Log In | About PICPA | Contact | FAQs

Legislative Update

Week Ending Sept. 19, 2008

• For the Pennsylvania Legislature, Time is Running Out
• Pennsylvania Prepares for Worsening Economy
• Pennsylvania's Keystone Opportunity Zones 'Open For Business'
• Elm Street Bill Goes to Full Senate for Vote
• State Treasurer Joins Call for Municipal Pension Reform
• August Revenue Collections Down
• Time is Running Out to Register to Vote
  

For the Pennsylvania Legislature, Time is Running Out

The state General Assembly returned to Harrisburg Monday, Sept. 15 to resume work on the plethora of outstanding issues abandoned during lawmakers’ eight week summer recess. And, in an election year such as this, the realization of many of these initiatives – including healthcare and energy independence – may mean the difference between reelection or retirement.

Adding to this pressure has been the ongoing grand jury investigation into the so-called ‘Bonusgate’ scandal, which rocked the state Capitol in July when Attorney General Tom Corbett handed down indictments to a dozen current and former employees and members of the House Democratic caucus. The AG’s office has announced that it will announce further indictments – focused on the remaining three caucuses – either before the end of this month or after the Nov. 4 elections.

In addition, the Senate has announced that it will not be returning to Harrisburg for a “lame duck” session – the period between the general elections and Nov. 30 – leaving the legislature an even smaller window of opportunity to accomplish its lofty goals. Restraints are even greater as lawmakers take into consideration the downward trend of revenue collections.

So – what all must the General Assembly accomplish in the handful of voting days left in the legislative session?

• The governor’s agenda includes expanding the AdultBasic health insurance program to “Cover All Pennsylvanians” – an initiative supported by House Democrats.
• The state’s crumbling infrastructure must also be addressed, as well as how to pay for its reconstruction.
• Gov. Rendell has threatened to keep rate caps in place if he does not see his energy independence initiatives grow legs in the legislature and move forward.

For a General Assembly that has thus far gained notoriety for its relative inactivity, rather than its ability to set and accomplish a comprehensive legislative agenda, these are no small tasks to undertake. PICPA’s Government Relations Team will keep our members current via our Legislative Update – keep checking back for updated information.

Pennsylvania Prepares for Worsening Economy

Quick on the heels of recently announced lower-than-anticipated revenue collections for the months of July and August, Gov. Ed Rendell announced this week he is directing commonwealth agencies to reduce spending, eliminate out-of-state travel, and place a hold on hiring new employees. All this in order to try and save $200 million in the current fiscal year and avoid having to readdress budget numbers.

“Partly because of strategic, targeted investments in the past several years, Pennsylvania has a stronger economy than many other states, but the national economy is starting to affect us,” Gov. Rendell said. “Our unemployment rate has been at or below the national average for 65 of the past 67 months, but our rate rose to 5.4 percent in July, and revenue collections through August are 3.3 percent less than we had projected. Revenue collections for the first two weeks of September show that sluggish trend is continuing. To make sure the commonwealth’s budget remains in balance, we need to reduce spending now.”

The Governor directed cabinet secretaries to identify 4.25 percent of their enacted budgets from which reductions may be made, which will then be placed into budgetary reserve. Agencies providing public safety, health, and education services will have lower percentage targets to meet.

“We are not undertaking this effort to fill any specific gap in our 2008-09 budget,” the Governor said. “We are simply setting this amount aside as a prudent measure, in response to the recent economic indicators.
 
As part of the across-the-board fiscal controls, the Governor is prohibiting out-of-state travel by commonwealth employees, board members, and commissioners, effective immediately.

The Governor also announced a general hiring freeze, which will apply to salaried positions, wage positions, annuitants (retired commonwealth employees who have returned to work part-time), and other temporary staff, as well as paid interns.

Pennsylvania is certainly not alone in taking preemptive measures.

According to the Center on Budget and Policy Priorities, 13 other states are reporting new budget shortfalls, just two months after enacting budgets. Last week Ohio announced a 4.75 percent across-the-board cut to state agencies to trim $540 million from its current budget.

Pennsylvania's Keystone Opportunity Zones 'Open For Business'

Pennsylvania's Keystone Opportunity Zones are open for business under new guidelines that promise to make them better and help to improve the state's economy, the Department of Community and Economic Development recently announced.

Under the KOZ tax incentive program, companies can significantly reduce their state and local tax burden, thus attracting new or expanding companies and helping to transform a community's abandoned, unused, or underutilized land.

Under Act 79 of 2008, DCED may approve up to 15 new Keystone Opportunity Zones entitled to certain tax abatements for 10 years beginning Jan. 1, 2010.

KOZs are designated by local communities and approved by the state – a working partnership between state and local taxing bodies, school districts, economic development agencies, and community-based organizations.

In addition, existing KOZs can expand by up to 15 acres if the proposed extension is contiguous to existing boundaries.

Elm Street Bill Goes to Full Senate for Vote

A bill to revise the Elm Street program was approved this week by the Senate Community, Economic and Recreational Development Committee and will now go to the full Senate for consideration.

House Bill 2233 would allow the Elm Street Program—an urban residential revitalization initiative that targets older established neighborhoods—continue beyond its current sunset date of 2011.

Currently, the program provides up to five years of financial assistance for municipalities to hire an Elm Street manager to work with local officials and community groups to establish a plan for revitalizing targeted neighborhoods. HB 2233 would allow Elm Street managers to continue for up to an additional five years, if necessary.
  
The Elm Street Program is administered by the Department of Community and Economic Development, and is similar to the existing Main Street Program. Main Street focuses on revitalizing downtown commercial districts while Elm Street targets residential districts close to those commercial districts.

State Treasurer Joins Call for Municipal Pension Reform

Pennsylvania Treasurer Robin L. Wiessmann this week issued this statement calling for improvements to the current municipal pension system in Pennsylvania:

“It is imperative that we improve the current municipal pension system in Pennsylvania. Most of the state's 3,100 municipal pension plans serve fewer than 10 employees. Consolidation of the various disparate plans would modernize the existing system, creating economies of scale that would lower administrative and investment costs, saving both taxpayers and plan participants significant money.”

By virtue of her position as Pennsylvania Treasurer, Wiessmann serves on the boards of the State Employees’ Retirement System (SERS), the Public School Employees’ Retirement System (PSERS), and the Pennsylvania Municipal Retirement (PMRS).

August Revenue Collections Down

Secretary of Revenue Tom Wolf this week reported Pennsylvania collected $1.7 billion in General Fund revenue in August, $117.5 million, or 6.6 percent, less than anticipated. Fiscal year-to-date General Fund collections total $3.4 billion, which is $117.6 million, or 3.3 percent, below estimate.

“This is only the second month of the fiscal year,” Wolf said. “It’s too early to jump to any conclusions about where collections will be at the end of the fiscal year. August collections are actually 1 percent higher than the same month last year.”

Sales tax receipts totaled $693 million for August, $27.8 million below estimate. Sales tax collections year-to-date total $1.5 billion, which is $27.8 million, or 1.8 percent, below estimate.   

Personal income tax (PIT) revenue in August was $737.2 million, $7.3 million below estimate, and brings year-to-date PIT collections to $1.4 billion, which is $7.3 million, or 0.5 percent, below estimate.   

August corporation tax revenue of $46.8 billion was $21 million below estimate. Year-to-date corporation tax collections total $125.6 billion, which is $21 million, or 14.4 percent, below estimate.

Other General Fund revenue figures for the month included $67 million in inheritance tax, which was $9.6 million below estimate, bringing the year-to-date total to $140.9 million, which is $9.7 million below estimate.

Realty transfer tax was $35.1 million for August, bringing the total to $72.1 million for the year, which is $6.8 million less than anticipated.

Other General Fund revenue, including the cigarette, malt beverage, and liquor tax, totaled $89.8 million for the month, which was $45 million below estimate and brought the year-to-date total to $171.1 million, or $45 million below estimate.

In addition to the General Fund collections, the Motor License Fund received $274.8 million for the month, which was $36.1 million below estimate. Fiscal year-to-date collections for the fund total $434.2 million, which is $36.1 million, or 7.7 percent, below estimate.

The Gaming Fund received $47.5 million in unrestricted revenues for August. Fiscal year-to-date collections for the fund total $102.6 million. Gaming Fund receipts include taxes, fees, and interest. Of the total for the month, $47 million was collected in state taxes for property tax relief, bringing the year-to-date total to $101.8 million.  

Other gaming-related revenues collected for August included $5.5 million for the Local Share Assessment, for a total of $7.8 million for the year; $6.9 million for the Economic Development and Tourism Fund, for a year-to-date total of $15 million; and $16.6 million for the Race Horse Development Fund, bringing the total for the year to $35.9 million.

Time is Running Out to Register to Vote

While the weather is cooling down, the elections are heating up. You can make a difference this fall by voting for the candidates that best represent your interests. But you can’t vote unless you are registered. PICPA wants you, your family, your friends, and your neighbors to be registered to vote. Download the voter registration forms, print them out, complete them, and mail them back to your county as instructed at www.pavoterservices.state.pa.us. In Pennsylvania, you must be registered by October 6 to vote in the November Election. Register today so your voice can be heard on Nov. 4th!