State budget agreement reached?

At an 11 a.m. press conference, leaders from the Senate Republican, House Democratic and Senate Democratic caucuses announced an agreement “in principle” on the 2009-10 state budget.

The agreement calls for the adoption of a $27.945 billion spending plan with no broad-based tax increases. Among the revenue sources included in the plan are a slowdown in the phase-out of the Capital Stock and Franchise Tax, the introduction of table games at Pennsylvania’s casinos and a 25-cent per pack increase in the cigarette tax.

The agreement also taps the state’s Rainy Day Fund and will transfer an existing surplus in the Health Care Provider Retention Account to the General Fund.

No printed draft of the legislation is yet available for analysis but leaders indicated that work will continue through the weekend to draft the legislation necessary to enact the agreement. The plan could be voted on in both the House and the Senate as early as next week. Governor Rendell, however, has indicated concerns with the proposal.

Proposed 2009-10 State Budget

Agreement Summary

(as Provided at Press Conference)

General Points

• This budget includes $27.945 billion in spending.
• There are no broad-based tax increases.
• No programs are moved offline.

Recurring Revenues

• $373.9 million in fiscal year 2009-10 and $550.6 million in fiscal year 2010-11 by delaying the phase-out of the Capitol Stock and Franchise Tax. The CSFT rate would be set at 2.89 mills for 2009 through 2011.
• Businesses would benefit by changes to the Net Operating Loss Carry-Forward and Sales Factor provisions. These changes would cut business taxes by a combined $73.9 million in fiscal year 2009-10 and $92.1 million in 2010-11.
• $200 million in fiscal 2009-10 by adding table games at existing casinos. Table games would generate about $120.7 million in fiscal year 2010-11.
• $170.9 million per year in fiscal 2009-10 and 2010-11 by redirecting the portion of the cigarette tax that currently goes to the Health Care Provider Retention Account (HCPRA) to the General Fund.
• $100 million by leasing more state property for Marcellus Shale drilling.
• $97.2 million in fiscal year 2009-10, and $145.7 million in fiscal year 2010-11, by increasing the cigarette tax by 25-cents per pack.
• $75 million by reducing various tax credit programs.
• $60 million in fiscal year 2009-10 and again in fiscal year 2010-11 by reducing eligibility errors in the Department of Public Welfare.
• $25 million in fiscal year 2009-10 and again in fiscal year 2010-11 by transferring state store profits into the General Fund.
• Increasing the limits and taxing small games of chance would generate up to $100 million in fiscal year 2009-10, and $200 million in fiscal year 2010-11.

One-Time Revenue Sources

• $755 million from the Rainy Day Fund for fiscal 2009-10.
• $708 million from the surplus in the Health Care Provider Retention Account (HCPRA) would be transferred to the General Fund in fiscal year 2009-10.
• $211.4 million in fiscal year 2009-10 by accelerating the due date for sales tax collections.
• $159.1 million in fiscal year 2010-11 by accelerating the due date for personal income tax collections.
• $150 million from the Tobacco Endowment account in fiscal year 2009-10, plus an additional $150 million in fiscal year 2010-11.
• $143 million through a transfer from the Oil & Gas Lease Fund in fiscal year 2009-10, plus an additional $125 million transfer in fiscal year 2010-11.
• $100 million from a tax amnesty program for fiscal year 2009-10.
• $31.9 million from various transfers identified in Senate Bill 850 for fiscal year 2009-10.
• $16.1 million by reducing spending on the tobacco fund cessation and prevention program in fiscal year 2009-10, and again in fiscal year 2010-11.

Items Not in This Plan

• There is no PIT (Personal Income Tax) increase.
• There is no sales tax increase, or elimination of any sales tax exemptions.
• There are no slots or video poker at corner bars and taverns.
• There is no keno.