Adjust Text Size
October 6, 2009

Senator Mike Waugh
E-News Update

In this Edition:

• Hi Everyone!
• State Budget Update
• Budget Agreement Highlights
• September Revenue Numbers
• New H1N1 Flu Web Site
• Fire and Ambulance Grants
• 2009 York County Farm Tour
• Agritourism Resource Guide
• DEP Environmental Education Grants

Hi Everyone!

As is tradition, October at the Capitol is marked by the flow of pink water in the fountain outside of the East Wing to recognize Breast Cancer Awareness Month.  This year is no different, but while the fountain runs pink, the legislature continues to debate a spending plan for fiscal year 2009-2010.  Now into the fourth month without a budget, I wanted to provide you with an update on where we are in the process. 

Continue reading to learn more about a bi-partisan budget agreement, as well as other issues that may be of interest.  As always, please let me know if you would like additional information on any of the topics below or other state-related matters. 

State Budget Update

After months of debate and numerous proposals, today the Senate approved Senate Bill 1085, a new bi-partisan budget agreement that proposes to spend $27.835 billion during fiscal year 2009-2010.   

For the first time in recent history, this figure represents a decrease in spending from the previous year.  Additionally, this figure represents a $1 billion decrease from Governor Rendell’s original budget request of $28.972 billion. In order to achieve this spending level in a year in which we faced a $3.25 billion revenue shortfall, a compromise on the issue of revenue increases was necessary, resulting in alterations to Pennsylvania’s current tax structure.  However, previous proposals such as a tax on small games of chance and tickets to arts and cultural events were not included in the revenue plan approved in the Senate today. 

This Senate-approved proposal meets the basic goals set forth from the beginning of this debate by spending less than last year, preventing broad-based tax increases, and by ensuring sustainability this year and next.  It is important to keep in mind that like previous proposals the final details could still change; nevertheless, I wanted to provide you with some highlights of the Senate-approved proposal, which you will find below.   

Budget Agreement Highlights

Total Spending: $27.835 billion 

Revenue Package:
   -  No broad-based tax increases to the personal income tax or sales tax
   -  Tax Proposals:

• Cigarettes – An additional $0.25 per pack, raising the tax to $1.60 per pack
• Cigarillos/"Little Cigars" – A new tax of $1.60 per pack of 20
• Capital Stock and Franchise Tax – Originally on the path to being phased out, the CSFT would revert to the 2008 level of 2.89 mills, up from the current 1.89 mills.  (See below for additional information.)
• Tax Amnesty- A 60-day tax amnesty program would allow taxpayers to avoid penalties and half the interest on delinquent taxes as of June 30, 2009.   

Business Tax Changes
Several changes to the business tax structure have been proposed under the bi-partisan budget agreement, including a temporary suspension of the previously-approved phase-out of the Capital Stock and Franchise Tax (CSFT). 

Under the plan, the CSFT would be frozen at the 2008 level of 2.89 mills for three years beginning retroactively to January 1, 2009.  Revenue projections are estimated at $374 million for the current fiscal year and $550 million next fiscal year.  The planned phase-out of the tax would resume then in 2012.

Two other business tax proposals under the agreement would result in an estimated collective savings for businesses of $75 million this year alone. 

First, the cap on Net Operating Loss Carry-Forwards would be increased from the current $3 million or 12.5% of taxable income, whichever is greater, to $3 million or 15% in 2009 and $3 million or 20% in 2010.  Second, the formula for calculating a business’s Corporate Net Income Tax (CNIT) would go from 70% sales, 15% payroll, and 15% property to 85% sales, 7.5% payroll, and 7.5% property in 2009 and to 90% sales, 5% payroll, and 5% property in 2010 – the ultimate goal being a sales-only basis for the CNIT. 

Line Items:

• Agriculture: The Department would be appropriated an additional $8.03 million over Senate Bill 850 and includes $600,000 for Crop Insurance and $2 million for PA Fairs.
• Basic Education: A $300 million increase would be provided through a combination of state funds and federal stimulus dollars.
• Child Care Services: An additional $11.957 million over SB 850 would result in a total appropriation of $171.7 million.
• Libraries: With a $23 million increase over SB 850, public libraries would be appropriated $60 million.
• Pre-K Counts and Head Start: Funding would be maintained at last year’s levels of $86.4 million and $39.48 million, respectively.

Click here to view a full list of budget line items contained in SB 1085.
Please note: This is a scanned document, and therefore, the “find” tool may not work.  Be sure to scroll through the document to find the line item you are looking for.

Video and Audio Clips
Click below to watch or listen to budget-related video and audio clips: 

10/6/09 - Senate Appropriations Committee Chairman Jake Corman (R-34) remarks on a budget package approved today by the Senate.

10/5/09 - The Senate Republicans announce that they will move quickly to send  a complete budget package to the House to expedite passage of a spending plan.

10/1/09 - Senate Republican leaders discuss the need for House action on a state budget agreement.

September Revenue Numbers

September Revenue Total: $2.1 billion; $118.6 million or 5.5% less than expected

• Sales-tax: $633.4 million; $38.8 million below estimates

• Income-tax: $835.4 million; $69.5 million below estimates  
• Corporation tax: $409.5 million; $5.6 million above estimates

First Quarter Total: $5.3 billion; $140.6 million or 2.6% less than expected.