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Legislative Update

Week Ending Sept. 28, 2007

• Gov. Rendell Calls for Action on Energy Plan
  
• Senator Unveils Property Tax Elimination Act
  
• Senate Committee Act on Municipal Purchasing Package
  
• New Education Initiative Promotes Shared Services
• Professional Issues Updates: Hear What You’re Missing

Gov. Rendell Calls for Action on Energy Plan

Gov. Ed Rendell this week again called on the General Assembly to use the Special Session on Energy to grow Pennsylvania’s economy by making it a leader in the renewable energy industry and strengthening its security by reducing our dependence on foreign oil.

“We owe it to the people of Pennsylvania to work together to build an energy policy that works for our citizens and puts more of our citizens to work … a policy that allows us to reduce our dependence on foreign oil and makes our nation safe … and most of all, an energy policy that helps us create a better world for our children by ensuring a supply of energy for generations to come that is clean, reliable and home grown.

Rendell laid out the elements of the Energy Independence Strategy he unveiled in February and asked legislators to focus on two specific issues this session: the PennSecurity Fuels Initiative to boost homegrown, renewable fuels; and the $850 million Energy Independence Fund to invest in new technologies, businesses and products that either reduce energy use or produce clean, renewable energy. 

A one-twentieth of one cent per kilowatt of power “public benefits” charge on electricity use will generate a revenue source for the Energy Independence Fund. This charge will add up to about 45 cents per month or $5.40 annually for the average residential customer, about $3.03 cents a month or $36.36 annually for an average commercial customer in 2008 and $74 per month or $888 per year for the average industrial customer.

For more information about the Special Session on Energy, contact your PICPA Government Relations Team.

Senator Unveils Property Tax Elimination Act

Encouraging his colleagues in the General Assembly to “let the people decide,” state Sen. James Rhoades unveiled his proposed Property Tax Elimination Act, a plan that would eliminate $9 billion in school property taxes if it is approved by the voters.

“For years, we have been tinkering around the edges of property tax reform, never fully solving the problem,” said Rhoades. “My legislation will let the people decide whether to virtually eliminate school property taxes in Pennsylvania. It is a $9 billion solution to a $9 billion problem.”

The Property Tax Elimination Act will require that a state-wide referendum question appear on the November 4, 2008 ballot. If Pennsylvanians vote “yes” on the referendum question, the state personal income tax and the state sales tax will increase and school property taxes will be reduced dollar for dollar, totaling $9 billion in total relief, an amount equal to 96 percent of all school property taxes.

If the state-wide referendum question is approved, the state sales tax would increase from its current rate of 6 percent to a new rate of 9.19 percent and the personal income tax would increase from its current rate of 3.07 percent to a new rate of 4.36 percent.

Rhoades went on to say that the funds would be directed to school districts by providing each school district with at least $5,000 for each student enrolled or an amount equal to 100 percent of their property tax revenues. School districts would be required to use these funds to reduce or eliminate property taxes on all property taxpayers across the board.

Your PICPA Government Relations Team continues to monitor this and all property tax relief proposals.

Senate Committee Act on Municipal Purchasing Package

On Sept. 26, the Senate Local Government Committee unanimously moved forward a bipartisan package of bills that would provide local governments — counties, cities, townships, boroughs, towns, and municipal authorities — greater flexibility when it comes to purchasing.

Currently, when a municipality plans to purchase an item of more than $10,000, it must go through the competitive bidding process, which includes paying for newspaper advertisements in a newspaper, waiting for sealed bids, and voting at a public meeting on the lowest responsible bid.

The Local Government Bid Limits Package would amend the various local government codes by raising to $25,000 the level at which local governments must go through the competitive bidding process. The bills also require written or telephonic quotes for purchases costing $7,000 to $25,000. Additionally, the bid limit thresholds would annually be adjusted by the Department of Labor and Industry based upon the Consumer Price Index for all Urban Consumers (CPI-U) -- thus negating the need to regularly address this issue.

Senate Bills 1071 (Counties), 1072 (Third Class Cities), 1073 (First Class Townships), 1074 (Second Class Townships), 1075 (Boroughs), 1076 (Incorporated Towns), 1077 (Municipal Authorities), 1080 (Political Subdivision Joint Purchases Law), 1082 (Public Auditorium Authorities Law), and 1085 (Municipal Flood Improvement Law) are now awaiting further consideration by the full Senate.

For more information, contact your PICPA Government Relations Team.

New Education Initiative Promotes Shared Services

This week, state Education Secretary Gerald Zahorchak encouraged public schools across Pennsylvania to take advantage of a new initiative that is designed to help them dedicate more money to promoting learning rather than meeting operational costs. The 2007-08 state budget provides $1 million for the Common Cents program to promote shared services among school districts and intermediate units that want to save money and resources.

This collaborative effort will be fostered by professional consultant services that will be provided to participating school districts by the Department of Education at no cost to the districts. The consultants will review operations in 11 areas and recommend ways to improve efficiency and save money by combining efforts with other districts.

Professional Issues Updates: Hear What You’re Missing

Join us for the 2007 Professional Issues Update series in which PICPA President Denise Devine and CEO Bert Trexler travel across Pennsylvania to talk about the issues that that affect your professional success: tax patents, the CPA statute, local tax collection, peer review standards, CPA image, private company financial reporting, student recruitment, emerging CPAs and more.

Visit www.picpa.org/update, for location and time of an Issues Update near you.