UPDATE: From all indications, it appears that the House will be back in Harrisburg to its already announced beginning of its Fall Legislative session on September 11th. For more information on the ongoing dialogue here are some recent resources:
I last updated you on the ongoing Pennsylvania budget saga Tuesday, July 25th, as the Senate was poised to return to Harrisburg and complete a revenue package that would address the state’s current $2.2 billion budget gap for the 2017-18 FY which began on July 1st. You’ll recall that the Senate’s return came in the wake of the just-failed effort by House Speaker Mike Turzai to rally his caucus around a zero-tax package.
As the Speaker closed session on Saturday July 22, and spoke to reporters after failing to garner support for his alternative proposal, he challenged his Senate counterparts to send the House their own version of a budget gap-filling revenue package.
On Thursday, the Speaker received that response as the Senate passed a slew of code bills, the most important being the revenue-rich Tax Code bill, which included new or increased taxes on consumer telephone, electric and gas bills, a first-ever Marcellus gas drilling tax, $1.3 billion in securitized borrowing against tobacco settlement dollars, expanded gaming (details of which are yet to be determined) and $200 million in transfers.
Though Senate Republicans leaders lamented the need for new taxes, they saw no other path forward that could both balance the budget and meet the Governor’s approval. In advancing their revenue package, they noted that state spending for the portions of the government which are controllable (as opposed to pension obligations and corrections) are at their lowest levels since 2010.
So now we wait to see what the House will do. There are no immediate plans to return to Harrisburg nor is there any expectation that the lower chamber is preparing to rubber stamp what the Senate has sent it. However, in a House Republican leadership memo following Senate action this week, House members were told to expect a likely return to Harrisburg at some point before the end of August.
Stay tuned – we shall report new updates when they occur. For now, feel free to peruse (below) a run-down of what the Senate revenue package includes.
Natural Gas Production Tax ($100 Million Per Year Anticipated)
The state would impose a new volume tax on natural gas from the Marcellus Shale; the effective tax rate for 2017-18 would be 2 cents per thousand cubic feet.
Borrowing Against Tobacco Settlement Fund ($1.3 Billion)
The state would securitize a portion of the annual revenue it receives from the 1998 multistate tobacco settlement. The infusion of up-front cash in the form of a $1.3 billion loan would be repaid with interest and other costs over 20 years at a total cost of $2 billion.
Natural Gas Service ($300 Million Anticipated)
A new tax on natural gas utility service imposed at 5.7% (a 5% natural gas utility tax was eliminated in 2000).
Electric Service (Revenue TBD)
A tax hike on home electric bills, rising from 5.9% to 6.5%.
Telephone Service (Revenue TBD)
A tax on home and cellular telephone bills, rising from 5% to 6%.
Online Sales (Revenue TBD)
Pennsylvania’s 6 percent sales tax would extend to sales in online marketplaces run by third-party vendors.
Gambling ($200 Million Anticipated)
The Senate’s revenue plan assumes $200 million from expanded casino gambling in Pennsylvania with details yet to be decided or voted upon by the upper chamber.
Transfers ($200 Million)
The transfer of $200 million from the nonprofit Pennsylvania Professional Liability Joint Underwriting Association, created by state law in 2002 to offer medical malpractice insurance.