THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY BOYD, O'NEILL, AUMENT, CALTAGIRONE, CUTLER, GEIST, GOODMAN, HARHAI, HARKINS, HICKERNELL, KAUFFMAN, KAVULICH, LONGIETTI, MARSHALL, MIRABITO, MURT, PEIFER, PETRARCA, QUINN, RAPP, REICHLEY, ROAE, SCAVELLO, J. TAYLOR, VULAKOVICH, WATSON, GRELL, HESS, MICOZZIE, DENLINGER, DeLUCA, D. COSTA, ROCK, K. SMITH AND SCHRODER, FEBRUARY 1, 2011

AS REPORTED FROM COMMITTEE ON FINANCE, HOUSE OF REPRESENTATIVES, AS AMENDED, JUNE 27, 2012   

AN ACT

Providing for a tax credit program to support community-based

mental retardation services in this Commonwealth.

The General Assembly finds and declares as follows:

(1)  In July 1999, the Supreme Court issued the Olmstead

v. L.C. decision that clearly challenges Federal, state and

local governments to develop more opportunities for

individuals with disabilities through more accessible systems

of cost-effective community-based services.

(2)  The Olmstead decision interpreted Title II of the

Americans with Disabilities Act of 1990 (Public Law 101-336,

104 Stat. 327) and its implementing regulation, requiring

states to administer their services, programs and activities

in the most integrated setting appropriate to the needs of

qualified individuals with disabilities.

(3)  In Pennsylvania, services for individuals with

mental retardation are evolving from a system comprised of

large public and private residential facilities to a system

of community supports and services so that individuals may

remain in their homes and communities.

(4)  Community services include a variety of residential

and day support services which are either administered or

operated by county mental health and mental retardation

offices, contracted private residential intermediate care

facilities for persons with mental retardation (ICF/MR) and

contracted private providers of community-based services.

(5)  In 1999, the Office of Mental Retardation of the

Department of Public Welfare released a report with a long-

term plan to address the waiting list for mental retardation

services in Pennsylvania.

(6)  The waiting list is comprised of three categories:

the emergency category, for individuals who need services

immediately; the critical list, for individuals who will need

services within one year; and the planning category, for

individuals who will need services in five years.

(7)  In 1999, a total of 14,083 persons were on the

waiting list for services. As of December 2004, the Office of

Mental Retardation reported that there are 20,652 individuals

on the waiting list for mental retardation services. Of that

group, 2,180 individuals are in the emergency category, 8,000

individuals are in the critical category and 10,000

individuals are in the planning category.

(8)  Since 2001, decreasing revenues and rising Medicaid

costs have impacted state budgets across the United States

with the results that Federal and State funding has been

insufficient to meet the needs of the growing number of

individuals with mental retardation waiting for community-

based services.

(9)  It is critical to access other sources of revenue to

address the waiting list for services.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Short title.

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

Retardation Services Tax Credit Act.

Section 2.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Business firm."  An entity authorized to do business in this

Commonwealth and subject to taxes imposed under Article III, IV,

VI, VII, VIII, IX or XV of the act of March 4, 1971 (P.L.6,

No.2), known as the Tax Reform Code of 1971.

"Contribution."  A donation of cash, personal property or

services, the value of which is the net cost of the donation to

the donor or the pro rata hourly wage, including benefits, of

the individual performing the service.

"Department."  The Department of Community and Economic

Development of the Commonwealth.

"Individual."  An individual who is eligible for community-

based services funded through the Office of Mental Retardation

of the Department of Public Welfare.

"Provider."  A nonprofit entity that:

(1)  Provides community-based services to individuals

with mental retardation, including, but not limited to,

community residential options and nonresidential services,

such as supported employment, training and recreation,

mobility training, employment training and opportunities and

adult day care.

(2)  Is exempt from Federal taxation under section 501(c)

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

26 U.S.C. § 1 et seq.).

Section 3.  Mental retardation services tax credit program.

(a)  Establishment.--A mental retardation services tax credit

program is hereby established to supplement, not supplant,

existing Federal and State funding for community-based services

for individuals with mental retardation in this Commonwealth.

(b)  Information.--In order to qualify under this act, a

provider must submit information to the department that enables

the department to confirm that the provider is exempt from

taxation under section 501(c)(3) of the Internal Revenue Code of

1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).

(c)  Provider application.--

(1)  An application submitted to the department by the

provider must describe the community-based services it

provides to individuals with mental retardation on a form

provided by the department.

(2)  The department shall consult with the Department of

Public Welfare as necessary to determine that the provider

provides community-based services for individuals with mental

retardation. The department shall review and approve or

disapprove the application.

(d)  Notification.--The department shall notify the provider

that the provider meets the requirements under this act for that

fiscal year no later than 60 days after the provider has

submitted the application required under this section.

(e)  Publication.--The department shall annually publish a

list of each provider qualified under this section in the

Pennsylvania Bulletin. The list shall also be posted and updated

as necessary on the publicly accessible Internet website of the

department.

(f)  Restriction on use of contributions.--All contributions

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received by a provider from a business firm claiming a tax

credit under this act must use the contributions for direct care

or services relating to direct care of individuals.

Section 4.  Availability of tax credits.

(a)  Application.--A business firm may apply to the

department for a tax credit under section 5. A business firm

shall receive a tax credit under this act if the provider that

receives the contribution from the business firm appears on the

list under section 3(e).

(b)  Availability of tax credits.--Tax credits under this

section shall be made available by the department on a first-

come-first-served basis within the limitation established under

section 6(a).

(c)  Contributions.--A contribution by a business firm to a

provider shall be made no later than 60 days following the

approval of an application under subsection (a).

Section 5.  Grant of tax credits.

(a)  General rule.--In accordance with section (6)(a), the

Department of Revenue shall grant a tax credit against a tax

liability owed to the Department of Revenue by a business firm

that provides proof of a contribution to a provider in the

taxable year in which the contribution is made. The business

firm may apply the credit against any tax due under Article III,

IV, VI, VII, VIII, IX or XV of the act of March 4, 1971 (P.L.6,

No.2), known as the Tax Reform Code of 1971.

(b)  Limitation.--The tax credit shall not exceed 50% of the

total amount contributed by a business firm to a provider during

the taxable year of the business firm. The tax credit shall not

exceed $100,000 annually per business firm.

(c)  Additional amount.--

(1)  A business firm that contributes to a provider in

two or more consecutive years shall qualify for a 75% tax

credit for the contributions made in the second year and

every consecutive year of making a contribution to a

provider.

(2)  Nothing in this section shall be construed to

require a business firm to contribute to the same provider

every year in order for the business firm to qualify for a

tax credit under this subsection.

Section 6.  Amount of tax credits.

(a)  General rule.--The total aggregate amount of all tax

credits approved shall not exceed $30,000,000 $10,000,000 in a

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fiscal year.

(b)  Activities.--No tax credit shall be approved for

activities that are part of a business firm's normal course of

business.

(c)  Tax liability.--A tax credit granted for any one taxable

year may not exceed the tax liability of a business firm.

(d)  Use.--A tax credit not used in the taxable year the

contribution was made may not be carried forward or carried back

and is not refundable or transferable.

Section 7.  Report to General Assembly.

The Department of Revenue shall provide a list of all

providers receiving contributions from business firms granted a

tax credit under this act to the General Assembly by June 30 of

each year.

Section 8.  Effective date.

This act shall take effect in 60 days.