House Bill 2435
In the Governor’s 2010-11 budget plan, he proposed new revenue measures to help address the significant future fiscal challenges facing the Commonwealth not just this year but in the years to come.
Recently, a bill was introduced that would end special interest tax breaks in order to preserve critical public services like education and health care by raising $370 million in the first year. House Bill 2435 adopts many of the revenue proposals made in the Governor’s budget, but at different levels. It is meant to close corporate tax loopholes, enact a severance tax on natural gas production, assess an excise tax on cigars and smokeless tobacco, and close a sales tax giveaway. The legislation also includes a reduction in the corporate tax rate and other business tax cuts long sought by the business community.
Below is a summary from the Pennsylvania Budget and Policy Center of the main components of the bill:
- Creates a tobacco products tax on cigars, chewing tobacco, snuff, and loose tobacco - HB 2435 proposes to levy an excise tax on other tobacco products at a rate of 30% of the prices paid by retailers. Not only will the tax raise needed revenue, it will also help reduce health care costs by discouraging use of tobacco products. The tobacco products tax is expected to raise $42 million in 2010-11.
- Enacting a severance tax on natural gas drilling - HB 2435 proposes to levy a severance tax on natural gas production at the same rate as neighboring West Virginia. The tax would shift some of the public costs of increased drilling, such as environmental damage, infrastructure wear and tear, and additional public safety needs onto the companies doing the drilling. The severance tax is expected to raise $179 million in 2010-11. This legislation would direct 90% of the tax into the state’s General Fund, with the remainder being distributed to counties and municipalities that host the gas development.
- Closes corporate tax loopholes and lowers the corporate income tax rate - HB 2435 proposes to close a loophole that allows more than 70 percent of Pennsylvania corporations to not pay income taxes by requiring parent companies and their subsidiaries to file tax returns as a single company. This would eliminate the transactions that artificially move profits out of Pennsylvania to a tax-haven state like Delaware. The bill also lowers the corporate net income tax rate from 9.99% to 8.99% and includes two provisions long sought by some corporations: a shift to a single sales factor (where only sales in Pennsylvania are used to determine taxable activity in the state) and allowing unlimited use of net operating losses to reduce current taxable income. Closing corporate tax loopholes is expected to raise $67 million in 2010-11 and could bring in as much as $500 million in new revenue in future years.
- Eliminates the sales tax vendor discount - Currently, retailers that collect sales tax are allowed to keep 1 percent of the take to offset administrative costs. For big-box retailers, like Wal-Mart, Target, and Home Depot, this discount can add up to millions of dollars each year. HB 2435 proposes to end this discount. Eliminating the discount is expected to increase sales tax collections by $74 million in 2010-11.
Last week, in a letter to the City Council President, Nutter outlined a number of cuts that would reduce his budget proposal by $17 million:
- A $5.5 million reduction in the prison budget (which is contingent on a decreasing prison population),
- A $3 million reduction in police overtime (dependent on court reforms),
- The elimination of a $4 million contingency for snow removal,
- Not paying $3.5 million in vehicle leases that are not due until 2012, and
- A $1 million reduction in Council's $16 million budget.
Council is currently working on a proposal calling for a 9 percent increase in property taxes. Other ways to close the gap include not filling job vacancies. In order to deal with future financial crisis, there is also a bill proposed that would require the creation of a rainy day fund. This fund would not be required for this budget year and payments would only begin when the city’s revenue had increased.
If you have questions about the budgetary process in Philadelphia, the Committee of Seventy had put together a series of questions and answers.
Voter Mobilization Training
Learn about how to help homeless and low-income individuals overcome barriers on Election Day, May 18th. Training topics include:
- Voter Protection
- Assistance in the Voting Booth
- ID Issues Impacting Voters
WHERE: Project HOME, 1515 Fairmount Avenue, Philadelphia
To assist on Election Day volunteers must attend this or a previous training.
For the training or to assist on Election Day please RSVP to Jennine Miller at 215-232-7272 or email email@example.com.
Support Adult Basic and Literacy Education
Adult education and family literacy programs are especially important during this recession to ensure that families have the opportunity to gain the education they need to become self-sufficient. Any cuts in funding will only result in even longer waiting lists and less people served.
The Pennsylvania Associate of Continuing Adult Education (PAACE) is asking individuals to write letters to their state legislators to discuss the importance of these programs. The letter discusses taking a balanced approach to the state budget and avoiding further cuts to the non-profit sector, including adult basic and literacy education.
Below is a sample letter from PAACE:
Subject: A Balanced Approach to the Budget
This letter can be put on letterhead or have a personal address.
Dear (Senator or Representative)_________________:
On behalf of the adult basic and family literacy education community in your district, and most especially on behalf of adult learners, I urge you to take a balanced approach to the state budget by raising revenue instead of further cutting jobs and programs in the Commonwealth’s nonprofit sector. Our services support your constituents.
This year, despite increased waiting lists due to 26% cuts in the state adult basic and literacy education budget, adult learners in our agency, ________________ (name of program), have successfully (prepared for the GED, transition into the workforce, increased workplace skills through workforce education, studied English as a second language, etc.). Let me share with you _______________’s (name of learner to highlight) story:
Instead of further cutting funding to adult basic and literacy education, higher education, hospitals, and social services, I urge you to choose from the many options available to increase revenue to prevent further cuts to essential services in 2010-11.
Please support a balanced approach to the budget by taking these measures to ensure that the Commonwealth’s nonprofit sector can continue to serve Pennsylvanians and maintain the overall health and future prosperity of the Commonwealth.
If you would like to visit a literacy program in your district, please contact me at (include email or telephone number).
Other Important Programs and Action Steps:
While the state budget is very tight this year, it is crucial for legislators to hear from their constituents about programs that cannot and should not see more cuts this year. Even programs that are not undergoing large cuts need to be advocated for to ensure that changes are not made to their funding during the budget debates. Below we have highlighted just a few of those programs:
Adult Education and Family Literacy Programs: The greatest predictor of a child's future academic success is the literacy level of the child's mother. Adult education and family literacy programs are especially important during this recession to ensure that families have the opportunity to gain the education they need to become self-sufficient. If you or your clients have been impacted by the need for literacy, please contact your state legislators today and let them know.
State Supplemental Program: Help restore cuts to the State Supplemental Payments for Pennsylvania’s elderly, disabled, and blind. As a result of the 2009-2010 budget, the state supplement has now been cut each month by $5 for a single person and $10 for a couple. If you believe the payments are important. please contact your state legislators and urge them to find ways to restore this cut.
adultBasic: Over 350,000 people are on the waiting list for adultBasic. While those on the waiting list can pay full price for the program until they can access the program, but the cost to buy in has increased 80 percent. Meanwhile, coverage under the Governor’s 2010-2011 budget will not expand beyond 50,000 people. If you or your clients believe that when 12 percent of adults in Pennsylvania are without health care, programs that assist them are essential and need to be expanded, please contact your state legislators today and let them know.
Child Care Subsidy: The subsidy allows parents to afford to work by assisting them with the expense of child care. If you or your clients have been impacted by the need for child care, please contact your state legislators today and let them know.