Senate Republicans Will Study Rendell Budget Proposal
Governor proposes new taxes, eliminating sales tax exemptions
Senate Republicans will carefully study Governor Rendell's $29 billion
General Fund budget request for Fiscal Year 2010-11 and remain committed to enacting
a fiscally responsible spending plan in a timely manner while protecting the interests of
Pennsylvania's taxpayers.
Senate Republicans are holding to the same basic conservative principles
they maintained during last year's deliberations -- the budget must be balanced
without a broad-based tax increase and should be delivered on time.
In particular, Senate Republicans will consider the Governor's proposal to
impose new taxes and eliminate sales tax exemptions to create a Stimulus
Transition Reserve Fund. Rendell proposes to impose new taxes on Marcellus Shale
natural gas extraction and on "other tobacco products" – cigars and smokeless
tobacco. Rendell also proposes the elimination of the 1 percent fee granted to
vendors for collection of Pennsylvania's sales tax.
Rendell's plan calls for a decrease in Pennsylvania's sales tax from 6
percent to 4 percent but would subject more goods and services to the tax -- eliminating 74 current exemptions to
that levy. The Governor also wants to close the "Delaware Loophole" through
combined reporting by multistate and multinational firms of their income and
expenses for tax purposes.
The Governor's budget proposal also includes a $1.15 billion (4.1 percent)
increase in spending and projected 3.2 percent increase in revenues in the
upcoming fiscal year.
The Governor's proposed FY 2010-11 General Fund budget includes a $354 million
increase in Basic Education Subsidies for Pennsylvania's public schools for a
proposed total of $5.88 billion. Special Education funding would remain at the
current level of $1.027 billion.
The proposed budget also maintains funding for community colleges,
the State System of Higher Education, and the four State-Related universities at FY 2009-10 levels.
Senate Republicans will continue to carefully monitor revenue collections
over the coming months. As of the end of January, state revenue collections are $374.4 million below
projections for the year-to-date. The Governor is now projecting a total
$525 million shortfall for the current fiscal year, which ends on June 30.
The Senate's review of the budget proposal will formally begin on February 16
with three weeks of hearings conducted by the Senate Appropriations Committee.
The state's current fiscal year ends on June 30.
2009-2010 Budget
State Budget Protects Taxpayers, Reduces Spending
The Legislature approved a 2009-2010 budget package that
reduces state spending and maintains state services and programs without a
broad-based tax increase.
Due to the efforts of Senate Republicans, the budget
provides sustainable funding without a personal income tax increase or
raising the state's sales and use tax.
The budget sets General Fund spending at $27.8 billion –
more than $1.172 billion less than the Governor's initial budget request and
$467 million less than the approved 2008-09 budget total of $28.267 billion.
This marks the first time during the Rendell Administration that spending has
decreased from one budget year to the next.
Basic Education funding is increased by $300 million
and support is restored for several human services programs. School districts
will see an increase of more than $1 billion, or 16 percent, when considering
increases in Basic Education funding and federal funds.
This budget is built on spending that is in line with
revenues. It will position our state to rebound quickly when the national
economy starts to improve.
Independent Budget Office Will Improve Accountability
A provision included in the budget package will
fundamentally reform Pennsylvania’s budgeting process while increasing
transparency and accountability in state government.
The legislation establishes an independent fiscal office
– a non-partisan agency with expertise in financial matters. The fiscal office
would have access to the same agency and department financial information as the
Governor's Budget Office.
One of the key duties of this office will be to set a
binding revenue estimate by June 15 for the coming fiscal year. This would
clearly set the parameters by which the Legislature can consider a spending
plan. Right now, the Governor alone certifies a revenue estimate. The budget
process would be much more transparent and streamlined if everyone went
forward knowing exactly how much money was available.
State agencies and departments will be required to submit
their budget requests to the independent fiscal office at the same time they
submit them to the Office of the Budget. Prior to this new law, Pennsylvania
was one of only eight states where the Legislature does not receive the
agency budget requests.
The fiscal office would also develop performance
measures for state programs and departments and evaluate the performance
reviews of those programs and departments as reported by the Administration.
These provisions would be extremely helpful during tough economic times such as
Pennsylvania experienced this year.
The agency budget requests would enable the Legislature to
see their priorities and the performance evaluations would give the General
Assembly a better idea of the effectiveness of state-supported services and
programs.
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