Tax Relief

The Senate approved significant reforms to the Emergency and Municipal Services Tax, with legislation that has been signed into law.

The Senate concurred with House amendments to Senate Bill 218 (now Act 7 of 2007), sponsored by Senate Finance Committee Chairman Pat Browne (R-Lehigh).

The new law ends the lump-sum maximum payment of $52 and set specific restrictions on how taxing entities may use revenues raised by the levy. It also requires that the tax be withheld on a payroll-period basis with a maximum deduction of $1 per week. Employers will be required to send collections on a quarterly basis. Those earning $12,000 or less per year are exempted from paying the tax.

Senate Bill 218 renames the tax as the more accurate “Local Services Tax” and requires that a minimum of 25 percent of the total revenue collected must go to support emergency services including police, fire and emergency medical services operations. The remaining revenues could be used for road construction and maintenance, and property tax relief.

The Senate Finance Committee, chaired by Sen. Pat Browne (R-Lehigh), approved the Taxpayer Protection Act bill and Constitutional Amendment, designed to rein in state government spending.

Senate Bill 7, sponsored by Sen. Bob Regola (R-Westmoreland), is a proposed amendment to the Pennsylvania State Constitution that would limit state spending to the average inflation rate plus the average percentage change in state population over the three preceding years. Senate Bill 707, sponsored by Sen. Mike Folmer (R-Lebanon), would provide the same limitation, but not as a Constitutional Amendment.

To prevent the state from pushing spending requirements onto local taxpayers, the measures were amended to include a provision by Sen. John Eichelberger (R-Blair) stating that the spending limit would be decreased when funds are cut to a mandated service.

In addition to the spending limits in the Taxpayer Protection Act, the proposal also sets realistic restrictions on the use of any unanticipated revenues received by the Commonwealth. Specifically, 75 percent of any revenues exceeding the spending limits imposed by the bill would be returned to taxpayers. The remaining 25 percent would go directly into the Rainy Day Fund to help address unanticipated revenue shortfalls.

The Senate Banking and Insurance Committee, chaired by Sen. Don White (R-Indiana), and the Senate Finance Committee, chaired by Sen. Pat Browne (R-Lehigh), held a joint public hearing on the legality and practicality of Gov. Rendell's proposed tax on employers to support his health care plan.

The committees heard testimony from a national expert, who said a recent court decision involving a mandated health benefits program in Maryland means "an act of Congress" would be needed before Gov. Rendell's proposal could be enacted. In January 2007, the U.S. Court of Appeals for the Fourth Circuit affirmed a decision that invalidated Maryland's program citing that it clashed with the Employee Retirement Income Security Act of 1974.

Todd Anderson, Outside General Counsel for Retail Industry Leaders Association, said the Fourth Circuit Court's decision would directly apply to Governor Rendell's tax proposal.

2010 Budget Hearings Highlights and Summaries

Senators Pileggi, Mellow Name Members to Cost Study Commission; First Meeting on Feb. 19
Senator Majority Leader Dominic Pileggi (R-9) and Senate Democratic Leader Robert Mellow (D-22) announced the names of members appointed to the Government Management and Cost Study Commission created by Senate Resolution 161. 

Amended Municipal Pension Bill Protects Workers, Taxpayers
In 1984, Pennsylvania enacted Act 205, which is appropriately and most clearly summarized in its name "The Municipal Pension Plan Funding Standards Act."  The reason for this effort was to ensure that pension systems across Pennsylvania maintained fiscal stability to protect municipal employees in their personal financial security and the public that they serve.

Senate Approves Municipal Pension Relief Measure
The Senate approved legislation designed to aid Pennsylvania's ailing municipal pension plans, according to Senator Pat Browne (R-16), author of an amendment that expanded the bill to include communities across the Commonwealth.

Finance Committee Approves Municipal Pension Relief Measure
The Senate Finance Committee amended and approved legislation designed to help Philadelphia address its fiscal crisis and provide relief from spiking public pension liabilities to communities across the Commonwealth, according to Committee Chairman Senator Pat Browne (R-16).
- Hearing
- Senator Browne
- Senator Orie

Finance Committee Approves Surviving Spouse Tax Bill
The Senate Finance Committee approved legislation that will allow a surviving spouse to file a joint state income tax return, according to Committee Chairman Senator Pat Browne (R-16).

Eichelberger To Introduce Alternative County-Wide Tax Reform Plan
Senator John H. Eichelberger, Jr. (R-Blair) announced his intention to introduce an alternative to the local sales tax plan proposed by the Governor.  Under his proposed "Balanced Options-Local Decisions" Act, the voters could also select a new local tax structure which could include a sales or income tax at the county level.

Pippy Chairs Meeting on Impact of Tax-Exempt Property on Municipalities
Harrisburg – The Legislative Budget and Finance Committee, chaired by Sen. John Pippy (R-37), gathered experts to discuss the impact tax-exempt properties have on the fiscal status of Pennsylvania municipalities.

Argall Advocates Property Tax Referendum
HARRISBURG – State Senator David G. Argall (R-29) announced a measure that would give Pennsylvania voters a stronger voice in the elimination of the state's outdated school property tax system.

Finance Committee OKs Expanded Check-Off Box Option
The Senate Finance Committee approved legislation allowing charitable contributions to be added to income tax remittance payments, according to Committee Chairman Senator Pat Browne (R-16).

Senate Approves Transfer of Funds to Ease Budget Deficit
The state Senate approved legislation sponsored by Sen. Mary Jo White (R-21) to transfer much-needed revenue into the state's General Fund budget, helping to close a budget deficit without increasing taxes on working Pennsylvanians.

Senate Republican Leaders Seek to Set Core Guidelines For Determining How Federal Stimulus Funds are Spent
Senate Republican leaders announced their sponsorship of a resolution outlining core principles that the Senate will follow when determining how federal stimulus money will be spent in Pennsylvania.

Senator Brubaker Introduces Stimulus Oversight Legislation
Senator Mike Brubaker (R-36) introduced legislation that would provide transparency and oversight of all federal stimulus dollars spent in Pennsylvania.

Committee Approves Taxpayer Transparency Act
The Senate Finance Committee approved the Taxpayer Transparency Act bill and a resolution calling for a study of the impact of state business tax credit programs on Pennsylvania’s economy, job market and local tax revenues, according to Committee Chairman Senator Pat Browne (R-16).

Vance Proposes Legislation to Place Moratorium on Film Tax Credit Program
In the face of the Commonwealth's current fiscal woes, Sen. Pat Vance (R-Cumberland/York) has introduced legislation to suspend Pennsylvania's $75 million Film Production Tax Credit program.

Scarnati Legislation Would Return Funds from Legislative Accounts
Senate President Pro Tempore Joe Scarnati (R-Jefferson) is preparing to introduce legislation that would transfer a significant portion of surplus funds from legislative accounts to the General Fund.

Alloway Introduces Legislation to Phase Out 'Death Tax'
Senator Richard Alloway II (R-33) introduced legislation that would completely phase out Pennsylvania's inheritance tax by 2017.