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As part of
your chamber membership, we issue Legislative
Matters the second and fourth Monday of each month when Congress
and the General Assembly are in session. We hope you will find
the information in Legislative Matters to be useful and
interesting.
Bernie Riley
Vice President
- Government Affairs
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In This
Issue:
STATE NEWS:
Education Budget Signed into
Law
The recently signed into law
2008-09 Education Budget introduces a predictable state funding
formula for the first time in nearly two decades. It increases
funding for basic education by $274 million, or 5.5 percent,
while also continuing to fund successful initiatives that are
benefiting children from early childhood through graduation.
The funding formula will drive additional state resources to
each of Pennsylvania’s 501 school districts, with every district
being guaranteed at least a 3 percent increase in basic
education funding. Larger increases will go to those districts
identified in the General Assembly’s Costing-Out Study as
needing additional resources to aid student achievement.
In November, the General Assembly’s
Costing-Out Report provided a Pennsylvania-specific funding
target for each school district by showing the level of
resources needed to help every student succeed. The budget
signed by the governor begins implementing the legislature’s
findings with the additional $274 million in basic education
funding as the first step toward what Governor Rendell hopes
will be a long term commitment to meeting the adequacy gap in
every school district.
The education budget takes a long overdue approach to school
funding by addressing the adequacy gap in each district, while
also driving money into the neediest districts using a formula
that stresses investments in proven school improvement
strategies.
The state’s additional investments in Pennsylvania’s schools
also will help alleviate the need for local property tax
increases in school districts. As the state’s share of school
funding has dropped in recent decades, local property taxes have
been forced to rise.
Chamber Action:
The week prior to the deal being reached, Chamber staff met with
our Senate delegation in Harrisburg to advocate for the increase
in basic education funding and the distribution formula changes
suggested by the Costing-Out Study.
Our continued advocacy for additional funding will be linked to
the accountability measures that are also recommended in the
study.
[Top of Page]
2008-09
Budget Finalized
Governor Ed
Rendell has signed into law Pennsylvania's 2008-09 General Fund
budget. The $28.26 billion spending plan represents a 3.98
percent increase over last fiscal year's budget.
The new
budget does not include progress on two targeted tax reductions
supported by the unified business community - elimination of the
cap on Net Operating Losses and the adoption of a Single Sales
Factor apportionment formula for the Corporate Net Income tax.
Budget
Highlights:
-
$274
million increase, or 5.5 percent, for basic education; each
district will receive at least an additional 3 percent
-
$350
million for repairs to the Commonwealth's deteriorated
bridges
-
$650
million for alternative energy projects, including $500
million in new borrowing
-
Biodiesel and cellulosic ethanol mandates at the pump
-
75
cent-per-gallon subsidy for Pennsylvania's biodiesel
producers
-
$800
million in borrowing for water and sewer maintenance to be
repaid with gaming revenue
-
$400
million in borrowing for water and sewer repairs, which will
require voter approval
-
$800
million in borrowing for the Redevelopment Assistance
Capital Program
[Top of Page]
Tax
Collection Reform Approved
Senate Bill
1063, legislation that will lead to a new, more efficient local
tax collection system, has now been signed into law.
The
legislation was a direct result of a 2004 report published by
the Department of Community and Economic Development, which
documented the fragmentation, complexity and inefficiency of the
earned income collection system.
The new law
will consolidate Pennsylvania's number of earned income tax
collectors from 560 to 69 -- roughly congruent with counties,
but will not be a function of county government.
According
to the Pennsylvania Economy League, Pennsylvania's fractured and
inefficient system left some $237 million uncollected each year,
which would be enough to hire 3,000 more teachers and 3,000 more
police officers, or lower property taxes.
In
addition, the legislation includes a number of important
improvements:
-
Establishing uniform withholding, remittance, and
distribution requirements.
-
Requiring that employers withhold all local income taxes
imposed on the compensation of their employees and remit
those taxes to only one collector, even if an employer
operates in multiple counties.
-
Instituting a continually updated, comprehensive tax
register, maximum twice-yearly rate changes, a uniform
definition of taxable income and a system of appeals.
-
Strengthening reporting requirements so that each tax dollar
is tracked from the time it is withheld until it is received
by the appropriate taxing jurisdiction.
-
Requiring that the commonwealth issue one set of rules &
regulations that apply to all collectors, taxpayers, and
employers.
-
Requiring that DCED develop uniform forms, notices, reports,
returns, schedules, and codes for school districts,
municipalities, and tax collection districts.
-
Requiring that tax collectors keep a record of all public
monies received and distributed, and submit monthly reports
to each taxing jurisdiction and the tax collection district
that must be reconciled with other records in an annual
audit.
Chamber
Action:
The Chamber
supported the legislation and actively advocated our support to
our elected officials.
[Top of Page]
FEDERAL NEWS:
The Third
Time’s the Charm?
Senate
Democratic leaders are hoping that’s the case when the Senate
votes later this month for the third time on whether to debate
and vote on a stalled tax extenders package. The House May 21
approved the "Renewable Energy and Job Creation Act of 2008”
(H.R. 6049) that includes immediate extensions of a strengthened
R&D tax credit, tax incentives for energy efficiency and
renewable energy, deferral of U.S. tax on active business global
financing income, and look-through rules for payments between
related foreign corporations. In June, Senate Democrats twice
fell short of the 60 votes needed to bring the bill to the
floor.
Source:
National Association of Manufacturers
[Top of Page]
IRS Increases
Mileage Rates through Dec. 31, 2008
On June 23, the
Internal Revenue Service (IRS) announced an increase in the
optional standard mileage rates for the final six months of
2008. Taxpayers may use the optional standard rates to calculate
the deductible costs of operating an automobile for business,
charitable, medical, or moving purposes.
The rate will
increase to 58.5 cents a mile for all business miles driven from
July 1, 2008, through Dec. 31, 2008. This is an increase of
eight (8) cents from the 50.5 cent rate in effect for the first
six months of 2008.
In recognition
of recent gasoline price increases, the IRS made this special
adjustment for the final months of 2008. The IRS normally
updates the mileage rates once a year in the fall for the next
calendar year. The new rates are contained in
Announcement 2008-63 on the optional standard mileage rates.
Source: SBE
Council
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