO would mean more can be spent on infrastructure. Sec. Dunn confirmed that is correct and spoke to the potential for a trust fund to ensure projects can be funded.
Rep. Boback noted Pennsylvania’s park system is award-winning and asked for details on the award. Sec. Dunn said it dates back to 2008 at a national conference, and Pennsylvania won the gold medal award. She reported that as of 2011, there was a billion dollars in state revenue generated by the park system. She also spoke to the economic benefits of river towns and rail to trail paths.
Rep. Boback asked if the department would consider putting the studies online. Sec. Dunn suggested they are there but may be “buried.” She agreed it is a good story to tell.
Rep. Masser spoke to ATV trails in the state and requested the status on last year’s RFP for a gap analysis study. Sec. Dunn said it is under review among staff. She could not offer details on the anticipated cost of the RFP. Rep. Masser asked where they are with Whiskey Springs ATV trail. Devlin said they are expecting its remediation to be completed possibly by next year.
Rep. Masser asked about Rep. Moul’s proposed bill linked to the recreational use of land and water. Sec. Dunn said the department has always supported that concept. Discussing ATV and snowmobile registration, he noted only 15 percent of revenues come from snowmobiles, yet there are 250 miles of trails for ATVs and thousands of miles of trails for snowmobiles. Sec. Dunn said they look comprehensively for the best opportunities. She noted snowmobile trails are seasonal in nature.
Rep. Kampf spoke to the department’s personnel costs and asked whether the figures contained in their budget documentation includes benefits. Pasi confirmed it is inclusive. She reported benefits total 86 percent of personnel salaries. She said 26 percent of the salary rate goes to retirement.
3/16/15, 1:30 p.m., 140 Main Capitol
By Mike Howells, PLS
The committee held a budget hearing with the Department of Conservation and Natural Resources (DCNR).
Cindy Adams Dunn, acting secretary of DCNR, offered comments along with Daniel Devlin, State Forester, and Pam Pasi, Director of the Bureau of Administration, in support of the governor’s proposed budget, and its overall increase of $8.3 million for the department.
Sec. Dunn reported the state’s award-winning park system generates more than a billion dollars a year in economic activity and supports 13,000 jobs, while the Bureau of Forestry manages 2.2 million acres of state forest land for a variety of uses including conservation. She noted Gov. Wolf signed an executive order reinstating a moratorium on new oil and gas leases in the state’s forests and parks, and said DCNR agrees with that approach.
Sec. Dunn discussed the economic impact of other programs under the department, including rail trails, of which she said the state’s larger ones generate more than $91 million in user-spending annually.
Speaking to the continued use of Oil and Gas Fund revenues for general government operations (GGO) over the years, Sec. Dunn reported the governor’s proposed budget restores $20 million from the General Fund to help the department focus Oil and Gas Fund dollars toward conservation and recreation projects.
Chairman Adolph noted the omission of funding for state Heritage Parks in the proposed budget. Sec. Dunn shared her support for the program and said it is owed to the fact that the proposed budget is very austere. She added the heritage areas do compete for environmental stewardship funds and competitive grants. Chairman Adolph expressed his desire to see their funding returned in the budget.
Rep. Maher, chairman of the Environmental Resources and Energy Committee, spoke to royalty payments due to the state for mineral extraction in state parks and forests, and remarked many concerns have been related to the sufficiency of payments. He asked if there has been internal auditing of the payments submitted by the industry. Sec. Dunn noted the Bureau of Forestry hired an accountant for that purpose and is considering an RFP for an outside consultant to conduct an audit. Rep. Maher suggested ongoing audits should be in place. Devlin said there is a three-part auditing process in effect, with an internal audit conducted first, after which a third-party, Penn State, conducts a volumetric audit, and then they are undertaking an RFP for a consultant to perform price audits. He said drilling companies in the past have been “pretty amenable” to paying what they owe.
Rep. Maher asked if the gathering lines necessary for existing leases are in place. Sec. Dunn said there are over 600 wells out of a potential buildout of 3,000 on state lands, even with the moratorium in place. Devlin said the infrastructure is in place on state forest land, though there is a bottleneck elsewhere.
Rep. Maher spoke to Point State Park and its proposed seven additional employees, which he called “essentially a large lawn” at the moment. He asked what the new employees would do. Sec. Dunn said the city has had employees on staff by contract with DCNR, and as they have retired the state has picked up the staff. She added it is a location where the public expects a high degree of maintenance. Rep. Maher questioned whether it would be appropriate just to ramp up staff on a seasonal basis rather than maintaining seven full time staff year-round. Sec. Dunn offered to discuss the matter further.
Rep. Maher noted 12 years ago as a budget impasse continued into the summer, the then-governor shut down parks and other public areas that didn’t previously have any access restrictions built into them. He asked how DCNR would approach the situation if it were to recur. Sec. Dunn agreed it would not be a wise use of resources to do that.
Rep. Vitali, minority chairman of the Environmental Resources and Energy Committee, expressed delight to see DCNR’s proposed increase in the budget. He contended the reinstatement of the drilling moratorium was a strong symbolic gesture on the part of the governor. He voiced concern in the proposed budget surrounding $117 million for use by DCNR from the Oil and Gas Lease Fund. He said it was not intended for use for operating expenses, particularly with a $600 million dollar backlog on infrastructure projects.
Rep. Vitali requested an update on Loyalsock State Forest. Sec. Dunn said it is a highly important place with a “mosaic” of ownership. She reported meeting with various stakeholders to determine a course moving forward, with an eye to conserving the most ecologically important places within its borders.
Rep. Vitali asked if there are any projects afoot in support of DCNR’s mission to enhance recreation and conservation. Sec. Dunn confirmed there are. She said the department looks to recreation with an eye to encouraging people of all ages to take advantage of the state’s outdoor areas, and explained they are working on a Get Outdoors Pennsylvania initiative to teach younger generations to fish, snowshoe and the like. She added the department has similar conservation objectives as well.
Rep. Vitali discussed the Enhance Penn’s Woods initiative. Sec. Dunn said it coupled various funding sources plus bond interest money from Growing Greener II funds to help whittle down the long-term backlog of capital projects. She confirmed, “it has made a dent.”
Rep. Vitali asked if there are adequate funds for gypsy moth spraying. Sec. Dunn said there are $2.5 million but said they do not know how bad the infestation will be. Devlin said there is a spray program lined up for 30,000 acres, and funds included in the proposed budget as well that anticipates an uptick in the northeast part of the state.
Rep. Milne requested clarity on the proposed $675 million bond issuance and its $55 million debt service annually. Sec. Dunn could not confirm whether the severance tax is intended to pay that debt service. Speaking to the Oil and Gas Lease Fund, Rep. Milne asked if the proposed severance tax does not get passed for whatever reason whether there have been discussions about that fund or the General Fund being used to pay back the debt service. Sec. Dunn said she has not been party to any such discussions.
Rep. Milne inquired whether Act 147 of 2012 gives DCNR sufficient resources and staff for its implementation. Devlin said there is a memorandum of understanding with the Department of General Services offering technical assistance but said while there was initial interest regarding gas activity, “all that has gone by the wayside” and there is nothing proposed on any other state land. He reported the only relevant activity has been a small patch of coal. Rep. Milne asked whether there will be activity by PASSHE relative to Act 147. Devlin said there is not a lot of interest, in part due to low gas prices.
Rep. O’Brien asked what the department is doing to expand its mission in urban areas. Sec. Dunn said it is critical to lend understanding of the outdoors to the next generation. She said there is a lot of interest and what is sometimes missing is a connection with someone who can introduce them to the opportunities on offer. She said what DCNR can do is continue to focus on partnerships that help increase programming, and invest in infrastructure. With respect to cities, she said they let them point the way to investment opportunities, such as TreeVitalize in Philadelphia.
Rep. Everett asked for an update on unconventional operations taking place on state lands. Sec. Dunn said a lot of extraction activity has shifted to the southwest portion of the state. Devlin said as of March 1, 1,020 sites have been approved for gas activity, of which 1,004 have received well permits from DEP. In total, he said there are 608 drilled wells on state lands, and 232 approved wellpads. He reported there are 517 wells reporting royalty production to date, with only one rig operating at the moment. Rep. Everett asked how that slowdown and the price of natural gas impacted the funds going to the Oil and Gas Lease Fund. Sec. Dunn said they expect the price of gas to remain low and relatively flat for the next several years, before going up. Devlin confirmed they are watching prices very closely. Rep. Everett spoke to the need to build out the state’s pipeline infrastructure, and asked if there is any of that work ongoing. Sec. Dunn said their stance is to be cooperative with companies that come in. Devlin noted there is a lot of interest in crossing state forests with pipelines, and the department has been approached by companies looking to negotiate passage. He added it is the department ‘s intent to look to co-locate with existing infrastructure. Rep. Everett noted the downside of pipelines is forest fragmentation. Sec. Dunn said it is an issue that needs attention and noted there are a lot of best practices that can be incorporated.
Rep. Everett questioned whether there has been a development plan submitted by the two companies with development rights in the Loyalsock State Forest and what the timelines look like. Sec. Dunn said it is still fairly in the process. Devlin said there hasn’t been a new plan since last year.
Rep. Kinsey spoke to the department’s GGO and cited documents showing the department expects one-third of its workforce to retire in the next four years and the department is looking to hire from out of state for certain positions including foresters. He asked if there are dollars being invested in training in-state workers. Sec. Dunn said there is a combination of efforts being undertaken to train and acquire the next generation of DCNR employees. She noted the vast majority of forestry staff come from Penn State’s forestry program, and the effort to recruit from out-of-state is in effect a diversity initiative. She reported DCNR does attend job fairs in urban areas, and works to connect with city-based conservation and recreation entities. Rep. Kinsey expressed optimism at working to promote more diversity in the organization.
Rep. Quinn said there is concern in her district surrounding the South Newark Basin Study commissioned in the Fiscal Code two years ago. Sec. Dunn said the study’s results have not been released yet but confirmed with respect to the department being interested in drilling in the south east, “the answer is no.”
Rep. Quinn noted the proposed increase to Washington Crossing State Park and requested details on its $2.2 million line. Sec. Dunn confirmed it is an increase and noted the funding in the budget is what triggers the department taking over the park, as people will expect a level of management in place for the area.
Rep. Daley discussed infrastructure, and listed the variety of dams, bridges, buildings, water treatment systems and other features under the purview of DCNR. She asked for an update on the department’s infrastructure needs. Sec. Dunn said the cost of projects has been whittled down to $650 million from $1 billion. She said that remains a daunting amount, though the investment yields annual tax revenue and jobs for the state.
Rep. Daley asked if less reliance on the Oil and Gas Lease Fund for GGO would mean more can be spent on infrastructure. Sec. Dunn confirmed that is correct and spoke to the potential for a trust fund to ensure projects can be funded.
Rep. Boback noted Pennsylvania’s park system is award-winning and asked for details on the award. Sec. Dunn said it dates back to 2008 at a national conference, and Pennsylvania won the gold medal award. She reported that as of 2011, there was a billion dollars in state revenue generated by the park system. She also spoke to the economic benefits of river towns and rail to trail paths.
Rep. Boback asked if the department would consider putting the studies online. Sec. Dunn suggested they are there but may be “buried.” She agreed it is a good story to tell.
Rep. Masser spoke to ATV trails in the state and requested the status on last year’s RFP for a gap analysis study. Sec. Dunn said it is under review among staff. She could not offer details on the anticipated cost of the RFP. Rep. Masser asked where they are with Whiskey Springs ATV trail. Devlin said they are expecting its remediation to be completed possibly by next year.
Rep. Masser asked about Rep. Moul’s proposed bill linked to the recreational use of land and water. Sec. Dunn said the department has always supported that concept. Discussing ATV and snowmobile registration, he noted only 15 percent of revenues come from snowmobiles, yet there are 250 miles of trails for ATVs and thousands of miles of trails for snowmobiles. Sec. Dunn said they look comprehensively for the best opportunities. She noted snowmobile trails are seasonal in nature.
Rep. Kampf spoke to the department’s personnel costs and asked whether the figures contained in their budget documentation includes benefits. Pasi confirmed it is inclusive. She reported benefits total 86 percent of personnel salaries. She said 26 percent of the salary rate goes to retirement.