|
Senate Moves State Spending Control Measures Forward
Includes Automatic Reduction
in state Personal Income Tax
HARRISBURG -- The
Pennsylvania Senate yesterday acted to move forward historic legislation that
would limit state government spending and set aside surpluses in a new fund to
reduce the state Personal Income Tax, according to Senate Majority Leader David
Brightbill (R-48) and Senate Majority Whip Jeffrey Piccola (R-15).
House Bill 2082 -- approved
with bipartisan support on a 31 to 18 vote -- is the House version of Senate
Bill 4, the Taxpayer Fairness Act, which would tie state spending increases to
the rate of inflation. Brightbill and Piccola are the lead sponsors of SB 4.
“This is a big step toward
ending business as usual in putting together a state budget in Pennsylvania,”
said Brightbill. “The concept of spending limits frightens some special
interest groups who would like to see the unlimited growth of state government.
This vote sends the message that we're moving in a different direction. And
Pennsylvania's taxpayers will be the ultimate beneficiaries.”
In addition to restricting
state spending growth, the bills would set aside 35 percent of surplus revenues
in the state's Rainy Day Fund for use in times of economic necessity, and 65
percent in a new Taxpayer Fairness Fund to reduce the state Personal Income
Tax. Current law sets aside 25 percent of surplus revenues into the Rainy Day
Fund.
The Senate amended the bill to
make the surplus-funded one-year PIT reductions automatic.
“This measure makes budgeting
in Pennsylvania more responsible. Without spending constraints, we cannot cut
taxes for working families and job creators,” said Piccola. “Establishing
spending control levels also leaves room for other priorities that have been
promised by our governor -- such as property tax relief and job creation -- and
I urge him to begin fulfilling these commitments by signing this legislation.”
The measure approved yesterday
would restrict state spending growth to the lesser of: the average annual rate
of change of personal income in Pennsylvania for the three preceding years; or
the average rate of inflation plus the average percentage change in state
population for the three preceding years.
Under House Bill 2082, it's
estimated that next year's budget (FY 2006-07) could increase spending by about
3.48 percent. Exceeding the spending limit would require the support of
two-thirds of the General Assembly. The bill includes exceptions for
emergencies or disasters.
Under the legislation:
-
35 percent of surplus
revenues will go to the Rainy Day Fund; 65 percent will go to the new
Taxpayer Fairness Fund, which will be distributed to taxpayers through a
temporary reduction in the Personal Income Tax.
-
When the Rainy Day Fund
reaches 7.5 percent of General Fund Appropriations, all surplus revenues go
to the Taxpayer Fairness Fund.
-
The lower PIT rate will be
in effect Jan. 1 to Dec. 31 of the following calendar year.
The Taxpayer Fairness Act is
part of the Republican Playbook for Progress, a positive agenda for Pennsylvania
unveiled earlier this year by Senate and House GOP leaders. Thirty states have
spending controls, revenue controls or both. Pennsylvania is in the minority of
states which have no controls.
The measure was returned to
the House of Representatives for consideration.
|
