SENATE AMENDED

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY BELFANTI, GERGELY, GOODMAN, MENSCH, BRENNAN, SIPTROTH, HORNAMAN, CALTAGIRONE, PASHINSKI, DeLUCA, GEORGE, HALUSKA, GRUCELA, FRANKEL, MURPHY, KORTZ, FABRIZIO, CARROLL, K. SMITH, MAHONEY, MURT, MELIO AND YOUNGBLOOD, JUNE 5, 2009

SENATOR TOMLINSON, APPROPRIATIONS, IN SENATE, RE-REPORTED AS AMENDED, OCTOBER 8, 2009   

AN ACT

Amending the act of April 9, 1929 (P.L.343, No.176), entitled,

as amended, "An act relating to the finances of the State

government; providing for the settlement, assessment,

collection, and lien of taxes, bonus, and all other accounts

due the Commonwealth, the collection and recovery of fees and

other money or property due or belonging to the Commonwealth,

or any agency thereof, including escheated property and the

proceeds of its sale, the custody and disbursement or other

disposition of funds and securities belonging to or in the

possession of the Commonwealth, and the settlement of claims

against the Commonwealth, the resettlement of accounts and

appeals to the courts, refunds of moneys erroneously paid to

the Commonwealth, auditing the accounts of the Commonwealth

and all agencies thereof, of all public officers collecting

moneys payable to the Commonwealth, or any agency thereof,

and all receipts of appropriations from the Commonwealth,

authorizing the Commonwealth to issue tax anticipation notes

to defray current expenses, implementing the provisions of

section 7(a) of Article VIII of the Constitution of

Pennsylvania authorizing and restricting the incurring of

certain debt and imposing penalties; affecting every

department, board, commission, and officer of the State

government, every political subdivision of the State, and

certain officers of such subdivisions, every person,

association, and corporation required to pay, assess, or

collect taxes, or to make returns or reports under the laws

imposing taxes for State purposes, or to pay license fees or

other moneys to the Commonwealth, or any agency thereof,

every State depository and every debtor or creditor of the

Commonwealth," providing for method of filing; further

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providing for the definition of "cigarettes"; providing for

the definition of "little cigars"; establishing the

independent fiscal office; further providing for notice and

publication of lists of property subject to custody and

control of the Commonwealth; providing for borrowing for

capital facilities and for oil and gas wells; further

providing for the State Workers' Insurance Board and for 

sunset provisions relating to State Workers' Insurance Fund

investment authority; providing for Pennsylvania Gaming

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Economic Development and Tourism Fund and for Water and Sewer

System Assistance Bond Fund; further providing for Department

of Corrections, for Department of Education, for Department

of Environmental Protection, for Pennsylvania State Police

and for Pennsylvania Emergency Management Agency; providing

for 2009-2010 budget implementation and for 2009-2010

restrictions on appropriations for funds and accounts;

abolishing the Board of Trustees of the Scranton State School

for the Deaf; and making related repeals.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Sections 1731-A and 1732-A of the act of April 9,

<--

1929 (P.L.343, No.176), known as The Fiscal Code, added July 7,

2005 (P.L.174, No.41), are reenacted and amended to read:

Section 1.  The act of April 9, 1929 (P.L.343, No.176), known

<--

as The Fiscal Code, is amended by adding a section to read:

Section 10.  Method of Filing.--(a)  The Department of

Revenue may require any return, report or other document

required to be filed for a tax administered by the department

prepared by a third party who submits fifty or more returns per

year to be filed by any method prescribed by the department

including by telephonic, electronic or other method. Notice of

the method of filing shall be published in the Pennsylvania

Bulletin and on the Department of Revenue's Internet website at

least sixty days prior to the due date of the return, report or

other document required to be filed by telephonic, electronic or

other method. The notice shall refer to this section.

(b)  Failure to file a return, report or other document by

the method required under subsection (a) shall subject the tax

preparer to a penalty of one percent of the tax due on the

return, report or other document up to a maximum of five hundred

dollars ($500), but not less than ten dollars ($10). This

penalty shall be assessed and collected in the manner provided

by the act of March 4, 1971 (P.L.6, No.2), known as the "Tax

Reform Code of 1971." This penalty shall be in addition to any

civil penalty imposed in the applicable article of the "Tax

Reform Code of 1971" for failure to file a return, report or

other document. The criminal penalty for failure to file a

return, report or other document by the method required under

subsection (a) shall be the same as the criminal penalty for

failure to file a return, report or other document under the

applicable article of the "Tax Reform Code of 1971."

(c)  (1)  The Department of Revenue may waive the requirement

to file by the method required under subsection (a) when the

department determines that any of the following apply:

(i)  The prescribed filing method causes an undue hardship.

(ii)  The preparer or taxpayer requests a waiver in writing

that clearly states why the filing method causes an undue

hardship.

(2)  In determining whether filing by the method required

under subsection (a) causes an undue hardship, the Department of

Revenue may consider unusual circumstances that may prevent the

person from filing by the prescribed method or any other factor

that the department determines is relevant.

Section 1.1.  The definition of "cigarettes" in section 202-A

of the act, added July 2, 1993 (P.L.250, No.46), is amended and

the section is amended by adding a definition to read:

Section 202-A.  Definitions.--As used in this article--

* * *

"Cigarettes" shall mean and include any roll for smoking made

wholly or in part of tobacco, irrespective of size or shape, and

whether or not such tobacco is flavored, adulterated or mixed

with any other ingredient, the wrapper or cover of which is made

of paper or any other substance or material, excepting tobacco,

and shall not include cigars. For purposes of licensing under

this article only, the term shall include little cigars.

* * *

"Little cigars" shall mean any roll for smoking that weighs

not more than four pounds per thousand, where the wrapper or

cover is made of natural leaf tobacco or of any substance

containing tobacco.

* * *

Section 1.2.  The act is amended by adding an article to

read:

ARTICLE V-A

INDEPENDENT FISCAL OFFICE

Section 501-A.  Short title.

This article relates to independence in fiscal matters.

Section 502-A.  Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Baseline budget."  A draft budget using current dollar

values that projects current year levels of budget authority,

outlays and revenues and the deficit or surplus into the new

budget year and out years on the basis of current laws and

policies.

"Committee."  The Independent Fiscal Office Selection

Committee.

"Commonwealth agency."  Any office, department, authority,

board, multistate agency or commission of the executive branch.

The term includes:

(1)  The Office of the Governor.

(2)  The Office of Attorney General, the Department of

the Auditor General and the Treasury Department.

(3)  An independent agency, as defined in the act of

February 14, 2008 (P.L.6, No.3), known as the Right-to-Know

Law.

(4)  A State-affiliated entity, as defined in the Right-

to-Know Law.

(5)  The General Assembly.

(6)  The Judiciary.

"Director."  The director of the Independent Fiscal Office.

"Office."  The Independent Fiscal Office established in

section 503-A.

Section 503-A.  Office established.

There is established a nonpartisan Independent Fiscal Office

as an independent agency.

Section 504-A.  Duties of office.

The office shall:

(1)  Prepare revenue estimates to include Federal funds,

State revenues and funds from other resources, including any

projected revenue surplus or deficit for a given fiscal year,

as provided under section 505-A.

(2)  By January 1, provide a baseline budget that

includes levels of spending necessary to retain the current

program and statutory requirements.

(3)  Provide an analysis of the executive budget,

including budgetary projections, economic outlook, economic

impact and an analysis of all related tax and revenue

proposals. The budget analysis may include performance

recommendations to secure greater efficiency and economy.

(4)  Develop and use econometric models to annually

forecast State revenues and update the models. The office

shall make the equations of a model and any historic

databases related to the model available to the

Appropriations Committee of the Senate, the Appropriations

Committee of the House of Representatives, the Majority

Leader and Minority Leader of the Senate and the Majority

Leader and Minority Leader of the House of Representatives.

(5)  By November 15 of each year, provide an assessment

of the State's current fiscal condition and a projection of

what the fiscal condition will be during the next five years.

The assessment shall take into account the state of the

economy, demographics, revenues and expenditures.

(6)  Monitor State taxes and other receipts.

(7)  Develop performance measures for executive-level

programs and departments and evaluate performance measures

and results as promulgated and reported by executive-level

departments. Performance measurements shall be outcomes-based

and include activity cost analysis, measures of status

improvement of recipient populations, economic outcomes and

performance benchmarks against similar State programs.

(8)  Establish an Internet website.

Section 505-A.  Revenue estimates.

(a)  Initial revenue estimate.--By the second week of

February, the office shall submit to the General Assembly an

initial revenue estimate for the next fiscal year.

(b)  Official revenue estimate.--

(1)  By June 15 of each year, the office shall submit to

the General Assembly an official final binding revenue

estimate for the next fiscal year. If the General

Appropriation Act is not enacted by July 1, the office shall

prepare a revised revenue estimate by the 15th of each

succeeding month until such time as the General Appropriation

Act is enacted. The revised revenue estimate prepared

immediately preceding enactment shall be binding.

(2)  The revenue estimate submitted under this section

shall establish the maximum amount of tax revenue which may

be considered for the General Appropriation Act for the

ensuing fiscal year. No changes in the revenue estimates

shall be made by the office after submission under paragraph

(1) unless significant changes in economic assumptions or

changes in statutes affecting revenues and receipts are

enacted.

(3)  The office shall publish the methodology used to

develop revenue estimates.

(4)  Following the adoption of a General Appropriation

Act or Supplemental Appropriation Act by the General

Assembly, the Governor shall certify that the budget

appropriations made by the General Assembly do not exceed the

actual and estimated revenue and surplus available according

to the official final binding revenue estimate under

paragraph (1).

(c)  Information.--The office shall provide the

Appropriations Committee of the Senate, the Appropriations

Committee of the House of Representatives and the Secretary of

the Budget all data, assumptions and econometric models used to

develop projections and revenue estimates.

(d)  Required information.--

(1)  A revenue estimate submitted by the office under

this subsection shall include all of the following:

(i)  An assessment of the Pennsylvania economy and

the national economy and the impact of the existing or

emerging State or national economic trends on revenue

performance for the current year and the forecasted or

projected revenue collections for the budget year and the

succeeding year.

(ii)  A summary of current year-to-date revenue

collections by specific tax or revenue source, including

Federal funds, the General Fund, the Lottery Fund and the

Motor License Fund and a detailed explanation of any

negative or positive variation from the prior year's

official revenue estimate, including the reasons or

events contributing to the variation.

(iii)  Any projected revenue surplus or deficit for

the current budget year.

(2)  A revenue estimate shall be based on existing

statutes and tax policy and existing or emerging State or

national economic trends.

(3)  The office shall prepare a revenue estimate of any

change in State tax law proposed as part of the annual State

budget. If the proposed change in State tax law will have a

fiscal impact in excess of $10,000,000 in any fiscal year,

the estimate shall be prepared on the basis of assumptions

that estimate the probable behavioral responses of taxpayers,

businesses and other persons to the proposed changes and

shall include a statement identifying those assumptions.

(e)  Department of Revenue.--The Department of Revenue in

conjunction with the Secretary of the Budget shall make revenue

estimates for the use of the Governor in preparing the budget.

Section 506-A.  Budget information.

The office shall be notified and shall attend any briefings

provided by the Governor or the Secretary of the Budget under

section 619 of the act of April 9, 1929 (P.L.177, No.175), known

as The Administrative Code of 1929.

Section 507-A.  Expenditures.

(a)  Expenditure reports.--Commonwealth agencies shall make

monthly expenditure data available to the office. The data shall

be provided within seven days after the end of each month. The

monthly data shall include a summary of the last monthly

submission. The data shall be provided in finished reports or

electronically, as determined by the office. The data shall be

provided by fund, by appropriation, by department and by

organization within each department and shall include:

(1)  Number of filled personnel positions and their cost.

(2)  Itemized personnel vacancies and their cost.

(3)  New positions created and their cost.

(4)  Wage and overtime costs.

(5)  Allotments and expenditures for itemized personnel

expenses.

(6)  Allotments and expenditures for itemized operating

expenses.

(7)  Allotment and expenditures for itemized fixed

assets.

(8)  The rate of expenditures in appropriations for major

subsidy and grant programs during the month.

(b)  Budget requests.--Commonwealth agencies shall submit

their agency budget requests to the office and the Office of the

Budget. The Commonwealth agency budget requests shall be

submitted to both offices at the same time.

(c)  Revenue reports.--The Governor shall make monthly

revenue reports to the office. The revenue reports shall show

the actual collection of revenue itemized by source and a

comparison of the actual collections with estimated collections

for each month. The comparison shall include an analysis of any

change in collection patterns which will cause a shortfall or

overrun on annual estimates of more than 1%.

(d)  Other revenue data.--Commonwealth agencies shall cause

to be prepared any other revenue data as may be requested from

time to time by the office.

(e)  Electronic access.--Except for information that is

confidential pursuant to statute, the office shall have access

to all information available under this section on inquiry-only

screens through an integrated central computer system.

Section 508-A.  Revenue conference.

By January 31 of each year, the office shall convene a

meeting with the Secretary of the Budget and 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 to discuss the

following:

(1)  An assessment of the Pennsylvania economy and the

national economy and the impact of the economic trends on

revenue performance for the budget year and the succeeding

year.

(2)  Recommended changes to revenue forecasting and

econometric models being considered by the office.

(3)  Current year-to-date revenue collections by specific

tax or revenue source, including Federal funds, the General

Fund, the Lottery Fund and the Motor License Fund and

variations that may be occurring in the revenue estimate

submitted under section 505-A(a).

(4)  Any statutory or tax policy changes that may be

recommended by the Governor or the General Assembly for the

next succeeding fiscal year.

Section 509-A.  Access to information.

(a)  Agencies.--The director is authorized to secure

information, data, expense information, estimates and statistics

directly from a Commonwealth agency or a political subdivision.

All Commonwealth agencies and political subdivisions shall

furnish the director with all reports of expenditure for each

agency and any other available material or data which the

director determines to be necessary in the performance of the

duties of the office, other than material the disclosure of

which would be a violation of law. The director is also

authorized, upon agreement with the head of any Commonwealth

agency or political subdivision, to utilize the services,

facilities and personnel of the agency with or without

reimbursement.

(b)  Office of the Budget.--In carrying out the duties and

functions of the office, the director is authorized to obtain

information, data, estimates and statistics developed by the

Office of the Budget and all Commonwealth agencies. The Governor

shall submit to the office copies of final agency budget

requests.

(c)  Computer database.--In order to carry out its duties

under this article, the office shall have access to the

computerized database of a State agency that is required to aid

the office in the performance of its duties under sections 504-A

and 505-A, except that any statutory requirements regarding

privacy of individuals' records shall be observed in providing

access.

(d)  Daily revenue data.--

(1)  The Secretary of Revenue and the Secretary of the

Budget shall post revenue collection data for each deposit

day and make the information available to the office and 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.

(2)  The daily revenue data shall be presented in a

manner similar to and consistent with the daily revenue data

provided on June 30, 2007. In no case shall each deposit day

contain less information than was accessible during the

2006-2007 fiscal year as a result of changes in reporting

procedures, accounting systems or computer systems.

(3)  The Governor, the Attorney General, the Auditor

General and the State Treasurer shall cause to be prepared

any other revenue data as may be requested by the office.

(e)  Civil action.--If information is not made available by a

Commonwealth agency or political subdivision within a reasonable

time, the director may make a written request to the agency

head, stating the authority to receive the information. The

agency head shall have ten days to respond. If the information

is not provided within ten days of the receipt of the agency

response, the director may bring a civil action to require the

agency head to provide the information.

Section 510-A.  Selection and organization committee.

(a)  Selection and organization committee.--There is

established a committee to organize the office and select the

director of the office consisting of the following:

(1)  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.

(2)  The Majority Leader and the Minority Leader of the

Senate and the Majority Leader and the Minority Leader of the

House of Representatives.

(3)  The President pro tempore of the Senate and the

Speaker of the House of Representatives.

(4)  The Governor.

(b)  Duties of committee.--The following shall apply:

(1)  By August 31, 2010, the selection and organization

committee shall deliberate the following:

(i)  The organizational structure of the office.

(ii)  The procedures to be adopted to select the

director of the office.

(iii)  The operational budget for the office.

(2)  By October 31, 2010, the selection and organization

committee shall submit a report to the Secretary of the

Budget, the chairman and minority chairman of the

Appropriations Committee and the chairman and minority

chairman of the Finance Committee of the Senate and the

chairman and minority chairman of the Appropriations

Committee and the chairman and minority chairman of the

Finance Committee of the House of Representatives setting

forth a plan to establish the office, including an

operational budget, and to select the director of the office.

Section 511-A.  Appointment.

(a)  Director.--The office shall be headed by a director

appointed by the selection committee under section 510-A. The

appointment shall be made without regard to political

affiliation and solely on the basis of fitness to perform the

duties of the office based on qualifications published by the

selection committee.

(b)  Deputy director.--The director shall appoint a deputy

director who shall perform such duties as assigned by the

director and who shall during the absence or incapacity of the

director or a vacancy act as the director.

(c)  Term.--The term of office of the director shall be six

years. An individual appointed as director to fill a vacancy

prior to the expiration of a term shall serve only for the

unexpired portion of that term. An individual serving as

director at the expiration of a term may continue to serve until

a successor is appointed.

(d)  Removal.--The director may be removed by a concurrent

resolution passed by the Senate and the House of Representatives

and approval of the Governor.

Section 512-A.  Powers and duties of director.

(a)  Personnel.--The director shall appoint and fix the

compensation of personnel necessary to carry out the duties and

functions of the office. All personnel shall be appointed

without regard to political affiliation and solely on the basis

of their fitness to perform their duties.

(b)  Experts and consultants.--In carrying out the duties and

functions of the office, the director may procure the temporary

or intermittent services of experts or consultants by contract.

Section 2.  Section 1301.12(c) and (d) of the act, amended

June 29, 2002 (P.L.614, No.91), are amended to read:

Section 1301.12.  Notice and Publication of Lists of Property

Subject to Custody and Control of the Commonwealth under this

Article.--* * *

(c)  The State Treasurer is not required to [publish in such

notice] include in such notice published in an English language

newspaper of general circulation any item of less than [one

hundred dollars ($100)] two hundred fifty dollars ($250) or to

include in such notice published in a legal newspaper any item

of less than two hundred fifty dollars ($250), unless the State

Treasurer, in either instance, deems such publication to be in

the public interest.

(d)  Within nine (9) months from the receipt of the report

required by section 1301.11, the State Treasurer shall mail a

notice to each person having an address listed who appears to be

entitled to property of the value of [one hundred dollars

($100)] two hundred fifty dollars ($250) or more subject to

custody and control of the Commonwealth under this article. The

mailed notice shall contain:

1.  A statement that, according to a report filed with the

State Treasurer, property is being held to which the addressee

appears entitled;

2.  The name and address of the holder of the property and

any necessary information regarding changes of name and address

of the holder;

3.  A statement that, if satisfactory proof of claim is not

presented by the owner to the holder by the date specified in

the published notice, claims should thereafter be filed with the

State Treasurer.

* * *

Section 3.  The act is amended by adding articles to read:

ARTICLE XVI-B

BORROWING FOR CAPITAL FACILITIES

Section 1601-B.  Scope.

This article relates to neighborhood improvement zones.

Section 1602-B.  Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Capital Facilities Debt Enabling Act."  The act of February

9, 1999 (P.L.1, No.1), known as the Capital Facilities Debt

Enabling Act.

"City."  A city of the third class with, on the effective

date of this section, a population of at least 106,000 and not

more than 107,000, based on the 2000 Federal decennial census.

"Contracting authority."  An authority created under 53

Pa.C.S. Ch. 56 (relating to municipal authorities) for the

purpose of designating a neighborhood improvement zone and

constructing a facility or other authority created under the

laws of this Commonwealth which is eligible to apply for and

receive redevelopment assistance capital grants under Chapter 3

of the act of February 9, 1999 (P.L.1, No.1), known as the

Capital Facilities Debt Enabling Act, and which is under a

contract with the Office of the Budget to receive those grants.

"Facility."  A stadium, arena or other structure owned or

leased by professional sports organization at which professional

athletic events are conducted in the presence of individuals who

pay admission to view the event constructed or operated by the

contracting authority.

"Facility complex."  A development or complex of residential,

commercial, exhibition, hospitality, conference, retail and

community uses which includes a stadium arena or other place

owned, leased or utilized by a professional sports organization

at which a professional athletic event or other events are

conducted in the presence of individuals who pay admission to

view the event.

"Fund."  The Neighborhood Improvement Zone Fund established

under section 1604-B.

"Neighborhood improvement zone."  A neighborhood improvement

zone designated by the contracting authority for the purposes of

neighborhood improvement and development within a city.

"Professional sports organization."  A sole proprietorship,

corporation, limited liability company, partnership or

association that meets all of the following:

(1)  Owns a professional sports franchise.

(2)  Conducts professional athletic events of the sports

franchise at a facility.

"Qualified business."  An entity authorized to conduct

business in this Commonwealth which is located or partially

located within a neighborhood improvement zone and is engaged in

the active conduct of a trade or business for the taxable year.

An agent, broker or representative of a business shall not be

considered to be in the active conduct of trade or business for

the business.

Section 1603-B.  Facility.

The contracting authority may designate a neighborhood

improvement zone of not greater than 130 acres, in which a

facility or facility complex may be constructed, and may borrow

funds for the purpose of improvement and development within the

neighborhood improvement zone and construction of a facility or

facility complex within the zone.

Section 1604-B.  Neighborhood Improvement Zone Fund.

(a)  Special fund.--There is established a special fund known

as the Neighborhood Improvement Zone Fund. Interest income

derived from investment of the money in the fund shall be

credited by the Treasury Department to the fund.

(b)  Calculation.--Within 60 days of the end of each quarter,

the Department of Revenue shall calculate the amounts under this

subsection for improvement and development in the neighborhood

improvement zone, the facility complex and the facility. The

contracting authority shall provide good faith estimates of

quarterly amounts to be calculated in a form and manner required

by the Department of Revenue. The Department of Revenue shall

estimate the quarterly amounts, subject to an annual

reconciliation, and shall certify the amounts to the Office of

the Budget within 90 days of the end of a fiscal quarter. An

entity collecting a local tax within the neighborhood

improvement zone shall, within 30 days of the end of a fiscal

quarter, submit all of the local taxes collected that are to be

calculated under this subsection to the State Treasurer for

transfer to the fund under subsection (d). The following shall

be the amounts calculated:

(1)  An amount equal to all corporate net income tax,

capital stock and franchise tax, personal income tax,

business privilege tax, business privilege licensing fees and

earned income tax related to the ownership and operation of a

professional sports organization conducting professional

athletic events at the facility or facility complex.

(2)  An amount equal to all of the following:

(i)  All personal income tax, earned income tax and

local services tax withheld from its employees by a

professional sports organization conducting professional

athletic events at the facility or facility complex.

(ii)  All personal income tax, earned income tax and

local services tax withheld from the employees of any

provider of events at or services to, or any operator of

an enterprise in, the facility or facility complex.

(iii)  All personal income tax, earned income tax and

local services tax to which the Commonwealth would be

entitled from performers or other participants, including

visiting teams, at an event or activity at the facility

or facility complex.

(3)  An amount equal to all sales and use tax related to

the operation of the professional sports organization and the

facility and enterprises developed as part of the facility

complex. This paragraph shall include sales and use tax paid

by any provider of events or activities at or services to the

facility or facility complex, including sales and use tax

paid by vendors and concessionaires and contractors at the

facility or facility complex.

(4)  An amount equal to all tax paid to the Commonwealth

related to the sale of any liquor, wine or malt or brewed

beverage in the facility or facility complex.

(5)  The amount paid by the professional sports

organization or by any provider of events or activities at or

services to the facility or facility complex of any new tax

enacted by the Commonwealth following the effective date of

this section.

(6)  An amount equal to all personal income tax, earned

income tax and local services tax withheld from personnel by

the professional sports organization or by a contractor or

other entity involved in the construction of the facility or

facility complex.

(7)  An amount equal to all sales and use tax paid on

materials and other construction costs, whether withheld or

paid by the professional sports organization or other entity,

directly related to the construction of the facility or

facility complex.

(8)  An amount equal to all of the following:

(i)  All corporate net income tax, capital stock and

franchise tax, personal income tax, business privilege

tax, business privilege licensing fees and earned income

tax related to the ownership and operation of any

qualified business within the neighborhood improvement

zone.

(ii)  All personal income tax, earned income tax and

local services tax withheld from its employees by a

qualified business within the neighborhood improvement

zone.

(iii)  All personal income tax, earned income tax and

local services tax withheld from the employees of a

qualified business that provides events, activities or

services in the neighborhood improvement zone.

(iv)  All personal income tax, earned income tax and

local services tax to which the Commonwealth would be

entitled from performers or other participants at an

event or activity in the neighborhood improvement zone.

(v)  All sales and use tax related to the operation

of a qualified business within the neighborhood

improvement zone. This subparagraph shall include sales

and use tax paid by a qualified business that provides

events, activities or services in the neighborhood

improvement zone.

(vi)  All tax paid by a qualified business to the

Commonwealth related to the sale of any liquor, wine or

malt or brewed beverage within the neighborhood

improvement zone.

(vii)  The amount paid a qualified business within

the neighborhood improvement zone of any new tax enacted

by the Commonwealth following the effective date of this

section.

(viii)  All personal income tax, earned income tax

and local services tax withheld from personnel by a

qualified business involved in the improvement,

development or construction of the neighborhood

improvement zone.

(ix)  All sales and use tax paid on materials and

other construction costs, whether withheld or paid by the

professional sports organization or other qualified

business, directly related to the improvement,

development or construction of the neighborhood

improvement zone.

(x)  An amount equal to any amusement tax paid by a

qualified business operating in the neighborhood

improvement zone. No political subdivision or other

entity authorized to collect amusement taxes may impose

or increase the rate of any tax on admissions to places

of entertainment, exhibition, amusement or upon athletic

events in the neighborhood improvement zone which are not

in effect on the date the neighborhood improvement zone

is designated by the contracting authority.

(9)  Except for a tax levied against real property, an

amount equal to any tax imposed by the Commonwealth or any of

its political subdivisions on a qualified business engaged in

an activity within the neighborhood improvement zone.

(c)  Income apportionment.--For the purpose of making the

calculations under subsection (b), the taxable income of a

corporation that is a qualified business shall be apportioned to

the neighborhood improvement zone by multiplying the

Pennsylvania taxable income by a fraction, the numerator of

which is the property factor plus the payroll factor plus the

sales factor and the denominator of which is three, in

accordance with the following:

(1)  The property factor is a fraction, the numerator of

which is the average value of the taxpayer's real and

tangible personal property owned or rented and used in the

neighborhood improvement zone during the tax period and the

denominator of which is the average value of all the

taxpayer's real and tangible personal property owned or

rented and used in this Commonwealth during the tax period

but shall not include the security interest of any

corporation as seller or lessor in personal property sold or

leased under a conditional sale, bailment lease, chattel

mortgage or other contract providing for the retention of a

lien or title as security for the sales price of the

property.

(2)  The following apply:

(i)  The payroll factor is a fraction, the numerator

of which is the total amount paid in the neighborhood

improvement zone during the tax period by the taxpayer

for compensation and the denominator of which is the

total compensation paid in this Commonwealth during the

tax period.

(ii)  Compensation is paid in the neighborhood

improvement zone if:

(A)  the person's service is performed entirely

within the neighborhood improvement zone;

(B)  the person's service is performed both

within and without the neighborhood improvement zone,

but the service performed without the neighborhood

improvement zone is incidental to the person's

service within the neighborhood improvement zone; or

(C)  some of the service is performed in the

neighborhood improvement zone and the base of

operations or, if there is no base of operations, the

place from which the service is directed or

controlled is in the neighborhood improvement zone,

or the base of operations or the place from which the

service is directed or controlled is not in any

location in which some part of the service is

performed, but the person's residence is in the

neighborhood improvement zone.

(3)  The sales factor is a fraction, the numerator of

which is the total sales of the taxpayer in the neighborhood

improvement zone during the tax period and the denominator of

which is the total sales of the taxpayer in this Commonwealth

during the tax period.

(i)  Sales of tangible personal property are in the

neighborhood improvement zone if the property is

delivered or shipped to a purchaser that takes possession

within the neighborhood improvement zone regardless of

the F.O.B. point or other conditions of the sale.

(ii)  Sales other than sales of tangible personal

property are in the neighborhood improvement zone if:

(A)  the income-producing activity is performed

in the neighborhood improvement zone; or

(B)  the income-producing activity is performed

both within and without the neighborhood improvement

zone and a greater proportion of the income-producing

activity is performed in the neighborhood improvement

zone than in any other location, based on costs of

performance.

(d)  Transfers.--

(1)  Within ten days of receiving notification under

subsection (b), the Secretary of the Budget shall direct the

State Treasurer to, notwithstanding any other law, transfer

the amounts calculated under subsection (b) from the General

Fund to the fund.

(2)  The State Treasurer shall provide quarterly payments

to the contracting authority until the bonds issued to

finance the improvement and development of the neighborhood

improvement zone and the construction of the contracted

facility or facility complex are retired. The payment in each

quarter shall be equal to the balance of the fund on the last

day of the prior calendar quarter.

(e)  Restriction on use of funds.--Funds transferred under

subsection (d):

(1)  May only be utilized for payment of debt service on

bonds issued for the improvement and development of all or

any part of the neighborhood improvement zone and the purpose

of constructing a facility or facility complex.

(2)  May not be utilized for purposes of renovating or

repairing a facility or facility complex, except for capital

maintenance and improvement projects.

(f)  Ticket surcharge.--The entity operating the facility may

collect a capital repair and improvement ticket surcharge, the

proceeds of which shall be deposited into the fund. The funds

shall be maintained and utilized as follows:

(1)  The money deposited under this subsection may not be

encumbered for any reason and shall be transferred to the

entity for capital repair and improvement projects upon

request from the entity.

(2)  Upon the expiration of the neighborhood improvement

zone under section 1606-B, any and all portions of the fund

attributable to the ticket surcharge shall be immediately

transferred to the contracting authority to be held in escrow

where they shall be unencumbered and maintained by the

contracting authority in the same manner as the fund. Upon

the transfer, any ticket surcharge collected by the operating

entity shall thereafter be deposited in the account

maintained by the contracting authority and dispersed for a

capital repair and improvement project upon request by the

operating entity.

Section 1605-B.  Keystone Opportunity Zone.

Within 30 days of the effective date of this section, the

city shall apply to the department to decertify and remove the

designation of all or part of the Keystone Opportunity Zone in

accordance with section 309 of the act of October 6, 1998

(P.L.705, No.92), known as the Keystone Opportunity Zone,

Keystone Opportunity Expansion Zone and Keystone Opportunity

Improvement Zone Act. The department shall act on the

application within 30 days.

Section 1606-B.  Duration.

The neighborhood improvement zone shall be in effect for a

period equal to the length of time of the bonds that are

initially issued.

ARTICLE XVI-E

OIL AND GAS WELLS

SUBARTICLE A

PRELIMINARY PROVISIONS

Section 1601-E.  Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this subarticle unless

the context clearly indicates otherwise:

"Department."  The Department of Conservation and Natural

Resources.

"Fund."  The Oil and Gas Lease Fund established under the act

of December 15, 1955 (P.L.865, No.256), entitled, "An act

requiring rents and royalties from oil and gas leases of

Commonwealth land to be placed in a special fund to be used for

conservation, recreation, dams, and flood control; authorizing

the Secretary of Forests and Waters to determine the need for

and location of such projects and to acquire the necessary

land."

"Marcellus well."  An active production well certified by the

Department of Environmental Protection as a well from which gas

from the Marcellus Shale formation as determined by the United

States Geological Survey was extracted during the fiscal year,

including wells on Commonwealth and non-Commonwealth land.

Section 1602-E.  Appropriation.

Notwithstanding any other provision of law and except as

provided in section 1603-E, no money in the fund from royalties

may be expended unless appropriated by the General Assembly. In

making appropriations, the General Assembly shall consider the

adoption of an allocation to municipalities impacted by a

Marcellus well.

Section 1603-E.  Department of Conservation and Natural

Resources.

Subject to the availability of money in the fund, up to

$50,000,000 from the fund from royalties shall be appropriated

annually to the department to carry out the purposes set forth

in the act of December 15, 1955 (P.L.865, No.256), entitled "An

act requiring rents and royalties from oil and gas leases of

Commonwealth land to be placed in a special fund to be used for

conservation, recreation, dams, and flood control; authorizing

the Secretary of Forests and Waters to determine the need for

and location of such projects and to acquire the necessary

land." The department shall give preference to the operation and

maintenance of State parks and forests.

Section 1604-E.  Transfer.

Notwithstanding section 1603-E or any other provision of law,

in fiscal year 2009-2010 the amount of $60,000,000 shall be

transferred from the fund to the General Fund.

Section 3.1.  Sections 1731-A and 1732-A of the act, added

July 7, 2005 (P.L.174, No.41), are reenacted and amended to

read:

Section 1731-A.  State Workers' Insurance Board.

Notwithstanding any inconsistent provisions of section 1512

of the act of June 2, 1915 (P.L.736, No.338), known as the

Workers' Compensation Act, section 504 of the act of November

30, 1965 (P.L.847, No.356), known as the Banking Code of 1965,

section 922 of the act of December 14, 1967 (P.L.746, No.345),

known as the Savings Association Code of 1967, and any other law

of this Commonwealth, the power of the State Workers' Insurance

Board to invest money shall include the power to hold, purchase,

sell, assign, transfer and dispose of securities, including

common stock with the following restrictions:

(1)  Investments in equities may not exceed the lesser

of:

(i)  20% of the State Workers' Insurance Fund's

assets; or

(ii)  the State Workers' Insurance Fund's statutory

surplus after discount, except that in the event that the

statutory surplus is less than 7 1/2% of the book value

of the assets of the State Workers' Insurance Fund, the

investment in equities may not exceed the percentage set

forth in the provisions applicable to savings banks in

section 504 of the Banking Code of 1965.

(1.1)  Investments in equities shall be made subject to

the prudent man rule of section 504(c) of the Banking Code of

1965.

(2)  The State Workers' Insurance Board shall establish a

policy for investments and shall meet at least annually to

develop a schedule for rebalancing its investments in

securities to meet the restriction of paragraph (1).

Section 1732-A.  Expiration.

This subarticle shall expire June 30, [2009] 2014 2010.

<--

Section 2.  The reenactment and amendment of sections 1731-A

<--

and 1732-A shall apply retroactively to June 30, 2009.

Section 3.  This act shall take effect immediately.

Section 3.2.  Article XVII-A of the act is amended by adding

<--

subarticles to read:

SUBARTICLE H

PENNSYLVANIA GAMING ECONOMIC DEVELOPMENT

AND TOURISM FUND

Section 1771-A.  Definitions.

The following words and phrases when used in this subarticle

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Affiliated entity."  Any of the following:

(1)  A subsidiary or holding company of a lobbying firm

or other business entity owned in whole or in part by a

lobbying firm.

(2)  An organization recognized by the Internal Revenue

Service as a tax-exempt organization under section 501(c) of

the Internal Revenue Code of 1986 (Public Law 99-514, 26

U.S.C. § 501(c)) established by a lobbyist or lobbying firm

or an affiliated entity.

"Authority."  The Commonwealth Financing Authority.

"Eligible applicant."  As defined in the H2O PA Act.

"H2O PA Act."  The act of July 9, 2008 (P.L.908, No.63),

known as the H2O PA Act.

"High hazard unsafe dam."  As defined in the H2O PA Act.

"Lobbying."  The term shall have the meaning given to it in

65 Pa.C.S. § 13A03 (relating to definitions). The term shall

also include an effort to influence the action of the authority

or the Department of Community and Economic Development relating

to the approval, award, receipt or denial of a grant under the

H2O PA Act.

"Project."  As defined in the H2O PA Act.

Section 1772-A.  Certification of funds.

On or before January 1 of each year, the Secretary of the

Budget shall certify to the authority and the State Treasurer

the amount of funds available for transfer from the Gaming

Economic Development and Tourism Fund under the provisions of

section 301 of the H2O PA Act, for the next fiscal year.

Section 1773-A.  Request for appropriation.

If inadequate funds are available to the authority to pay all

the costs related to indebtedness incurred to fund projects

under the H2O PA Act after the transfer of funds from the Gaming

Economic Development and Tourism Fund under section 301 of the

H2O PA Act, the Secretary of the Budget on behalf of the

authority shall seek an appropriation from the General Fund to

fully pay the costs.

Section 1774-A.  Amount of grants.

Notwithstanding the provisions of section 501(d) of the H2O

PA Act, grants shall be made as follows:

(1)  A minimum of $85,000,000 shall be awarded to flood

control projects.

(2)  A minimum of $50,000,000 shall be awarded to high-

hazard unsafe dam projects. No more than $20,000,000 may go

to an eligible applicant that is the Commonwealth or an

independent agency.

Section 1775-A.  Eligible applicants.

Notwithstanding any other provision of the H2O PA Act to the

contrary, a not-for-profit organization that owns a high-hazard

unsafe dam and has filed with the authority an application for a

grant under section 502(a)(3) of the H2O PA Act prior to the

effective date of this section shall be an eligible applicant

for a grant under section 502(a)(3) of the H2O PA Act.

Section 1776-A.  Prohibited activities.

(a)  Limitation on giving compensation.--A person or its

affiliated entity may not compensate or incur an obligation to

compensate a person to engage in lobbying for compensation

contingent in whole or in part upon the approval, award, receipt

or denial of a grant under Chapters 1 through 7 of the H2O PA

Act.

(b)  Limitation on receiving compensation.--A person or its

affiliated entity may not engage in or agree to engage in

lobbying for compensation contingent in whole or in part upon

the approval, award, receipt or denial of any grant under

Chapters 1 through 7 of the H2O PA Act.

(c)  Inapplicability.--The provisions of this section shall

not apply to an eligible applicant that compensates a person to

prepare or assist in the preparation of a grant application and

related materials for submission to the authority under the H2O

PA Act if the following requirements are met:

(1)  The person is not identified in the submitted

application.

(2)  The person has no direct contact with the authority,

unless the person is responding to requests for additional

information or clarification.

(3)  The person is paid a fixed fee for the preparation

or assistance or a percentage of the amount of any grant

approved, awarded or received of up to .5%.

(d)  Violation.--A violation of this section shall be

considered an intentional violation of 65 Pa.C.S. § 13A09(e)

(relating to penalties).

SUBARTICLE I

WATER AND SEWER SYSTEMS

ASSISTANCE BOND FUND

Section 1781-A.  Definitions.

The following words and phrases when used in this subarticle

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Assistance Act."  The act of July 9, 2008 (P.L.915, No.64),

known as the Water and Sewer Systems Assistance Act.

"Fund."  The Water and Sewer Systems Assistance Bond Fund.

"Issuing officials."  The Governor, the Auditor General and

the State Treasurer.

"Nutrient credit."  As defined in the Assistance Act.

"Project."  As defined in the Assistance Act.

"Municipality."  As defined in the Assistance Act.

Section 1782-A.  Water and Sewer Systems Assistance Bond Fund.

(a)  Establishment.--The Water and Sewer Systems Assistance

Bond Fund, which is created in the State Treasury, shall be the

source from which all payments are authorized, with the approval

of the Governor, to carry out the purposes of this section and

as otherwise provided for in the Assistance Act.

(b)  Purpose of fund.--The money in the fund shall only be

utilized in accordance with the provisions of the Assistance Act

for grants and loans to municipalities, public utilities and

other entities implementing eligible projects and for the

purchase or trading of nutrient credits.

(c)  Exemption.--Money in the fund is exempt and not to be

considered under the limitations of section 5(c)(2) of the act

of March 1, 1988 (P.L.82, No.16), known as the Pennsylvania

Infrastructure Investment Authority Act.

Section 1783-A.  Commonwealth indebtedness.

(a)  Borrowing authorized.--

(1)  If the electorate approves a referendum question, in

accordance with the provisions of the Assistance Act, for

incurring indebtedness in the amount and for the purposes

prescribed in the Assistance Act and this article, the

issuing officials, pursuant to the provisions of section 7(a)

(3) of Article VIII of the Constitution of Pennsylvania, are

authorized and directed to borrow, on the credit of the

Commonwealth, money not exceeding in the aggregate the sum of

$400,000,000, in increments of not more than $150,000,000

every year over a three-year period after the effective date

of this section, not including money borrowed to refund

outstanding bonds, notes or replacement notes, as may be

found necessary to carry out the purposes of the Assistance

Act.

(2)  As evidence of the indebtedness, general obligation

bonds of the Commonwealth shall be issued to provide money

necessary to carry out the purposes of the Assistance Act for

the total amounts, in the form, in the denominations and

subject to the terms and conditions of issue, redemption and

maturity, rate of interest and time of payment of interest,

as the issuing officials direct, except that the latest

stated maturity date shall not exceed 20 years from the date

of the first obligation issued to evidence the debt.

(3)  All bonds and notes issued under the authority of

the Assistance Act must bear facsimile signatures of the

issuing officials and a facsimile of the Great Seal of the

Commonwealth and must be countersigned by an authorized

officer of an authorized loan and transfer agent of the

Commonwealth.

(4)  All bonds and notes issued in accordance with the

provisions of this section shall be direct obligations of the

Commonwealth, and the full faith and credit of the

Commonwealth is pledged for the payment of the interest on

them, as it becomes due, and for the payment of the principal

at maturity. The principal of and interest on the bonds and

notes shall be payable in lawful money of the United States.

(5)  All bonds and notes issued under the provisions of

this section shall be exempt from taxation for State and

local purposes.

(6)  The bonds may be issued as coupon bonds or

registered as to both principal and interest as the issuing

officials determine. If interest coupons are attached, they

shall contain the facsimile signature of the State Treasurer.

(7)  The issuing officials shall provide for amortization

of the bonds in substantial and regular amounts over the term

of the debt so that the bonds of each issue allocated to the

project to be funded from the bond issue shall mature within

a period not to exceed the appropriate amortization period

for each project as specified by the issuing officials, but

in no case in excess of 20 years. The first retirement of

principal shall be stated to mature prior to the expiration

of a period of time equal to one-tenth of the time from the

date of the first obligation issued to evidence the debt to

the date of the expiration of the term of the debt.

Retirements of principal shall be regular and substantial if

made in annual or semiannual amounts, whether by stated

serial maturities or by mandatory sinking fund retirements.

(8)  The issuing officials are authorized to provide by

resolution for the issuance of refunding bonds for the

purpose of refunding any debt issued under the provisions of

the Assistance Act and this article and outstanding, either

by voluntary exchange with the holders of the outstanding

debt or by providing funds to redeem and retire the

outstanding debt with accrued interest, any premium payable

on the debt and the costs of issuance and retirement of the

debt, at maturity or at any call date. The issuance of the

refunding bonds, the maturities and other details of the

refunding bonds, the rights of the holders of the refunding

bonds and the duties of the issuing official in respect to

the refunding bonds shall be governed by the applicable

provisions of this section. Refunding bonds, which are not