S0907B1243A04388     MSP:JMM  06/27/11     #90        A04388

AMENDMENTS TO SENATE BILL NO. 907

Sponsor: REPRESENTATIVE ADOLPH

Printer's No. 1243

Amend Bill, page 1, line 30, by striking out "in special

funds," and inserting

 providing for time for filing returns for certain sales and use

taxpayers; establishing a restricted account within the

Agricultural College Land Scrip Fund; in borrowing for capital

facilities, further providing for definitions, for Neighborhood

Improvement Zone Fund, for Keystone Opportunity Zone and for

duration and providing for Commonwealth pledges and for

confidentiality, providing for financially distressed

municipalities and for Keystone Special Development Zones; in

education tax credits, making an editorial change and providing

for Department of Revenue and for Department of Community and

Economic Development; in special funds, further providing for

funding and

Amend Bill, page 1, line 31, by inserting after "investments"

; providing for 2011-2012 budget implementation and

restrictions; in general budget implementation, further

providing for executive offices and for the Auditor General,

providing for Pennsylvania Infrastructure Investment Authority

Accounts, further providing for the Pennsylvania Higher

Education Assistance Agency, repealing provisions related to the

Legislative Department, providing for the Catastrophic Loss

Benefits Continuation Fund and further providing for the State

Gaming Fund; in 2010-2011 budget implementation, further

providing for the Department of Education; providing for audits;

and making related repeals

Amend Bill, page 2, lines 1 through 3, by striking out all of

said lines and inserting

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

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

Section 202.2.  Time for Filing Returns for Certain Sales and

Use Taxpayers.--(a)  Notwithstanding section 217 of the act of

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

1971," after May 31, 2011, for every sales and use tax licensee

whose total sales and use tax reported or required to be

reported for the third calendar quarter of the preceding year

equals or exceeds twenty-five thousand dollars ($25,000), the

licensee shall, on or before the twentieth day of each month,

file a single sales and use tax return consisting of all of the

following:

(1)  Except as provided in paragraph (2), an amount equal to

fifty per centum of the licensee's total sales and use tax

liability reported or required to be reported for the same month

in the preceding calendar year if the licensee was a monthly

sales and use tax filer. If the licensee was a quarterly or

semi-annual sales and use tax filer, an amount equal to fifty

per centum of the licensee's average total sales and use tax

liability reported or required to be reported for that tax

period in the preceding calendar year. The average total sales

and use tax liability shall be the total sales and use tax

liability reported or required to be reported for the tax period

divided by the number of months in that tax period. For

licensees that were not in business during the same month in the

preceding calendar year or were in business for only a portion

of that month, an amount equal to fifty per centum of the

average total sales and use tax liability reported or required

to be reported for each tax period the licensee has been in

business. If the licensee is filing a sales and use tax

liability for the first time with no preceding tax periods, the

amount shall be zero.

(2)  For a return due June 20, 2011, the percentage used in

the calculation under paragraph (1) shall be fifty-five per

centum.

(3)  An amount equal to the sales and use taxes due for the

preceding month, less any amounts paid in the preceding month as

required by paragraph (1).

(b)  The sales and use tax required to be reported under this

section shall be due and payable by the licensee on the day the

return is required to be filed and all payments must accompany

the return.

(c)  The department shall determine whether the amounts

reported under this section shall be remitted as one combined

payment or as two separate payments.

(d)  The department may require the filing of the returns and

the payments for filers under this section by electronic means

approved by the department.

(e)  If a licensee required to remit payments under this

section fails to make a timely payment or makes a payment which

is less than the required amount, the department may, in

addition to any applicable penalties, impose an additional

penalty equal to five per centum of the amount due under this

section which was not timely paid. The penalty under this

subsection shall be determined when the tax return is filed for

the tax period.

(f)  A reference in statute or regulation to section 217 of

the "Tax Reform Code of 1971" shall also be deemed a reference

to this section.

Section 507.  Restricted Account within Agricultural College

Land Scrip Fund.--(a)  A restricted account is hereby

established within the Agricultural College Land Scrip Fund for

the purpose of funding agricultural research programs and

agricultural extension services.

(b)  The restricted account established under this section

shall consist of such moneys as are appropriated or transferred

to the restricted account.

(c)  Following an appropriation or transfer, the State

Treasurer shall pay, on an equal monthly basis during the fiscal

year, the money in the restricted account to the Commonwealth's

land grant university for agricultural research programs and for

agricultural extension services.

(d)  Money deposited in the Agricultural College Land Scrip

Fund prior to the effective date of this section, and the

interest earned thereon, shall be paid pursuant to the act of

April 1, 1863 (P.L.213, No.227), entitled "An act to accept the

grant of Public Lands, by the United States, to the several

states, for the endowment of Agricultural Colleges," and the act

of May 7, 1923 (P.L.145, No.110), entitled "An act providing for

the redemption and cancellation of the bond issued under the

act, approved April third, one thousand eight hundred and

seventy-two (Pamphlet Laws, thirty-nine), entitled 'An act

directing the sale of the bonds composing the Agricultural

College land script fund, and authorizing the issue of a new

bond in lieu thereof, and abolishing the board commissioners

created by act of April first, one thousand eight hundred and

sixty-three,' and for the investment of the moneys in the fund

resulting from such redemption, and the payment of the interest

therefrom by the Sinking Fund Commission to Pennsylvania State

College."

Section 1.1.  The definition of "contracting authority" in

section 1602-B of the act, added October 9, 2009 (P.L.537,

No.50), is amended and the section is amended by adding

definitions to read:

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:

"Bonds."  Includes notes, instruments, refunding notes and

bonds and other evidences of indebtedness or obligations.

* * *

"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].

"Department."  The Department of Revenue of the Commonwealth.

* * *

Section 1.2.  Section 1604-B(b) introductory paragraph and

(9), (c) introductory paragraph, (d) and (e) of the act, added

October 9, 2009 (P.L.537, No.50), are amended and the section is

amended by adding subsections to read:

Section 1604-B.  Neighborhood Improvement Zone Fund.

* * *

(a.1)  Certification.--

(1)  Within 30 days of the end of each calendar year,

each qualified business shall file a report with the

department which complies with all of the following:

(i)  States each State tax, calculated in accordance

with subsection (b), which was paid by the qualified

business in the prior calendar year.

(ii)  Lists each State tax refund which complies with

all of the following:

(A)  The refund is for a tax:

(I)  set forth in subsection (b); and

(II)  certified as paid under subsection (b).

(B)  The refund was received in the prior

calendar year by the qualified business.

(iii)  Is in a form and manner required by the

department.

(2)  In addition to any penalties imposed under the act

of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code

of 1971, for failure to timely pay State taxes, failure to

file a timely and complete report under paragraph (1) shall

result in the imposition of a penalty of 10% of all State

taxes, calculated in accordance with subsection (b), which

were payable by the qualified business in the prior calendar

year.

(3)  Any penalty imposed under this subsection shall be

imposed, assessed and collected by the department under the

provisions for imposing, assessing and collecting penalties

under Article II of the Tax Reform Code of 1971. When the

penalty is received, the money shall be transferred from the

General Fund to the fund.

(4)  Within 30 days of the end of each calendar year,

each qualified business shall file a report with the local

taxing authority reporting all local taxes, calculated in

accordance with subsection (b), which were paid by the

qualified business in the prior calendar year. The report

from each qualified business shall also list any local tax

refunds of taxes set forth in subsection (b) received in the

prior calendar year by the qualified business and any refunds

related to the local taxes as calculated in accordance with

subsection (b). The report shall be in a form and manner

required by the department.

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

[quarter] calendar year, 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] department shall [estimate

the quarterly amounts, subject to an annual reconciliation, and

shall] certify the amounts of State taxes paid, less any State

tax refunds received, by the qualified businesses filing reports

under subsection (a.1)(1) to the Office of the Budget [within 90

days of the end of a fiscal quarter]. Beginning in 2012 and in

each calendar year thereafter, by November 1, the department

shall calculate, in accordance with this subsection, amounts of

State taxes actually received by the Commonwealth from each

qualified business that filed a report under subsection (a.1)(1)

in the prior calendar year; and the department shall certify the

amounts received to the office. An entity collecting a local tax

within the neighborhood improvement zone shall, within 30 days

of the end of [a fiscal quarter] each calendar year, submit all

of the local taxes [collected that are to be calculated under

this subsection] that are to be calculated under this subsection

and which were paid in the prior calendar year, less any

certified local tax refunds received by a qualified business in

the prior calendar year, to the State Treasurer [for transfer]

to be deposited in the fund under subsection (d). This

subsection shall not apply to any taxes subject to a valid

pledge or security interest entered into in order to secure debt

service on bonds if the pledge or security interest was entered

into prior to May 1, 2011, and is still in effect. The following

shall be the amounts calculated and certified:

* * *

(9)  Except for a tax levied against real property and

notwithstanding any other law, 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 or directly or

indirectly on any sale or purchase of goods or services,

where the point of sale or purchase is within the

neighborhood improvement zone.

(c)  [Income] State tax liability apportionment.--For the

purpose of making the calculations under subsection (b), the

[taxable income of a corporation that is] State tax liability of

a qualified business shall be apportioned to the neighborhood

improvement zone by multiplying the Pennsylvania [taxable

income] State tax liability 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:

(d)  Transfers.--

(1)  Within ten days of receiving [notification]

certification under subsection (b), the Secretary of the

Budget shall direct the State Treasurer to, notwithstanding

any other law, transfer the amounts [calculated] certified 

under subsection (b) from the General Fund to the fund.

Beginning in 2013 and in each year thereafter, the amounts

certified by the secretary to the State Treasurer and the

amounts transferred by the State Treasurer to the fund shall

be determined as follows:

(i)  Add amounts certified by the department under

subsection (b) for the prior calendar year.

(ii)  Subtract from the sum under subparagraph (i)

any State tax refunds paid as certified by the department

under subsection (b).

(iii)  Add to the difference under subparagraph (ii)

any amounts certified under subsection (b) with respect

to the second prior calendar year.

(iv)  Subtract from the sum under subparagraph (iii)

any amounts certified under subsection (b) which are less

than the amounts previously certified under subsection

(b) with respect to the second prior calendar year.

(2)  The State Treasurer shall provide [quarterly

payments] an annual transfer to the contracting authority

until the bonds issued to finance and refinance 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]

Each annual transfer to the contracting authority shall be

equal to the balance of the fund on the [last day of the

prior calendar quarter] date of the transfer under paragraph

(1).

(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, for payment

of debt service on bonds issued to refund those bonds and to

replenish amounts required in any debt service reserve funds

established to pay debt service on bonds. The term of a bond

to be refunded shall not exceed the maximum term permitted

for the original bond issued for the improvement or

development of the neighborhood improvement zone and the

construction of 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.

* * *

(g)  Excess money.--Within 30 days of the end of each

calendar year, any money remaining in the fund at the end of the

prior calendar year after the required payments under subsection

(d)(2) were made in the prior calendar year shall be refunded in

the following manner:

(1)  Money shall first be returned to the General Fund to

the extent that the excess money is part of the transfer

under subsection (d)(1).

(2)  Money shall next be paid to the contracting

authority to the extent that the amounts paid under

subsection (d)(2) consisted of local taxes. The contracting

authority shall return the money to the appropriate entities

collecting local tax who submitted the local taxes to the

State Treasurer under subsection (b).

Section 1.3.  Sections 1605-B and 1606-B of the act, added

October 9, 2009 (P.L.537, No.50), are amended to read:

Section 1605-B.  Keystone Opportunity Zone.

[Within 30 days of the effective date of this section] Before

September 1, 2011, the city shall apply to the [department]

Department of Community and Economic Development to decertify

and remove the designation of all or part of the Keystone

Opportunity Zone [in accordance with] on behalf of all political

subdivisions. The provisions of 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 shall be deemed

satisfied as to all political subdivisions. The [department]

Department of Community and Economic Development 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.] one year following retirement of all bonds

issued to finance or refinance the improvement and development

of the neighborhood improvement zone or the construction of the

facility or the facility complex. The maximum term of the bond,

including the refunding of the bond, shall not exceed 30 years.

Section 1.4.  The act is amended by adding sections to read:

Section 1607-B.  Commonwealth pledges.

If and to the extent that the contracting authority pledges

amounts required to be transferred to the fund under section

1604-B for the payment of bonds issued by the contracting

authority, until all bonds secured by the pledge of the

contracting authority, together with the interest on the bonds,

are fully paid or provided for, the Commonwealth pledges to and

agrees with any person, firm, corporation or government agency,

whether in this Commonwealth or elsewhere, and to and with any

Federal agency subscribing to or acquiring the bonds issued by

the contracting authority that the Commonwealth itself will not,

nor will it authorize any government entity to, abolish or

reduce the size of the neighborhood improvement zone; to amend

or repeal section 1604-B(a.1), (b) or (d); to limit or alter the

rights vested in the contracting authority in a manner

inconsistent with the obligations of the contracting authority

with respect to the bonds issued by the contracting authority;

or to otherwise impair revenues to be paid under this article to

the contracting authority necessary to pay debt service on

bonds. Nothing in this section shall limit the authority of the

Commonwealth or any government entity to change the rate, tax

bases or any subject of any specific tax or repealing or

enacting any tax.

Section 1608-B.  Confidentiality.

Notwithstanding any law providing for the confidentiality of

tax records, the contracting authority and the local taxing

authorities shall have access to any reports and certifications

filed under this article, and the contracting authority shall

have access to any State or local tax information filed by a

qualified business in the Neighborhood Improvement Zone solely

for the purpose of documenting the certifications required by

this article. Any other use of the tax information shall be

prohibited as provided under law.

Section 1.5.  The act is amended by adding an article to

read:

ARTICLE XVI-D.1

FINANCIALLY DISTRESSED MUNICIPALITIES

Section 1601-D.1.  Administrative oversight.

(a)  Scope.--This section applies to a city of the third

class which is determined to be financially distressed under

section 203 of the act of July 10, 1987 (P.L.246, No.47), known

as the Municipalities Financial Recovery Act.

(b)  Limitation on bankruptcy.--Notwithstanding any other

provision of law, including section 261 of the Municipalities

Financial Recovery Act, no distressed city may file a petition

for relief under 11 U.S.C. Ch. 9 (relating to adjustment of

debts of a municipality) or any other Federal bankruptcy law,

and no government agency may authorize the distressed city to

become a debtor under 11 U.S.C. Ch. 9 or any other Federal

bankruptcy law.

(c)  Penalty.--If a city subject to this section fails to

comply with subsection (b), all Commonwealth funding to the city

shall be suspended.

(d)  Expiration.--This section shall expire July 1, 2012.

Section 1.6.  Article XVI-F heading of the act, added July 6,

2010 (P.L.279, No.46), is amended to read:

ARTICLE XVI-F

[(RESERVED)]

KEYSTONE SPECIAL DEVELOPMENT ZONE

Section 1.7.  The act is amended by adding sections to read:

Section 1601-F.  Scope of article.

This article relates to the Keystone Special Development Zone

program.

Section 1602-F.  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:

"Affiliate."  As follows:

(1)  An entity which is part of the same "affiliated

group," as defined in section 1504(a) of the Internal Revenue

Code of 1986 (Public Law 99-514, 26 U.S.C. § 1504(a)), as a

Keystone Special Development Zone employer; or

(2)  An entity that would be part of the same "affiliated

group" except that the entity or the Keystone Special

Development employer is not a corporation.

"Department."  The Department of Community and Economic

Development of the Commonwealth.

"Employee."  An individual who:

(1)  is employed in this Commonwealth by a Keystone

Special Development Zone employer, or its predecessor, after

the effective date of this article;

(2)  is employed for at least 35 hours per week by a

Keystone Special Development Zone employer; and

(3)  spends at least 90% of his or her working time for

the Keystone Special Development Zone employer at the

Keystone Special Development Zone location.

"Full-time equivalent employee."  The whole number of

employees, rounded down, that equals the sum of:

(1)  the total paid hours, including paid time off and

family leave under the Family and Medical Leave Act of 1993

(Public Law 103-3, 29 U.S.C. § 2601 et seq.), of all of a

Keystone Special Development Zone employer's employees

classified as nonexempt during the Keystone Special

Development Zone employer's tax year divided by 2000; and

(2)  a total number arrived at by adding, for each

Keystone Special Development Zone employer's employee

classified as exempt scheduled to work at least 35 hours per

week, the fraction equal to the portion of the year the

exempt employee was paid by the Keystone Special Development

Zone employer. Whether an employee shall be classified as

exempt or nonexempt shall be determined under the Fair Labor

Standards Act of 1938 (52 Stat. 1060, 29 U.S.C. § 201 et

seq.).

The calculation under this definition excludes employees

previously employed by an affiliate and employees previously

employed by the Keystone Special Development Zone employer

outside of a Keystone Special Development Zone.

"Keystone Special Development Zone."  A parcel of real

property that meets all of the following:

(1)  On July 1, 2011, was within a special industrial

area, as described in section 305(a) of the act of May 19,

1995 (P.L.4, No.2), known as the Land Recycling and

Environmental Remediation Standards Act, for which the

Department of Environmental Protection has executed a special

industrial area consent order and agreement, as provided

under section 502(a) of the Land Recycling and Environmental

Remediation Standards Act.

(2)  On July 1, 2011, had no permanent vertical

structures affixed to it.

(3)  Is certified by the Department of Environmental

Protection as meeting the requirements of paragraphs (1) and

(2).

"Keystone Special Development Zone employer."  A person or

entity subject to the taxes imposed under Article III, IV, VI,

VII, VIII or XV of the act of March 4, 1971 (P.L.6, No.2) known

as the Tax Reform Code of 1971, who employs one or more

employees at a Keystone Special Development Zone. The term shall

include a pass-through entity. The term shall not include any of

the following:

(1)  An employer who, after January 1, 1990,

intentionally or negligently caused or contributed to, in any

material respect, a level of regulated substance above the

cleanup standards in the act of May 19, 1995 (P.L.4, No.2),

known as the Land Recycling and Environmental Remediation

Standards Act, on, in or under the Keystone Special

Development Zone at which an employee is employed.

(2)  An employer engaged in construction improvements on

a Keystone Special Development Zone.

"Pass-through entity."  A partnership as defined in section

301(n.0) of the act of March 4, 1971 (P.L.6, No.2), known as the

Tax Reform Code of 1971, or a Pennsylvania S corporation as

defined in section 301(n.1) of the Tax Reform Code of 1971.

"Qualified tax liability."  Any tax owed by a Keystone

Special Development Zone employer attributable to a business

activity conducted within a Keystone Special Development Zone

for a tax year under Article III, IV, VI, VII, VIII or XV of the

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

of 1971.

Section 1603-F.  Keystone Special Development Zone tax credit.

(a)  Tax credit.--A Keystone Special Development Zone

employer shall be entitled to claim a tax credit against its

qualified tax liability as provided in this article.

(b)  Process.--

(1)  A Keystone Special Development Zone employer shall

notify the department of its qualification for a tax credit

under this article by February 1 for tax credits earned

during a taxable year ending in the prior calendar year.

(2)  The notification shall contain the following:

(i)  The name, address and taxpayer identification

number of the Keystone Special Development Zone employer.

(ii)  Verification that it is a Keystone Special

Development Zone employer located in a Keystone Special

Development Zone.

(iii)  The names, addresses and Social Security

numbers of all employees for which the credit is claimed.

(iv)  Verification that each employee identified in

subparagraph (iii) spent at least 90% of the employee's

working time for the Keystone Special Development Zone

employer at the employer's Keystone Special Development

Zone location.

(v)  Any other information required by the

department.

(3)  To qualify for the credit, the Department of Revenue

must certify that the Keystone Special Development Zone

employer is current with all tax liabilities.

(4)  By March 1 of each year the department shall send

the Keystone Special Development Zone employer who submitted

the notification a certificate of its qualification for the

credit, which certificate the Keystone Special Development

Zone employer shall present to the Department of Revenue when

filing its return claiming the credit.

(c)  Amount.--The amount of the tax credit a Keystone Special

Development Zone employer may earn in any tax year shall be

equal to $2,100 for each full-time equivalent employee in excess

of the number of full-time equivalent employees employed by the

Keystone Special Development Zone employer prior to January 1,

2012.

(d)  Application of tax credits.--A Keystone Special

Development Zone employer must first use its Keystone Special

Development Zone tax credit against its qualified tax liability.

(d.1)  Sale or assignment of tax credit.--

(1)  If the Keystone Special Development Zone employer is

entitled to a credit in any year that exceeds its qualified

tax liability for that year, upon application to and approval

by the department, a Keystone Special Development Zone

employer which has been awarded a tax credit may sell or

assign, in whole or in part, the tax credit granted to the

Keystone Special Development Zone employer. The application

must be on the form required by the department and must

include or demonstrate all of the following:

(i)  The applicant's name and address.

(ii)  A copy of the tax credit certificate previously

issued by the department.

(iii)  A statement as to whether any part of the tax

credit has been applied to tax liability of the applicant

and the amount so applied.

(iv)  Any other information required by the

department.

(2)  The department shall review the application and,

upon being satisfied that all requirements have been met,

shall approve the application and shall notify the Department

of Revenue.

(3)  The purchaser or assignee of all or a portion of a

Keystone Special Development Zone tax credit under this

section shall claim the credit in the taxable year in which

the purchase or assignment is made. The purchaser or assignee

of a tax credit may use the tax credit against any tax

liability of the purchaser or assignee under Article III, IV,

VI, VII, VIII or XV of the Tax Reform Code of 1971. The

amount of the tax credit used may not exceed 75% of the

purchaser's or assignee's tax liability for the taxable year.

The purchaser or assignee may not carry over, carry back,

obtain a refund of or assign the Keystone Special Development

Zone credit. The purchaser or assignee shall notify the

department and the Department of Revenue of the seller or

assignor of the Keystone Special Development Zone tax credit

in compliance with procedures specified by the department.

(e)  Use and carryforward.--

(1)  A Keystone Special Development Zone employer may

earn the tax credit allowed under this article beginning in

any tax year beginning in 2012 and for a period of up to ten

tax years during the 15-year period beginning July 1, 2012,

and ending June 30, 2026.

(2)  A Keystone Special Development Zone employer may

carry forward for up to ten years a tax credit earned under

this article:

(i)  which it is unable to use; or

(ii)  which it does not sell or assign.

(3)  Tax credits carried forward under paragraph (2)

shall be used on a first-in-first-out basis.

(f)  Dual-use prohibited.--In a given year, a Keystone

Special Development Zone employer may only earn tax credits

under subsection (c) or (d) or under 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. A Keystone Special Development Zone

employer may not claim a credit under both this section and

Article XVIII-B of the Tax Reform Code of 1971.

(g)  Pass-through entities.--

(1)  If a Keystone Special Development Zone employer is a

pass-through entity and it has any unused tax credit under

subsection (c), (d) or (e), it may elect in writing,

according to procedures established by the Department of

Revenue, to transfer all or a portion of the credit to

shareholders, members or partners in proportion to the share

of the entity's distributive income to which the shareholder,

member or partner is entitled.

(2)  A Keystone Special Development Zone employer that is

a pass-through entity, and a shareholder, member or partner

of that Keystone Special Development Zone employer may not

both claim the Keystone Special Development Zone tax credit

earned by the Keystone Special Development Zone employer for

any tax year.

(3)  A shareholder, member or partner of a Keystone

Special Development Zone employer that is a pass-through

entity to whom a credit is transferred under this subsection

shall immediately claim the credit in the taxable year in

which the transfer is made.

(h)  Transfer.--Any tax credit or tax credit carryforward

that a Keystone Special Development Zone employer is entitled to

use may be transferred to a successor entity of the Keystone

Special Development Zone employer.

(i)  Penalties.--The following shall apply:

(1)  A company which receives Keystone Special

Development Zone tax credits and fails to substantially

maintain the operations related to the Keystone Special

Development Zone tax credits in this Commonwealth for a

period of five years from the date the company first submits

a Keystone Special Development Zone tax credit certificate to

the Department of Revenue shall be required to refund to the

Commonwealth the total amount of credits granted, with

interest and a penalty of 20% of the amount of credits

granted.

(2)  The department may waive the penalties in subsection

(a) if it is determined that a company's operations were not

maintained or the new jobs were not created because of

circumstances beyond the company's control. Circumstances

include natural disasters, unforeseen industry trends or a

loss of a major supplier or market.

Section 1604-F.  Tax liability attributable to Keystone Special

Development Zone.

(a)  Determinations of attributable tax liability.--Tax

liability attributable to business activity conducted within a

Keystone Special Development Zone shall be computed, construed,

administered and enforced in conformity with Article III, IV,

VI, VII, VIII or XV of the act of March 4, 1971 (P.L.6, No.2),

known as the Tax Reform Code of 1971, whichever is applicable,

and with specific reference to the following:

(1)  If the entire business of the employer in this

Commonwealth is transacted wholly within the Keystone Special

Development Zone, the tax liability attributable to business

activity within a Keystone Special Development Zone shall

consist of the Pennsylvania income as determined under

Article III, IV, VI, VII, VIII or XV, whichever is

applicable, of the Tax Reform Code of 1971.

(2)  If the entire business of the employer in this

Commonwealth is not transacted wholly within the Keystone

Special Development Zone, the tax liability of an employer in

a Keystone Special Development Zone shall be determined upon

such portion of the Pennsylvania tax liability of such

employer attributable to business activity conducted within

the Keystone Special Development Zone and apportioned in

accordance with subsection (b).

(b)  Tax liability apportionment.--The tax liability of an

employer shall be apportioned to the Keystone Special

Development Zone by multiplying the Pennsylvania tax liability

by a fraction, the numerator of which is the property factor

plus the payroll factor and the denominator of which is two, in

accordance with the following:

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

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

tangible personal property owned or rented and used in the

Keystone Special Development Zone during the tax period and

the denominator of which is the average value of the

employer'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 employer

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 payroll factor is a fraction, the numerator of

which is the total amount paid in the Keystone Special

Development Zone during the tax period by the employer to an

employee as compensation and the denominator of which is the

total compensation paid by the employer in this Commonwealth

during the tax period.

Section 1.8.  The heading of Article XVI-H of the act, added

July 6, 2010 (P.L.279, No.46), is amended to read:

ARTICLE XVI-H

[EDUCATIONAL] TAX CREDITS

Section 1.9.  The act is amended by adding sections to read:

Section 1602-H.  Department of Revenue.

For fiscal year 2011-2012 and each fiscal year thereafter and

notwithstanding section 1709-B(a) of the act of March 4, 1971

(P.L.6, No.2), known as the Tax Reform Code of 1971, the amount

of credits approved by the Department of Revenue under Article

XVII-B of the Tax Reform Code of 1971 shall not exceed

$55,000,000 in a fiscal year; and $11,000,000 of that amount

shall be allocated exclusively for small business. As used in

this section, the term "small business" has the meaning ascribed

in section 1702-B of the Tax Reform Code of 1971.

Section 1603-H.  Department of Community and Economic

Development.

For fiscal year 2011-2012 and each fiscal year thereafter,

the Department of Community and Economic Development may approve

tax credits as follows:

(1)  Notwithstanding section 1707-D(a) of the Tax Reform

Code of 1971, the aggregate amount of tax credits awarded

under Article XVII-D of the Tax Reform Code of 1971 shall not

exceed $60,000,000 in a fiscal year.

(2)  Notwithstanding section 1804-B(e) of the Tax Reform

Code of 1971, awards by the department shall not exceed

$10,100,000 in tax credits under Article XVIII-B of the Tax

Reform Code of 1971.

Section 2.  Section 1702-A of the act, amended July 4, 2008

(P.L.629, No.53), is amended to read:

Section 1702-A.  Funding.

(a)  Intent.--It is hereby declared as the intent and goal of

the General Assembly to create a stabilization reserve in an

eventual amount of 6% of the revenues of the General Fund of the

Commonwealth.

(b)  Transfer of portion of surplus.--

(1)  Except as may be provided in paragraph (2), for

fiscal years beginning after June 30, 2002, the following

apply:

(i)  Except as set forth in this paragraph, if the

Secretary of the Budget certifies that there is a surplus

in the General Fund for a specific fiscal year, 25% of

the surplus shall be deposited by the end of the next

succeeding quarter into the Budget Stabilization Reserve

Fund.

(ii)  If the Secretary of the Budget certifies, after

June 30, 2005, that there is a surplus in the General

Fund for the fiscal year 2004-2005, 15% of the surplus

shall be deposited by the end of the next succeeding

quarter into the Budget Stabilization Reserve Fund.

(iii)  No amount of the surplus in the General Fund

for fiscal year 2007-2008 may be deposited into the

Budget Stabilization Reserve Fund.

(iv)  No amount of the surplus in the General Fund

for fiscal year 2010-2011 may be deposited into the

Budget Stabilization Reserve Fund.

(2)  If, at the end of any fiscal year, the ending

balance of the Budget Stabilization Reserve Fund equals or

exceeds 6% of the actual General Fund revenues received for

the fiscal year in which the surplus occurs, 10% of the

surplus shall be deposited by the end of the next succeeding

quarter into the Budget Reserve Stabilization Fund.

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

time provide additional amounts from any funds available to this

Commonwealth as an appropriation to the Budget Stabilization

Reserve Fund.

Section 2.1.  The heading of Subarticle D of Article XVII-A

of the act, added July 7, 2005 (P.L.174, No.41), is reenacted to

read:

Amend Bill, page 2, line 6, by striking out "2" and inserting

 2.2

Amend Bill, page 3, line 12, by striking out "3" and

inserting

 2.3

Amend Bill, page 3, by inserting between lines 16 and 17

Section 3.  Repeals are as follows:

(1)  The General Assembly finds and declares as follows:

(i)  Each year, articles on budget implementation are

added to the act.

(ii)  These articles are temporary in nature but are

placed permanently into the act, utilizing article

numbers and section numbers.

(iii)  Reusing article numbers and section numbers

will keep the text of the act more concise.

(iv)  The repeal under paragraph (2) is necessary to

effectuate paragraph (1)(iii).

(2)  Articles XVII-B and XVII-C of the act, added July 5,

2006 (P.L.296, No.66), and amended or repealed in part July

17, 2007 (P.L.141, No.42), are repealed.

Section 4.  The act is amended by adding articles to read:

ARTICLE XVII-B

2011-2012 BUDGET IMPLEMENTATION

SUBARTICLE A

PRELIMINARY PROVISIONS

Section 1701-B.  Applicability of article.

Except as specifically provided in this article, this article

applies to the General Appropriation Act of 2011 and all other

appropriation acts of 2011.

Section 1702-B.  Definitions and abbreviations.

(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:

"General Appropriation Act."  The act of     , 2011 (P.L.   ,

No.1A), known as the General Appropriation Act of 2011.

"Secretary."  The Secretary of the Budget of the

Commonwealth.

(b)  Abbreviations.--The following abbreviations when used in

this article shall have the meanings given to them in this

section:

"AIDS."  Acquired Immune Deficiency Syndrome.

"ARC."  Appalachian Regional Commission.

"ARRA."  The American Recovery and Reinvestment Act of 2009

(Public Law 111-5, 123 Stat. 115).

"BG."  Block Grant.

"CCDFBG."  Child Care and Development Fund Block Grant.

"CSBG."  Community Services Block Grant.

"DCSI."  Drug Control and Systems Improvement Formula Grant

Program.

"DFSC."  The Safe and Drug-Free Schools and Communities Act

(Public Law 107-110, 20 U.S.C. § 7101 et seq.).

"DOE."  Department of Energy.

"EEOC."  Equal Employment Opportunity Commission.

"EPA."  Environmental Protection Agency.

"ESEA."  The Elementary and Secondary Education Act of 1965

(Public Law 89-10, 20 U.S.C. § 6301 et seq.).

"FEMA."  Federal Emergency Management Agency.

"FTA."  Federal Transit Administration.

"HUD."  Department of Housing and Urban Development.

"LIHEABG."  Low-Income Home Energy Assistance Block Grant.

"LSTA."  The Library Services and Technology Act (Public Law

104-208, 20 U.S.C. § 9101 et seq.).

"MCHSBG."  Maternal and Child Health Services Block Grant.

"MHSBG."  Mental Health Services Block Grant.

"MR."  Mental Retardation.

"PAFE."  Pennsylvania Agricultural Food Exposition.

"PHHSBG."  Preventive Health and Health Services Block Grant.

"RSAT."  Residential Substance Abuse Treatment.

"SABG."  Substance Abuse Block Grant.

"SCDBG."  Small Communities Development Block Grant.

"SDA."  Service Delivery Area.

"SSBG."  Social Services Block Grant.

"TANF."  Temporary Assistance for Needy Families.

"TANFBG."  Temporary Assistance for Needy Families Block

Grant.

"TEFAP."  Temporary Emergency Food Assistance Program.

"WIA."  The Workforce Investment Act of 1998 (Public Law

105-220, 112 Stat. 936).

"WIC."  Women, Infants and Children Program.

SUBARTICLE B

EXECUTIVE DEPARTMENTS

Section 1711-B.  Governor (Reserved).

Section 1712-B.  Executive Offices.

Funds for intermediate punishment treatment programs shall be

allocated in the same proportion as funding provided in fiscal

year 2010-2011 for intermediate punishment programs and for

intermediate punishment drug and alcohol treatment.

Section 1713-B.  Lieutenant Governor (Reserved).

Section 1714-B.  Attorney General (Reserved).

Section 1715-B.  Auditor General (Reserved).

Section 1716-B.  Treasury Department (Reserved).

Section 1717-B.  Department of Aging (Reserved).

Section 1718-B.  Department of Agriculture.

No less than 80% of the funds appropriated for hardwoods

research and promotion shall be equally distributed among the

hardwood utilization groups of this Commonwealth established

prior to the effective date of this section.

Section 1719-B.  Department of Community and Economic

Development.

The following shall apply to appropriations for the

Department of Community and Economic Development:

(1)  For fiscal year 2011-2012, funds appropriated to

Keystone Communities shall include allocations for the Main

Street and Elm Street programs in amounts not less than the

amounts allocated in fiscal year 2010-2011.

(2)  Funds appropriated for Partnerships for Regional

Economic Performance shall be allocated to Industrial

Development Corporations, Industrial Resource Centers, Local

Development Districts and Small Business Development Centers.

Forty percent of the funds appropriated shall be pro rata

allocated to the entity in proportion to the 2010-2011

appropriations to the entities. The department shall provide

notice of the allocation by October 1, 2011. The remaining

60% of funds appropriated for this program shall be

distributed in accordance with program guidelines.

Section 1720-B.  Department of Conservation and Natural

Resources (Reserved).

Section 1721-B.  Department of Corrections (Reserved).

Section 1722-B.  Department of Education.

The following shall apply to appropriations for the

Department of Education in the General Appropriation Act:

(1)  Notwithstanding 24 Pa.C.S. § 8329(a) (relating to

payments on account of social security deductions from

appropriations), when calculating payments by the

Commonwealth under 24 Pa.C.S. § 8329, the Department of

Education shall treat wages paid out of the ARRA State

Stabilization Fund, wages paid out of the ARRA funds

appropriated for Individuals with Disabilities Education

(Part B - Preschool-Age 3-5) or wages paid out of the

Education Jobs Fund grant as covered wages which are not

federally funded.

(2)  Notwithstanding the provisions of section 1724-A of

the act of March 10, 1949 (P.L.30, No.14), known as the

Public School Code of 1949, and 24 Pa.C.S. section 8329

(relating to payments on account of social security

deductions from appropriations), no payments shall be made to

charter schools or cyber charter schools authorized under the

provisions of Article XVII-A of the Public School Code of

1949 or any successor provisions contained in the Public

School Code of 1949, from funds appropriated for school

employees social security.

Section 1723-B.  Department of Environmental Protection.

The following shall apply to appropriations for the

Department of Environmental Protection in the General

Appropriation Act:

(1)  (Reserved).

(2)  Notwithstanding the provisions of section 502 of the

act of July 9, 2008 (1st Sp.Sess., P.L.1873, No.1), known as

the Alternative Energy Investment Act, in fiscal year

2011-2012, no funds shall be appropriated from the General

Fund to the department for the Consumer Energy Program. Any

appropriation for fiscal year 2011-2012 is revoked.

Section 1724-B.  Department of General Services (Reserved).

Section 1725-B.  Department of Health.

The following shall apply to appropriations for the

Department of Health in the General Appropriation Act:

(1)  Funds appropriated for lupus programs shall be

distributed in the same proportion as distributed in fiscal

year 2010-2011.

(2)  Funds appropriated for biotechnology research

include $750,000 for a regenerative medicine center located

in a county of the second class and $1,036,000 for an

institution for hepatitis and virus research located in a

county of the second class A, which conducts research related

to developing new therapies for viral hepatitis and liver

cancer.

Section 1726-B.  Insurance Department (Reserved).

Section 1727-B.  Department of Labor and Industry.

The following shall apply to appropriations for the

Department of Labor and Industry in the General Appropriation

Act:

(1)  The appropriation for payment to the Vocational

Rehabilitation Fund for work of the State Board of Vocational

Rehabilitation includes $2,153,000 for a Statewide

professional service provider association for the blind to

provide specialized services and prevention of blindness

services and $431,000 to provide specialized services and

prevention of blindness services in cities of the first

class.

(2)  For the "Reed Act-Unemployment Insurance" and "Reed

Act-Employment Services and Unemployment Insurance"

appropriations, the total amount which may be obligated shall

not exceed the limitations under section 903 of the Social

Security Act (49 Stat. 620, 42 U.S.C. § 1103).

Section 1728-B.  Department of Military and Veterans Affairs

(Reserved).

Section 1729-B.  Department of Public Welfare.

The following shall apply to appropriations for the

Department of Public Welfare from the General Appropriation Act:

(1)  Authorized transfers for child-care services. The

following shall apply:

(i)  The department, upon approval of the secretary,

may transfer Federal funds appropriated for TANFBG child

care assistance to the CCDFBG child-care services

appropriation to provide child-care services to

additional low-income families if the transfer of funds

will not result in a deficit in the appropriation. The

secretary shall provide notice ten days prior to a

transfer under this subparagraph 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.

(ii)  The department, upon approval of the secretary,

may transfer Federal funds appropriated for CCDFBG child

care assistance to the CCDFBG child-care services

appropriation to provide child-care services to

additional low-income families, provided that the

transfer of funds will not result in a deficit in the

appropriation. The secretary shall provide notice ten

days prior to a transfer under this subparagraph 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.

(2)  Federal and State medical assistance payments. The

following shall apply:

(i)  No funds appropriated for approved capitation

plans shall be used to pay a provider who fails to supply

information in a form required by the department in order

to facilitate claims for Federal financial participation

for services rendered to general assistance clients.

(ii)  For fiscal year 2011-2012, payments to

hospitals for Community Access Fund grants shall be

distributed under the formulas utilized for these grants

in fiscal year 2010-2011. If the total funding available

for Community Access Fund payments in fiscal year

2011-2012 is less than that available in fiscal year

2010-2011, payments shall be made on a pro rata basis.

(iii)  Funds appropriated for medical assistance

transportation shall only be utilized as a payment of

last resort for transportation for eligible medical

assistance recipients.

(iv)  Amounts allocated from funds appropriated for

medical assistance outpatient services for the Select

Plan for Women Preventative Health Services shall be used

for women's medical services, including noninvasive

contraception supplies.

(v)  Federal or State funds appropriated under the

General Appropriation Act in accordance with Article

VIII-H of the act of June 13, 1967 (P.L.31, No.21), known

as the Public Welfare Code, not used to make payments to

hospitals qualifying as Level III trauma centers shall be

used to make payments to hospitals qualifying as Levels I

and II trauma centers.

(vi)  Qualifying university-affiliated physician

practice plans which received funds for the fiscal year

2010-2011 shall not receive any less than 50% of the

State appropriation made available to those university-

affiliated physician practice plans during fiscal year

2010-2011.

(vii)  Qualifying State-related academic medical

centers which received funds for the fiscal year

2010-2011 shall not receive any less than 50% of the

State appropriation made available to those academic

medical centers during fiscal year 2010-2011. From funds

appropriated for qualifying State-related academic

medical centers, $2,000,000 shall be distributed to an

academic medical center located in a third class county

with a population between 210,000 and 215,000 under the

2010 Federal decennial census, $500,000 shall be

distributed to an academic medical center located in a

third class county with a population between 279,000 and

282,000 under the 2010 Federal decennial census and

$500,000 to an academic medical center located in a city

of the first class who did not receive funding during

fiscal year 2010-2011.

(3)  Breast cancer screening. The following shall

apply:

(i)  Funds appropriated for breast cancer screening

may be used for women's medical services, including

noninvasive contraception supplies.

(ii)  (Reserved).

(4)  Women's service programs. The following shall apply:

(i)  Funds appropriated for women's service programs

grants to nonprofit agencies whose primary function is to

provide alternatives to abortion shall be expended to

provide services to women until childbirth and for up to

12 months thereafter, including food, shelter, clothing,

health care, counseling, adoption services, parenting

classes, assistance for postdelivery stress and other

supportive programs and services and for related outreach

programs. Agencies may subcontract with other nonprofit

entities which operate projects designed specifically to

provide all or a portion of these services. Projects

receiving funds referred to in this subparagraph shall

not promote, refer for or perform abortions or engage in

any counseling which is inconsistent with the

appropriation referred to in this subparagraph and shall

be physically and financially separate from any component

of any legal entity engaging in such activities.

(ii)  Federal funds appropriated for TANFBG

Alternatives to Abortion shall be utilized solely for

services to women whose gross family income is below 185%

of the Federal poverty guidelines.

(5)  County children and youth programs. The following

shall apply:

(i)  No more than 50% of funds allocated from the

State appropriation for county children and youth

programs to each county shall be expended until each

county submits to the department data for the prior State

fiscal year, and updated quarterly, on the unduplicated

caseloads, unduplicated services and number of

caseworkers by county program. Data shall be submitted in

a form acceptable to the department. A copy of the data

shall be sent to the chairman and minority chairman of

the Appropriations Committee of the Senate and to the

chairman and the minority chairman of the Appropriations

Committee of the House of Representatives.

(ii)  Reimbursement for children and youth services

made under section 704.1 of the Public Welfare Code shall

not exceed the amount of State funds appropriated. It is

the intent of the General Assembly that counties do not

experience any adverse fiscal impact due to the

department's maximization efforts.

(6)  Community-based family centers. No funds

appropriated for community-based family centers may be

considered as part of the base for calculation of the county

child welfare needs-based budget for a fiscal year.

(7)  County human services. The Department of Public

Welfare shall convene a working group comprised of Department

of Public Welfare personnel and the County Commissioners

Association of Pennsylvania for the purpose of developing

mutually agreeable pilot programs for allocation of county

human services funding as multiple purpose grants, permitting

counties to utilize funds at the county level normally

provided in categorical allocations, such as child welfare,

mental health, substance abuse and similar programs. The

Department of Public Welfare shall report jointly developed

recommendations to the General Assembly no later than October

31, 2011, with the intent of establishing the multipurpose

pilot grant programs in the 2012-2013 budget.

(8)  Funds appropriated shall not be used to privatize