ARTICLE VIII

TAXATION AND FINANCE

 

Sec.

 1.  Uniformity of taxation.

 2.  Exemptions and special provisions.

 3.  Reciprocal exemptions.

 4.  Public utilities.

 5.  Exemption from taxation restricted.

 6.  Taxation of corporations.

 7.  Commonwealth indebtedness.

 8.  Commonwealth credit not to be pledged.

 9.  Municipal debt not to be assumed by Commonwealth.

10.  Audit.

11.  Gasoline taxes and motor license fees restricted.

12.  Governor's budgets and financial plan.

13.  Appropriations.

14.  Surplus.

15.  Project "70".

16.  Land and Water Conservation and Reclamation Fund.

17.  Special emergency legislation.

 

Adoption.  Unless otherwise noted, the provisions of present Article VIII (formerly Article IX) were adopted December 16, 1873, 1874 P.L.3, effective January 1, 1874. The article number was changed from IX to VIII by proclamation of the Governor of July 7, 1967, P.L.1063.

Prior Provisions.  Former Article VIII (Suffrage and Elections) was renumbered to Article VII by proclamation of the Governor of July 7, 1967, P.L.1063.

§ 1.  Uniformity of taxation.

All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws.

(Nov. 6, 1923, P.L.1117, J.R.1; Nov. 4, 1958, 1957 P.L.1021, J.R.3; Nov. 7, 1961, P.L.1785, J.R.6; Nov. 2, 1965, P.L.1908, J.R.2; Apr. 23, 1968, P.L.App.9, Prop. No.5)

 

1968 Amendment.  Section 4 of Proposal No.5 provided that the amendment to section 1 shall take effect as soon as possible but no later than July 1, 1970.

§ 2.  Exemptions and special provisions.

(a) The General Assembly may by law exempt from taxation:

(i)  Actual places of regularly stated religious worship;

(ii)  Actual places of burial, when used or held by a person or organization deriving no private or corporate profit therefrom and no substantial part of whose activity consists of selling personal property in connection therewith;

(iii)  That portion of public property which is actually and regularly used for public purposes;

(iv)  That portion of the property owned and occupied by any branch, post or camp of honorably discharged servicemen or servicewomen which is actually and regularly used for benevolent, charitable or patriotic purposes; and

(v)  Institutions of purely public charity, but in the case of any real property tax exemptions only that portion of real property of such institution which is actually and regularly used for the purposes of the institution.

(b)  The General Assembly may, by law:

(i)  Establish standards and qualifications for private forest reserves, agricultural reserves, and land actively devoted to agricultural use, and make special provision for the taxation thereof;

(ii)  Establish as a class or classes of subjects of taxation the property or privileges of persons who, because of age, disability, infirmity or poverty are determined to be in need of tax exemption or of special tax provisions, and for any such class or classes, uniform standards and qualifications. The Commonwealth, or any other taxing authority, may adopt or employ such class or classes and standards and qualifications, and except as herein provided may impose taxes, grant exemptions, or make special tax provisions in accordance therewith. No exemption or special provision shall be made under this clause with respect to taxes upon the sale or use of personal property, and no exemption from any tax upon real property shall be granted by the General Assembly under this clause unless the General Assembly shall provide for the reimbursement of local taxing authorities by or through the Commonwealth for revenue losses occasioned by such exemption;

(iii)  Establish standards and qualifications by which local taxing authorities may make uniform special tax provisions applicable to a taxpayer for a limited period of time to encourage improvement of deteriorating property or areas by an individual, association or corporation, or to encourage industrial development by a non-profit corporation; and

(iv)  Make special tax provisions on any increase in value of real estate resulting from residential construction. Such special tax provisions shall be applicable for a period not to exceed two years.

(v)  Establish standards and qualifications by which local taxing authorities in counties of the first and second class may make uniform special real property tax provisions applicable to taxpayers who are longtime owner-occupants as shall be defined by the General Assembly of residences in areas where real property values have risen markedly as a consequence of the refurbishing or renovating of other deteriorating residences or the construction of new residences.

(vi)  Authorize local taxing authorities to exclude from taxation an amount based on the assessed value of homestead property. The exclusions authorized by this clause shall not exceed 100% of the assessed value of each homestead property within a local taxing jurisdiction. A local taxing authority may not increase the millage rate of its tax on real property to pay for these exclusions.

(c)  Citizens and residents of this Commonwealth, who served in any war or armed conflict in which the United States was engaged and were honorably discharged or released under honorable circumstances from active service, shall be exempt from the payment of all real property taxes upon the residence occupied by the said citizens and residents of this Commonwealth imposed by the Commonwealth of Pennsylvania or any of its political subdivisions if, as a result of military service, they are blind, paraplegic or double or quadruple amputees or have a service-connected disability declared by the United States Veterans Administration or its successor to be a total or 100% permanent disability, and if the State Veterans' Commission determines that such persons are in need of the tax exemptions granted herein. This exemption shall be extended to the unmarried surviving spouse upon the death of an eligible veteran provided that the State Veterans' Commission determines that such person is in need of the exemption.

(Apr. 23, 1968, P.L.App.9, Prop. No.5; May 15, 1973, P.L.451, J.R.1; Nov. 8, 1977, P.L.361, J.R.1; Nov. 6, 1984, 1982 P.L.1478, J.R.2; Nov. 5, 1985, P.L.556, J.R.2; Nov. 4, 1997, P.L.633, J.R.1; Nov. 7, 2017, 2018 P.L.1197, J.R.1)

 

2018 Amendment.  Joint Resolution No.1 of 2017 amended subsec. (b)(vi).

Rejection of Proposed 1989 Amendment.  The question of amending subsection (b) to permit local taxing authorities to reduce tax rates on residential real property to the extent of additional revenues obtained from personal income taxes, as more fully set forth in Joint Resolution No.1 of 1989, was submitted to the electors at the municipal election on May 16, 1989, and was rejected. Section 1 of Article XI prohibits the submission of an amendment more often than once in five years.

1985 Amendment.  Joint Resolution No.2 amended subsec. (c).

1984 Amendment.  Joint Resolution No.2 of 1982 added subsec. (b)(v).

1973 Amendment.  Joint Resolution No.1 amended subsec. (b)(i).

1968 Amendment.  Proposal No.5 renumbered former section 2 to present section 5 and added present section 2. Section 4 of Proposal No.5 provided that section 2 shall take effect as soon as possible but no later than July 1, 1970.

§ 3.  Reciprocal exemptions.

Taxation laws may grant exemptions or rebates to residents, or estates of residents, of other States which grant similar exemptions or rebates to residents, or estates of residents, of Pennsylvania.

(Nov. 6, 1928, 1927 P.L.1049, J.R.12)

 

1928 Amendment.  Joint Resolution No.12 added present section 3 (formerly section 1B).

Prior Provisions.  Former section 3 was renumbered to present section 6 and present section 3 was renumbered from section 1B by amendment of April 23, 1968, P.L.App.9, Prop. No.5.

§ 4.  Public utilities.

The real property of public utilities is subject to real estate taxes imposed by local taxing authorities. Payment to the Commonwealth of gross receipts taxes or other special taxes in replacement of gross receipts taxes by a public utility and the distribution by the Commonwealth to the local taxing authorities of the amount as herein provided shall, however, be in lieu of local taxes upon its real property which is used or useful in furnishing its public utility service. The amount raised annually by such gross receipts or other special taxes shall not be less than the gross amount of real estate taxes which the local taxing authorities could have imposed upon such real property but for the exemption herein provided. This gross amount shall be determined in the manner provided by law. An amount equivalent to such real estate taxes shall be distributed annually among all local taxing authorities in the proportion which the total tax receipts of each local taxing authority bear to the total tax receipts of all local taxing authorities, or in such other equitable proportions as may be provided by law.

Notwithstanding the provisions of this section, any law which presently subjects real property of public utilities to local real estate taxation by local taxing authorities shall remain in full force and effect.

(Apr. 23, 1968, P.L.App.9, Prop. No.5)

 

1968 Amendment.  Proposal No.5 added present section 4. Section 4 of Proposal No.5 provided that section 4 shall take effect July 1, 1970, unless the General Assembly earlier provides enabling legislation in accordance therewith.

Prior Provisions.  Former section 4 was both repealed and renumbered to present section 7 by amendment of April 23, 1968, P.L.App.5, Prop. No.3.

§ 5.  Exemption from taxation restricted.

All laws exempting property from taxation, other than the property above enumerated, shall be void.

 

Prior Provisions.  Former section 5 was repealed by amendment of April 23, 1968, P.L.App.5, Prop. No.3, and present section 5 was renumbered from former section 2 by amendment of April 23, 1968, P.L.App.9, Prop. No.5.

§ 6.  Taxation of corporations.

The power to tax corporations and corporate property shall not be surrendered or suspended by any contract or grant to which the Commonwealth shall be a party.

(Apr. 23, 1968, P.L.App.9, Prop. No.5)

 

1968 Amendment.  Proposal No.5 amended and renumbered former section 3 to present section 6.

Prior Provisions.  Former section 6 was renumbered to present section 8 by amendment of April 23, 1968, P.L.App.5, Prop. No.3.

§ 7.  Commonwealth indebtedness.

(a)  No debt shall be incurred by or on behalf of the Commonwealth except by law and in accordance with the provisions of this section.

(1)  Debt may be incurred without limit to suppress insurrection, rehabilitate areas affected by man-made or natural disaster, or to implement unissued authority approved by the electors prior to the adoption of this article.

(2)  The Governor, State Treasurer and Auditor General, acting jointly, may (i) issue tax anticipation notes having a maturity within the fiscal year of issue and payable exclusively from revenues received in the same fiscal year, and (ii) incur debt for the purpose of refunding other debt, if such refunding debt matures within the term of the original debt.

(3)  Debt may be incurred without limit for purposes specifically itemized in the law authorizing such debt, if the question whether the debt shall be incurred has been submitted to the electors and approved by a majority of those voting on the question.

(4)  Debt may be incurred without the approval of the electors for capital projects specifically itemized in a capital budget, if such debt will not cause the amount of all net debt outstanding to exceed one and three-quarters times the average of the annual tax revenues deposited in the previous five fiscal years as certified by the Auditor General. For the purposes of this subsection, debt outstanding shall not include debt incurred under clauses (1) and (2) (i), or debt incurred under clause (2) (ii) if the original debt would not be so considered, or debt incurred under subsection (3) unless the General Assembly shall so provide in the law authorizing such debt.

(b)  All debt incurred for capital projects shall mature within a period not to exceed the estimated useful life of the projects as stated in the authorizing law, and when so stated shall be conclusive. All debt, except indebtedness permitted by clause (2) (i), shall be amortized in substantial and regular amounts, the first of which shall be due prior to the expiration of a period equal to one-tenth the term of the debt.

(c)  As used in this section, debt shall mean the issued and outstanding obligations of the Commonwealth and shall include obligations of its agencies or authorities to the extent they are to be repaid from lease rentals or other charges payable directly or indirectly from revenues of the Commonwealth. Debt shall not include either (1) that portion of obligations to be repaid from charges made to the public for the use of the capital projects financed, as determined by the Auditor General, or (2) obligations to be repaid from lease rentals or other charges payable by a school district or other local taxing authority, or (3) obligations to be repaid by agencies or authorities created for the joint benefit of the Commonwealth and one or more other State governments.

(d)  If sufficient funds are not appropriated for the timely payment of the interest upon and installments of principal of all debt, the State Treasurer shall set apart from the first revenues thereafter received applicable to the appropriate fund a sum sufficient to pay such interest and installments of principal, and shall so apply the money so set apart. The State Treasurer may be required to set aside and apply such revenues at the suit of any holder of Commonwealth obligations.

(Nov. 5, 1918, 1917 P.L.1264, J.R.1; Nov. 6, 1923, P.L.1118, J.R.2; Apr. 23, 1968, P.L.App.5, Prop. No.3)

 

1968 Amendment.  Proposal No.3 amended and renumbered former section 4 to present section 7.

Prior Provisions.  Former section 7 was repealed by amendment of April 23, 1968, P.L.App.11, Prop. No.6.

Cross References.  Section 7 is referred to in sections 15, 16 of this article.

§ 8.  Commonwealth credit not to be pledged.

The credit of the Commonwealth shall not be pledged or loaned to any individual, company, corporation or association nor shall the Commonwealth become a joint owner or stockholder in any company, corporation or association.

(Apr. 23, 1968, P.L.App.5, Prop. No.3)

 

1968 Amendment.  Proposal No.3 amended and renumbered former section 6 to present section 8.

Prior Provisions.  Former section 8 was repealed by amendment of April 23, 1968, P.L.App.11, Prop. No.6.

§ 9.  Municipal debt not to be assumed by Commonwealth.

The Commonwealth shall not assume the debt, or any part thereof, of any county, city, borough, incorporated town, township or any similar general purpose unit of government unless such debt shall have been incurred to enable the Commonwealth to suppress insurrection or to assist the Commonwealth in the discharge of any portion of its present indebtedness.

(Apr. 23, 1968, P.L.App.5, Prop. No.3)

§ 10.  Audit.

The financial affairs of any entity funded or financially aided by the Commonwealth, and all departments, boards, commissions, agencies, instrumentalities, authorities and institutions of the Commonwealth, shall be subject to audits made in accordance with generally accepted auditing standards.

Any Commonwealth officer whose approval is necessary for any transaction relative to the financial affairs of the Commonwealth shall not be charged with the function of auditing that transaction after its occurrence.

(Apr. 23, 1968, P.L.App.7, Prop. No.4)

 

1968 Amendment.  Proposal No.4 amended and renumbered former section 14 to present section 10. Section 3 of Proposal No.4 provided that section 10 shall take effect as soon as possible but no later than July 1, 1970.

Prior Provisions.  Former section 10 was repealed by amendment of April 23, 1968, P.L.App.11, Prop. No.6.

§ 11.  Gasoline taxes and motor license fees restricted.

(a)  All proceeds from gasoline and other motor fuel excise taxes, motor vehicle registration fees and license taxes, operators' license fees and other excise taxes imposed on products used in motor transportation after providing therefrom for (a) cost of administration and collection, (b) payment of obligations incurred in the construction and reconstruction of public highways and bridges shall be appropriated by the General Assembly to agencies of the State or political subdivisions thereof; and used solely for construction, reconstruction, maintenance and repair of and safety on public highways and bridges and costs and expenses incident thereto, and for the payment of obligations incurred for such purposes, and shall not be diverted by transfer or otherwise to any other purpose, except that loans may be made by the State from the proceeds of such taxes and fees for a single period not exceeding eight months, but no such loan shall be made within the period of one year from any preceding loan, and every loan made in any fiscal year shall be repayable within one month after the beginning of the next fiscal year.

(b)  All proceeds from aviation fuel excise taxes, after providing therefrom for the cost of administration and collection, shall be appropriated by the General Assembly to agencies of the State or political subdivisions thereof and used solely for: the purchase, construction, reconstruction, operation and maintenance of airports and other air navigation facilities; aircraft accident investigation; the operation, maintenance and other costs of aircraft owned or leased by the Commonwealth; any other purpose reasonably related to air navigation including but not limited to the reimbursement of airport property owners for property tax expenditures; and costs and expenses incident thereto and for the payment of obligations incurred for such purposes, and shall not be diverted by transfer or otherwise to any other purpose.

(Nov. 6, 1945, P.L.1418, J.R.1; Nov. 3, 1981, P.L.603, J.R.2)

 

1981 Amendment.  Joint Resolution No.2 amended and lettered existing provisions subsec. (a) and added subsec. (b).

1945 Amendment.  Joint Resolution No.1 added present section 11 (formerly section 18).

Prior Provisions.  Former section 11 was repealed by amendment of April 23, 1968, P.L.App.5, Prop. No.3, and present section 11 was renumbered from former section 18 by amendment of April 23, 1968, P.L.App.9, Prop. No.5.

§ 12.  Governor's budgets and financial plan.

Annually, at the times set by law, the Governor shall submit to the General Assembly:

(a)  A balanced operating budget for the ensuing fiscal year setting forth in detail (i) proposed expenditures classified by department or agency and by program and (ii) estimated revenues from all sources. If estimated revenues and available surplus are less than proposed expenditures, the Governor shall recommend specific additional sources of revenue sufficient to pay the deficiency and the estimated revenue to be derived from each source;

(b)  A capital budget for the ensuing fiscal year setting forth in detail proposed expenditures to be financed from the proceeds of obligations of the Commonwealth or of its agencies or authorities or from operating funds; and

(c)  A financial plan for not less than the next succeeding five fiscal years, which plan shall include for each such fiscal year:

(i)  Projected operating expenditures classified by department or agency and by program, in reasonable detail, and estimated revenues, by major categories, from existing and additional sources, and

(ii)  Projected expenditures for capital projects specifically itemized by purpose, and the proposed sources of financing each.

(Apr. 23, 1968, P.L.App.7, Prop. No.4)

 

1968 Amendment.  Proposal No.4 added present section 12. Section 3 of Proposal No.4 provided that section 12 shall take effect as soon as possible but no later than July 1, 1970.

Prior Provisions.  Former section 12 was repealed by amendment of April 23, 1968, P.L.App.5, Prop. No.3.

§ 13.  Appropriations.

(a)  Operating budget appropriations made by the General Assembly shall not exceed the actual and estimated revenues and surplus available in the same fiscal year.

(b)  The General Assembly shall adopt a capital budget for the ensuing fiscal year.

(Apr. 23, 1968, P.L.App.7, Prop. No.4)

 

1968 Amendment.  Proposal No.4 added present section 13. Section 3 of Proposal No.4 provided that section 13 shall take effect as soon as possible but no later than July 1, 1970.

Prior Provisions.  Former section 13 was repealed by amendment of April 23, 1968, P.L.App.5, Prop. No.3.

§ 14.  Surplus.

All surplus of operating funds at the end of the fiscal year shall be appropriated during the ensuing fiscal year by the General Assembly.

(Apr. 23, 1968, P.L.App.7, Prop. No.4)

 

1968 Amendment.  Proposal No.4 renumbered former section 14 to present section 10 and added present section 14. Section 3 of Proposal No.4 provided that section 14 shall take effect as soon as possible but no later than July 1, 1970.

§ 15.  Project "70".

In addition to the purposes stated in Article VIII, section 7 of this Constitution, the Commonwealth may be authorized by law to create debt and to issue bonds to the amount of $70,000,000 for the acquisition of land for State parks, reservoirs and other conservation and recreation and historical preservation purposes, and for participation by the Commonwealth with political subdivisions in the acquisition of land for parks, reservoirs and other conservation and recreation and historical preservation purposes, subject to such conditions and limitations as the General Assembly may prescribe.

(Nov. 5, 1963, P.L.1403, J.R.5)

 

1963 Amendment.  Joint Resolution No.5 added present section 15 (formerly section 24).

Prior Provisions.  Former section 15 was repealed by amendment of April 23, 1968, P.L.App.11, Prop. No.6, and present section 15 was renumbered from section 24 by amendment of April 23, 1968, P.L.App.9, Prop. No.5.

Repeal of Section.  Section 4 of Proposal No.3 of 1968 provided that, effective when the last bonds have been issued under its authority, section 24 (now section 15) is repealed.

Cross References.  Section 15 is referred to in section 16 of this article.

§ 16.  Land and Water Conservation and Reclamation Fund.

In addition to the purposes stated in Article VIII, section 7 of this Constitution, the Commonwealth may be authorized by law to create a debt and issue bonds in the amount of $500,000,000 for a Land and Water Conservation and Reclamation Fund to be used for the conservation and reclamation of land and water resources of the Commonwealth, including the elimination of acid mine drainage, sewage, and other pollution from the streams of the Commonwealth, the provision of State financial assistance to political subdivisions and municipal authorities of the Commonwealth of Pennsylvania for the construction of sewage treatment plants, the restoration of abandoned strip-mined areas, the control and extinguishment of surface and underground mine fires, the alleviation and prevention of subsidence resulting from mining operations, and the acquisition of additional lands and the reclamation and development of park and recreational lands acquired pursuant to the authority of Article VIII, section 15 of this Constitution, subject to such conditions and liabilities as the General Assembly may prescribe.

(May 16, 1967, P.L.1055, J.R.8)

 

1967 Amendment.  Joint Resolution No.8 added present section 16 (formerly section 25).

Prior Provisions.  Former section 16 was repealed by amendment of April 23, 1968, P.L.App.5, Prop. No.3, and present section 16 was renumbered from section 25 by amendment of April 23, 1968, P.L.App.9, Prop. No.5.

Repeal of Section.  Section 4 of Proposal No.3 of 1968 provided that, effective when the last bonds have been issued under its authority, section 25 (now section 16) is repealed.

§ 17.  Special emergency legislation.

(a)  Notwithstanding any provisions of this Constitution to the contrary, the General Assembly shall have the authority to enact laws providing for tax rebates, credits, exemptions, grants-in-aid, State supplementations, or otherwise provide special provisions for individuals, corporations, associations or nonprofit institutions, including nonpublic schools (whether sectarian or nonsectarian) in order to alleviate the danger, damage, suffering or hardship faced by such individuals, corporations, associations, institutions or nonpublic schools as a result of Great Storms or Floods of September 1971, of June 1972, or of 1974, or of 1975 or of 1976.

(b)  Notwithstanding the provisions of Article III, section 29 subsequent to a Presidential declaration of an emergency or of a major disaster in any part of this Commonwealth, the General Assembly shall have the authority by a vote of two-thirds of all members elected to each House to make appropriations limited to moneys required for Federal emergency or major disaster relief. This subsection may apply retroactively to any Presidential declaration of an emergency or of a major disaster in 1976 or 1977.

(Nov. 7, 1972, 1st Sp.Sess., P.L.1970, J.R.1; Nov. 4, 1975, P.L.622, J.R.2; Nov. 8, 1977, P.L.362, J.R.2)

 

1977 Amendment.  Joint Resolution No.2 amended and lettered existing provisions subsec. (a) and added subsec. (b) under the emergency provisions of Article XI. For preamble to amendment, see section 1 of Joint Resolution No.2 in the appendix to the Constitution.

1975 Amendment.  Joint Resolution No.2 amended section 17 under the emergency provisions of section 1(a) and (b) of Article XI. For preamble to amendment, see section 1 of Joint Resolution No.2 in the appendix to the Constitution.

1972 Amendment.  Joint Resolution No.1 added present section 17 under the emergency provisions of section 1(a) and (b) of Article XI. For preamble to amendment, see section 1 of Joint Resolution No.1 in the appendix to the Constitution.

Prior Provisions.  Former section 17 was repealed by amendment of April 23, 1968, P.L.App.5, Prop. No.3.