The General Assembly sent Governor Tom Wolf a $32 billion spending plan for the 2017-18 State Budget on Friday, June 30, but details on how lawmakers intended on funding that spending plan have only recently begun to take a definitive form. The projected budget deficit continues to hover near $2.2 billion, and negotiations have largely focused on filling the gap with funds borrowed from the Tobacco Settlement Fund, a transfer from the Workers’ Compensation Security Fund, and reforms in the liquor and gaming industries.
After weeks of closed door negotiations, the Senate passed a funding proposal that raises an additional $1.8 billion in revenues, mainly through a significant amount of borrowing, as expected. However, the package also includes several surprising tax expansions and increases and regulation changes. The House previously passed a proposal that did not have any tax increases, instead finding additional revenues to fill the budget deficit through liquor and gaming reforms, and it is unclear what House members will decide to do in regard to the Senate’s proposal. The full House has not yet returned to session to consider the package, although House leaders have said they are reviewing the details and that House members should be prepared to return to Harrisburg.
Below are some of the highlights from the Senate’s revenue proposal:
• The package would raise revenues by an estimated $1.8 billion.
• $571.5 million comes from tax increases and expansions. The state intends on borrowing $1.3 billion, and transferring an additional $200 million from the Workers’ Compensation Security and the Volkswagen Settlement Funds.
• Gross Receipts Taxes account for an additional $445.9 million in generated revenue.
• Sales taxes are expanded to include online purchases from third party vendors who do not already remit sales taxes.
• Consumer fireworks are legalized, and assessed a total 18% sales tax.
• Net Operating Loss cap is changed, but only if the courts nullify the current NOL provisions in the Nextel NOL case. Cap would be set at 30% taxable income in 2018, and 40% taxable income in 2019.
• A number of fees have been imposed or increased, including fees on:
- Copies of death records
- Child welfare background checks
- Criminal background checks
- Applications by higher education institutions
to operate in PA
- Inspections/permits from the PA Department
of Labor and Industry
- Municipal recycling fee sunset date extended
- Surcharge on traffic citations as collected by
the Unified Judicial System
• Noticeably missing from the package:
- iLottery/gaming reforms
- Liquor reforms
- eCigarette and vape tax repeal
- Delaware loophole reforms
- Sales tax increase and/or expansions on various commercial services
- SNAP distribution schedule expansion
- Merger of state departments and agencies
- Minimum wage increase
- Personal income tax increase
- PA Department of Revenue proposal to utilize the Financial Institution Data Match (FIDM) system to enhance delinquent tax collections
- PA Department of Revenue proposal to utilize the credit card levies to enhance delinquent tax collections on businesses
- Property tax elimination reform
For more detailed information on each bill in the Senate’s revenue proposal, please refer to the table below. PFMA will continue to advocate on behalf of members regarding this budget proposal. Please direct any questions or concerns to Alex Baloga or Meagan Thorpe.
After weeks of closed door negotiations, the Senate passed a funding proposal that raises an additional $1.8 billion in revenues, mainly through a significant amount of borrowing, as expected. However, the package also includes several surprising tax expansions and increases and regulation changes. The House previously passed a proposal that did not have any tax increases, instead finding additional revenues to fill the budget deficit through liquor and gaming reforms, and it is unclear what House members will decide to do in regard to the Senate’s proposal. The full House has not yet returned to session to consider the package, although House leaders have said they are reviewing the details and that House members should be prepared to return to Harrisburg.
Below are some of the highlights from the Senate’s revenue proposal:
• The package would raise revenues by an estimated $1.8 billion.
• $571.5 million comes from tax increases and expansions. The state intends on borrowing $1.3 billion, and transferring an additional $200 million from the Workers’ Compensation Security and the Volkswagen Settlement Funds.
• Gross Receipts Taxes account for an additional $445.9 million in generated revenue.
• Sales taxes are expanded to include online purchases from third party vendors who do not already remit sales taxes.
• Consumer fireworks are legalized, and assessed a total 18% sales tax.
• Net Operating Loss cap is changed, but only if the courts nullify the current NOL provisions in the Nextel NOL case. Cap would be set at 30% taxable income in 2018, and 40% taxable income in 2019.
• A number of fees have been imposed or increased, including fees on:
- Copies of death records
- Child welfare background checks
- Criminal background checks
- Applications by higher education institutions
to operate in PA
- Inspections/permits from the PA Department
of Labor and Industry
- Municipal recycling fee sunset date extended
- Surcharge on traffic citations as collected by
the Unified Judicial System
• Noticeably missing from the package:
- iLottery/gaming reforms
- Liquor reforms
- eCigarette and vape tax repeal
- Delaware loophole reforms
- Sales tax increase and/or expansions on various commercial services
- SNAP distribution schedule expansion
- Merger of state departments and agencies
- Minimum wage increase
- Personal income tax increase
- PA Department of Revenue proposal to utilize the Financial Institution Data Match (FIDM) system to enhance delinquent tax collections
- PA Department of Revenue proposal to utilize the credit card levies to enhance delinquent tax collections on businesses
- Property tax elimination reform
For more detailed information on each bill in the Senate’s revenue proposal, please refer to the table below. PFMA will continue to advocate on behalf of members regarding this budget proposal. Please direct any questions or concerns to Alex Baloga or Meagan Thorpe.
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