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HOUSE AMENDED
PRIOR PRINTER'S NOS. 161, 276
PRINTER'S NO. 999
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
181
Session of
2017
INTRODUCED BY MENSCH, BARTOLOTTA, GREENLEAF, BROOKS, ARGALL,
RESCHENTHALER, VULAKOVICH, DiSANTO, FOLMER, WAGNER, VOGEL,
STEFANO, EICHELBERGER, LAUGHLIN, RAFFERTY, WHITE, ALLOWAY,
AUMENT, SCARNATI, HUTCHINSON, MARTIN, WARD AND REGAN,
JANUARY 25, 2017
AS REPORTED FROM COMMITTEE ON APPROPRIATIONS, HOUSE OF
REPRESENTATIVES, AS AMENDED, JUNE 21, 2017
AN ACT
Providing for performance-based budgeting and tax credit
efficiency review; establishing the Performance-Based Budget
Board and providing for its powers and duties; and conferring
powers and imposing duties on the Independent Fiscal Office
AND PROVIDING FOR PERFORMANCE HEARINGS AND PERFORMANCE
REVIEWS.
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 Performance-
Based Budgeting and Tax Credit Efficiency Act.
Section 2. Findings.
The General Assembly finds and declares as follows:
(1) The traditional method of budget development, which
relies upon incremental adjustments to expenditures made in
the previous financial period, insulates governmental
activities from the thorough fiscal review expected by
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taxpaying citizens.
(2) New and changing demands for public services are met
through excessive budget growth rather than by systematic and
thorough analysis based on performance measurement and
established performance benchmarks and the reallocation of
existing fiscal resources. Traditional budgeting processes
often result in the continuation of obsolete or ineffective
programs and increased reliance on taxpayer support. Some
programs were established so long ago that the original
statutory basis has either been forgotten or is out of date.
In time, the budget is driven by inertia rather than by clear
and defensible purposes.
(3) Performance-based budgeting is an effective method
to counter the tendency toward perpetuation of outmoded State
programs.
(4) A thorough and efficient review of the tax credits
the Commonwealth offers to various individuals, organizations
and companies is vital to ensuring that the Commonwealth is
being a good stalwart of the support of taxpayers.
Section 3. 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:
"Agency." An agency, board or commission under the
Governor's jurisdiction.
"Board." The Performance-Based Budget Board established
under this act.
"Evaluation." The process of review of a tax credit by the
IFO. The term includes soliciting or accepting public input.
"Evaluation date." The date by which an evaluation of a tax
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credit by the IFO must be completed.
"IFO." The Independent Fiscal Office established under
Article VI-B of the act of April 9, 1929 (P.L.177, No.175),
known as The Administrative Code of 1929.
"Secretary." The Secretary of the Budget of the
Commonwealth.
"Tax Reform Code of 1971." The act of March 4, 1971 (P.L.6,
No.2), known as the Tax Reform Code of 1971.
Section 4. Performance-based budgets.
(a) Initiation of program.--Notwithstanding the provisions
of sections 610 and 611 of the act of April 9, 1929 (P.L.177,
No.175), known as The Administrative Code of 1929, to the
contrary, the secretary BOARD shall for fiscal year 2018-2019
initiate a program of performance-based budget reviews as part
of the annual budget preparation and program evaluation
processes.
(b) Schedule.--The secretary, in conjunction with the
director of the IFO, BOARD shall, within 30 days of the
effective date of this act, establish a schedule of performance-
based budget reviews for all agencies. The schedule shall ensure
that the agencies are subject to a performance-based budget
review at least once every five years.
(c) Notice.--Each time an agency is subject to a
performance-based budget review, the secretary BOARD shall
notify the agency and require the agency to prepare and submit
such information to the IFO as may be required for the
preparation of a performance-based budget plan. The information
shall include, but not be limited to:
(1) Detailed descriptions of all agency line item
appropriations and programs, including information on
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populations served, grants awarded and subsidies provided for
grant and subsidy appropriations.
(2) Descriptive information and data related to existing
performance measures for agency appropriations and programs.
(3) An agency mission statement and agency goals and
objectives for the budget year and successive planning years,
including specific goals and objectives, where they exist,
for agency programs.
(4) Any other information as the IFO may require.
(d) Submission of information.--Agencies shall submit
performance-based budget information contemporaneously to the
secretary, BOARD AND the IFO, the chairperson and minority
chairperson of the Appropriations Committee of the Senate and
the chairperson and minority chairperson of the Appropriations
Committee of the House of Representatives.
(e) Concurrent resolutions.--The General Assembly may direct
a performance-based budget review for an agency by adoption of a
concurrent resolution. Upon adoption of a concurrent resolution
under this subsection, the secretary BOARD shall make
notification to the agency under subsection (c).
Section 5. Independent Fiscal Office.
(a) Development of agency performance-based budget plan.--
(1) The IFO, pursuant to its mandate under section 604-
B(a)(3) of the act of April 9, 1929 (P.L.177, No.175), known
as The Administrative Code of 1929, and this act, shall
review agency performance-based budget information and
develop an agency performance-based budget plan for agencies
subject to a performance-based budget review under section 4.
(2) In developing performance-based budget plans the IFO
shall evaluate each agency program or line-item appropriation
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and develop performance measures for each agency program or
line-item appropriation.
(3) Performance measurements shall include outcome-based
measures along with efficiency measures, activity cost
analysis, ratio measures, measures of status improvement of
recipient populations, economic outcomes and performance
benchmarks against similar State programs or similar programs
of other states or jurisdictions.
(b) Completion and submission of evaluations.--The
evaluations under subsection (a) shall be completed in a timely
manner and submitted by the IFO to the board for review and
approval.
(c) Interagency cooperation.--The secretary BOARD and the
heads of agencies shall cooperate with the IFO and provide any
information or data that the IFO may require to carry out its
duties under this act.
Section 6. Evaluation.
(a) Evaluation.--Beginning January 1, 2018, the IFO shall
undertake and complete an evaluation of a tax credit by the
evaluation date as follows:
(1) On or before January 1, 2019, for the following tax
credits:
(i) Article XVII-D of the Tax Reform Code of 1971.
(ii) Article XVII-G of the Tax Reform Code of 1971.
(iii) Article XVIII-F of the Tax Reform Code of
1971.
(iv) Article XX-B of the act of March 10, 1949
(P.L.30, No.14), known as the Public School Code of 1949.
(2) On or before January 1, 2020, for the following tax
credits:
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(i) Article XVII-B of the Tax Reform Code of 1971.
(ii) Article XVIII of the Tax Reform Code of 1971.
(iii) Article XVIII-E of the Tax Reform Code of
1971.
(iv) The tax credits authorized under sections 518
and 519 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.
(3) On or before January 1, 2021, for the following tax
credits:
(i) Article XVII-E of the Tax Reform Code of 1971.
(ii) Article XVII-H of the Tax Reform Code of 1971.
(iii) Article XVIII-C of the Tax Reform Code of 1971.
(iv) Section 1906-F of the Tax Reform Code of 1971.
(4) On or before January 1, 2022, for the following tax
credits:
(i) Article XVII-I of the Tax Reform Code of 1971.
(ii) Article XIX-A of the Tax Reform Code of 1971.
(iii) Article XIX-B of the Tax Reform Code of 1971.
(iv) Article XIX-C of the Tax Reform Code of 1971.
(v) The tax credit authorized under Chapter 7 of the
act of July 9, 2008 (1st Sp.Sess., P.L.1873, No.1), known
as the Alternative Energy Investment Act.
(5) On or before January 1, 2023, for the following tax
credits:
(i) Article XVII-A of the Tax Reform Code of 1971.
(ii) Article XVIII-B of the Tax Reform Code of 1971.
(iii) Article XVIII-D of the Tax Reform Code of
1971.
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(iv) Any other tax credit not specified under this
subsection.
(b) Frequency.--Tax credits enumerated under subsection (a)
shall be evaluated by the IFO on or before January 1 of every
fifth year after the dates specified under subsection (a)(1),
(2), (3), (4) and (5).
(c) Future tax credits.--Subject to subsection (d), a tax
credit authorized on or after the effective date of this section
shall be evaluated by the IFO on or before January 1 of the
fifth year after enactment.
(d) Termination.--If a tax credit has a termination date
provided for by law, an evaluation shall be made by the IFO of
the tax credit on or before January 1 of the year preceding the
calendar year of the termination date.
(e) Duty.--The IFO must submit a report of the evaluations
made under this section to the Governor, the chairperson and
minority chairperson of the Appropriations Committee of the
Senate, the chairperson and minority chairperson of the Finance
Committee of the Senate, the chairperson and minority
chairperson of the Appropriations Committee of the House of
Representatives and the chairperson and minority chairperson of
the Finance Committee of the House of Representatives and must
make the reports available on the IFO's publicly accessible
Internet website.
(f) Contents.--A report under subsection (e) must include
all of the following:
(1) The purpose for which the tax credit was
established.
(2) Whether the original intent of the tax credit is
still appropriate.
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(3) Whether the tax credit is meeting the tax credit's
stated intent.
(4) Whether the tax credit could be more efficiently and
effectively carried out through alternative methods.
(5) The costs of providing the tax credit, including the
administrative cost to the Commonwealth and lost revenues to
the Commonwealth and local governments.
(6) Whether the tax credit should be continued,
terminated or amended.
(7) If the tax credit should be amended, recommended
changes to make the tax credit more efficient and effective.
Section 7 6. Performance-Based Budget Board.
(a) Establishment.--The Performance-Based Budget Board is
established as an independent board to review and approve the
performance-based budget plans developed by the IFO for agencies
and to make recommendations on how each agency's operations and
programs may be made more transparent, effective and efficient.
(b) Members.--The board shall consist of the following
members:
(1) The secretary DIRECTOR OF THE IFO.
(2) The chairperson of the Appropriations Committee of
the Senate.
(3) The minority chairperson of the Appropriations
Committee of the Senate.
(4) The chairperson of the Appropriations Committee of
the House of Representatives.
(5) The minority chairperson of the Appropriations
Committee of the House of Representatives.
(c) Review and approval.--
(1) The board shall review and approve or disapprove
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each performance-based budget plan submitted by the IFO in a
timely manner.
(2) Plans shall be approved by a majority vote of the
board taken at a public meeting.
(3) Meetings of the board shall be subject to the act of
February 14, 2008 (P.L.6, No.3), known as the Right-to-Know
Law, and 65 Pa.C.S. Ch. 7 (relating to open meetings).
(4) Plans not approved or disapproved by the board
within 45 days of submission by the IFO shall be deemed
approved. If the board disapproves a plan, it shall be
returned to the IFO with recommendations for revision and
resubmission to the board.
(d) Publication.--Approved performance-based budget plans
shall be published on the IFO's publicly accessible Internet
website AND DISTRIBUTED TO THE GENERAL ASSEMBLY AND THE BOARD BY
JANUARY 31 OF EACH YEAR.
(e) Agency representation during board review.--The head of
the agency, or a deputy secretary-level position, shall:
(1) Attend the performance-based budget board meeting
when the IFO presents the agency's performance-based budget
plan.
(2) Be available to offer additional explanation for
information contained in the plan.
Section 8 7. Governor.
The Governor shall consider approved agency performance-based
budgeting plans and performance measurements related thereto in
the annual budget development and implementation processes.
Section 9 8. General Assembly.
The General Assembly shall consider approved agency
performance-based budgeting plans, AND performance measurements
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related thereto and whether or not a tax credit is efficient in
the annual budget development and implementation processes.
SECTION 9. PERFORMANCE HEARINGS BY STANDING COMMITTEES.
(A) APPLICABILITY.--THIS SECTION APPLIES TO A PERFORMANCE
HEARING BY A STANDING COMMITTEE OF THE GENERAL ASSEMBLY TO
REVIEW AN AGENCY'S PROPOSED APPROPRIATION FOR THE NEXT FISCAL
YEAR.
(B) FREQUENCY.--EACH STANDING COMMITTEE SHALL CONDUCT AT
LEAST ONE PERFORMANCE HEARING BETWEEN FEBRUARY 1 AND MAY 30.
(C) PURPOSE.--EACH STANDING COMMITTEE SHALL HEAR A
PRESENTATION FROM EACH AGENCY THAT IS ASSIGNED TO THAT STANDING
COMMITTEE. THE PRESENTATION SHALL INCLUDE, BUT NOT BE LIMITED
TO, THE AGENCY'S PERFORMANCE-BASED BUDGET PLAN AND REGULATORY
AGENDA FOR THE NEXT FISCAL YEAR.
SECTION 10. PERFORMANCE AUDITS BY DEPARTMENT OF THE AUDITOR
GENERAL.
(A) FREQUENCY.--THE DEPARTMENT OF THE AUDITOR GENERAL SHALL,
WITHIN EXISTING RESOURCES, CONDUCT OR CAUSE TO BE CONDUCTED
PERFORMANCE AUDITS OF ONE OR MORE SPECIFIC PROGRAMS OR SERVICES
IN AT LEAST TWO AGENCIES ON AN ANNUAL BASIS.
(B) SELECTION CONSIDERATIONS.--IN SELECTING AN AGENCY AND A
SPECIFIC PROGRAM OR SERVICE FOR A PERFORMANCE AUDIT, THE
DEPARTMENT OF THE AUDITOR GENERAL SHALL CONSIDER RISK, AUDIT
COVERAGE, RESOURCES REQUIRED TO CONDUCT THE PERFORMANCE AUDIT
AND THE IMPACT OF THE AUDITED PROGRAM OR SERVICE ON THE AGENCY'S
PERFORMANCE-BASED GOALS.
(C) REVIEW.--A PERFORMANCE AUDIT OF A PROGRAM OR SERVICE
SELECTED FOR AUDIT MAY INCLUDE, BUT IS NOT LIMITED TO, A REVIEW
OF ALL OF THE FOLLOWING:
(1) THE INTEGRITY OF THE PERFORMANCE MEASURES AUDITED.
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(2) THE ACCURACY AND VALIDITY OF REPORTED RESULTS.
(3) THE OVERALL COST AND EFFECTIVENESS OF THE AUDITED
PROGRAM OR SERVICE IN ACHIEVING LEGISLATIVE INTENT AND THE
PERFORMANCE GOALS.
(D) TRANSMITTAL.--THE DEPARTMENT OF THE AUDITOR GENERAL
SHALL TRANSMIT EACH PERFORMANCE AUDIT REPORT FOR THE IMMEDIATELY
PRIOR FISCAL YEAR TO THE CHAIRPERSON AND MINORITY CHAIRPERSON OF
THE STANDING COMMITTEES WITH JURISDICTION OVER THE AGENCY.
(E) OTHER REPORTS.--THE DEPARTMENT OF THE AUDITOR GENERAL
SHALL TRANSMIT ANY OTHER AUDIT REPORT REGARDING AN AGENCY THAT
IS DEEMED RELEVANT FOR REVIEW BY A STANDING COMMITTEE WITH
JURISDICTION OVER THE AGENCY.
Section 10 11. Effective date.
This act shall take effect in 60 days.
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