Mike's Memo

Senate Passes Another 2009 – 2010 State Budget

On Tuesday the Senate passed yet another version of the 2009 – 2010 state budget, Senate Bill 1085. I was not able to support the $27.835 billion spending plan because I believe it goes beyond the ability of taxpayers to support it.  SB 1085 passed 43–6, and now goes to the House for consideration. The Senate is in recess to the call of the President Pro Tempore awaiting House action on this and other budget-related measures. 

Tax Changes

As part of the budget package, the Senate passed House Bill 1531, which included tax increases and cuts. The bill passed 35–14, but because of the tax increases, I was a “no” vote.  The bill now goes back to the House. Tax provisions in the bill include:

• Expansion of the Single Sales Factor of the Corporate Net Income (CNI) tax and expansion of the CNI Net Operating Loss (NOL) provision – saves business taxpayers $82.3 million;
• Delay in the phase-out of the Capital Stock – Franchise Tax, retroactive to January 1, 2009 – result is $373.9 million in additional tax revenues;
• Accelerated remittance of Sales Taxes – $211.4 million in additional tax revenues;
• Imposition of a Gross Receipts Tax on managed care organizations – $528.5 million in additional tax revenues;
• Increases in Cigarette Tax and other tobacco products – $271 million in additional tax revenues;
• Reduction in various tax credit programs (Research & Development, film production, and EITC) – $38.2 million; and
• Establishment of a 60-day tax amnesty program – $190 million in anticipated tax revenues. 

Other Changes

The Senate also passed by a vote of 36–13, Senate Bill 1042, changes to the Fiscal Code, which provide budget implementation language.  I was a “no” vote on the bill, which now goes to the House for consideration. Provisions in the bill include:

• Addition of "little cigars" to the definition of “cigarettes;”
• Establishes the Independent Fiscal Office to make recommendations on the 2011 – 2012 budget;
• Empowers the Department of Conservation & Natural Resources (DCNR) to enter into oil and gas leases;
• Establishes provisions for the use of federal stimulus moneys;
• Establishes a funding formula for libraries;
• Makes changes in the Tobacco Settlement Fund; and
• Transfers money to the General Fund from the Health Care Provider Retention Account ($100 million), the Catastrophic Loss Fund, and the Rainy Day Fund ($755 million). 

Small Games of Chance Bill Tabled

Efforts to keep small games of chance from being taxed were successful.  In the process, however, my Senate Bill 211 (legislation to increase the weekly limits of small games of chance) and Senate Bill 212 (increases to the daily limits for bingo) were tabled, or postponed.  I hope there will be a future opportunity to have these measures considered by the full Senate.

For more information on these issues or other legislative and state topics, or if you are unable to open the bill links, visit the Pennsylvania General Assembly website at www.legis.state.pa.us. You may also want to visit "News for Constituents", a comprehensive look into various issues affecting Pennsylvanians across the Commonwealth.

Please feel free to contact me at any time on state-related issues that are of concern to you.  I may be reached through e-mail at mfolmer@pasen.gov, my website, or any one of my offices listed below.