Monday, July 18, 2016

On June 30th, the Senate voted 47 to 3 and the House voted 144 to 54 to approve the final Budget Bill, SB1073.  The total for the overall spending plan for SB1073 is $31.62 billion, which is actually an increase following a move by the Senate to transfer $95 million a Commonwealth Financing Authority, a bonding authority. As reported by the Morning Call, the final budget includes:

·         An increase of Education Funding by 6 percent, or $665.2 million, for a total of $11.7 billion. Nearly half of that increase will go to cover rising pension costs for public school employees, while an additional $200 million from the increase will go to the state's per-pupil subsidy, the Department of Education's largest expense.  T
·         $15 million for Opioid Addiction Funding. 
·         13 percent increase to $313 million for the Legislature. 
·         9 percent increase to $184 million for the Governor’s Office.
·         Plus, many of the Administration’s Agencies are also seeing a funding increase

However, the Governor let the legislation become law without his signature until the legislature passed a revenue package to fund SB1073. This was done via a rare Conference Committee on July 13th.  The Conference Committee report was approved in the Senate by a vote 28-22 and 116-75 in the House.

Revenue to balance the budget includes:
  •  $55.5 million in removing the sales tax vendor discount 
  • $431 million in increased cigarette taxes and $48.2 million in taxes levied on smokeless tobacco, along with $13.3 million in an e-cigarette tax, and $3.8 million in taxes from roll-your-own cigarettes.
  •  $46.9 million in subjecting digital downloads and streaming to the sales and use tax
  • $23 million in changes to the Bank Shares Tax
  • $15.8 million by expanding the personal income tax to include prizes won in Pennsylvania Lottery cash prizes
  • $28.5 million in a transfer from the Tobacco Settlement Fund
  • $20 million assumed from the Volkswagen settlement, and $37 million in balance transfers

Revenue also being used to balance the budget comes in the form of $149 million from liquor modernization and expanded gambling to include, $16.8 million from a two percent tax increase on table games, $100 million in a promised gaming expansion proposal, $50 million in a casino slots license fee in Philadelphia, and $24.8 million in tables games license fees.

As reported by Pennsylvania Legislative Services, the Fiscal Code also requires a $200 million loan to the General Fund from a surplus in the Pennsylvania Professional Liability Joint Underwriters Association, a non-profit created under the MCare law.

While the Chamber was disappointed to see sales tax vendor discount removed and the new tax on digital downloads, we thank the legislature to responding to our advocacy to not install a broad based tax increase or increase/expansion of the sales tax.