THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY PERRY, AUMENT, BARRAR, BOYD, COX, CREIGHTON, CUTLER, EVERETT, FLECK, GABLER, GEIST, GILLEN, GROVE, HESS, HICKERNELL, HUTCHINSON, KAUFFMAN, METCALFE, MULLERY, PICKETT, ROCK, SCHRODER, SWANGER, TALLMAN, TRUITT, VULAKOVICH AND DENLINGER, MARCH 8, 2011

REFERRED TO COMMITTEE ON FINANCE, MARCH 8, 2011  

AN ACT

Establishing spending limitations on the Commonwealth; providing

for the disposition of surplus funds; establishing the

Taxpayer Protection Fund; and repealing provisions of The

Fiscal Code relating to the funding of a stabilization

reserve.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Short title.

This act shall be known and may be cited as the Taxpayer

Protection Act.

Section 2.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Appropriation limit."  The total of the amounts approved as

executive authorizations by the Governor plus the total amounts

of preferred and nonpreferred appropriations made by the General

Assembly from the General Fund during the fiscal year

immediately prior to the budget year under consideration,

adjusted by the lesser of:

(1)  the average percentage change in personal income in

this Commonwealth for the three preceding calendar years as

reported by the Federal Government or as determined pursuant

to an act of the General Assembly; or

(2)  the average percentage change in inflation for the

three preceding calendar years plus the average percentage

change in the State population for the three preceding years

as reported by the annual Federal census estimates, such

number being adjusted every decade to match the official

Federal census.

"Average percentage change in inflation."  The average of the

percentage change for each of the three calendar years, from

October to October, immediately preceding the calendar year in

which a given executive budget is submitted by the Governor, in

the Consumer Price Index for All Urban Consumers (CPI-U), not

seasonally adjusted, all items index or its successor index, as

officially reported by the United States Department of Labor,

Bureau of Labor Statistics.

"Average percentage change in personal income."  The average

of the percentage change in personal income estimates for this

Commonwealth, from second calendar quarter to second calendar

quarter, for each of the three calendar years immediately

preceding the calendar year in which a given executive budget is

submitted by the Governor, as reported by the United States

Department of Commerce, Bureau of Economic Analysis, SQ4

quarterly income summary for this Commonwealth or its successor

index or as determined pursuant to an act of the General

Assembly.

"Average percentage change in State population."  The average

of the percentage change in State population for each of the

three most recent years immediately preceding the calendar year

in which a given executive budget is submitted by the Governor,

as reported by the United States Census Bureau for July 1 of

each year.

"Mandated service."  Any program or service administered by a

political subdivision of the Commonwealth as a result of being

required to provide that program or service by State law.

"Total spending by the Commonwealth."  All General Fund

appropriations made by the General Assembly and all

appropriations from a constitutionally or statutorily

established fund created after the effective date of this

section.

Section 3.  Spending limitations.

(a)  General rule.--Total spending by the Commonwealth in any

fiscal year shall not exceed the spending appropriation limit as

set forth in this act.

(b)  Mandated expenses for political subdivisions.--The

State's limit under section 3(a) shall be reduced by the amount

of the reduction in State appropriations to a political

subdivision for administration of a mandated service, without an

equal or greater reduction in State-mandated expenses for said

local government or a repeal of the mandate to provide a program

or service.

(c)  Exceptions.--The appropriation limit of the Commonwealth

may be exceeded in any fiscal year for the following:

(1)  To respond to a presidential or gubernatorial

declaration of emergency if the General Assembly approves by

two-thirds affirmative vote of the members elected to each

house of the General Assembly. In no case shall the excess

spending authorized by exceeding the appropriation limit in

this manner be included in the computation base of the

appropriation limit for any subsequent fiscal year.

(2)  In other situations if the Governor so requests, in

writing, 30 days prior to the constitutional deadline for

adoption of a budget for the next fiscal year, and

simultaneously publishes that written notice in a newspaper

of general circulation in each county and senatorial and

representative district in which such newspapers shall be

published, and the General Assembly subsequently approves by

an affirmative vote of two-thirds of the members elected to

each house of the General Assembly.

Section 4.  Disposition of surplus funds.

(a)  Transfer of surplus.--

(1)  Except as provided under paragraph (2), for any

fiscal year in which the Governor certifies that a surplus

exists, 25% of that surplus shall be deposited by the end of

the next succeeding quarter into the Budget Stabilization

Reserve Fund established in section 1701-A of the act of

April 9, 1929 (P.L.343, No.176), known as The Fiscal Code,

and 75% of that surplus shall be deposited by the end of the

next succeeding quarter into the Taxpayer Protection Fund

which is hereby established in the State Treasury.

(2)  For any fiscal year in which the State Treasurer

certifies that the balance in the Budget Stabilization

Reserve Fund equals or exceeds 5% of the total of all General

Fund appropriations, 100% of the surplus certified by the

Governor under paragraph (1) shall be deposited into the

Taxpayer Protection Fund.

(b)  Distribution.--

(1)  Subject to the provisions of subsection (c), the

moneys in the Taxpayer Protection Fund shall be distributed

to taxpayers who have liability for the tax imposed under

Article III of the act of March 4, 1971 (P.L.6, No.2), known

as the Tax Reform Code of 1971, through a reduction in the

rate of such tax, which reduction shall be established by an

act of the General Assembly to be effective for January 1

through December 31 of the subsequent calendar year.

(2)  The Secretary of the Budget, in conjunction with the

Secretary of Revenue, shall certify the rate reduction for

the tax imposed under Article III of the Tax Reform Code of

1971, for the upcoming calendar year no later than September

30. The new rate shall be published in the Pennsylvania

Bulletin, posted on the State's publicly accessible Internet

website and reported to the chairman and minority chairman of

the Appropriations Committee of the Senate and the chairman

and minority chairman of the Appropriations Committee of the

House of Representatives.

(c)  Accumulation.--No moneys shall be distributed from the

Taxpayer Protection Fund pursuant to subsection (b) until such

time as the Secretary of the Budget certifies that the moneys

deposited therein are sufficient to provide a reduction of at

least 0.01% in the tax rate of taxation for the tax imposed

under Article III of the Tax Reform Code of 1971.

(d)  Appropriated funds.--The General Assembly may at any

time provide additional amounts from any funds available to the

Commonwealth as an appropriation to the Budget Stabilization

Reserve Fund.

Section 5.  Repeals.

Repeals are as follows:

(1)  The General Assembly declares that the repeal under

paragraph (2) is necessary to effectuate the provisions of

this act.

(2)  Section 1702-A of the act of April 9, 1929 (P.L.343,

No.176), known as The Fiscal Code, is repealed.

Section 6.  Effective date.

This act shall take effect immediately.