SENATE AMENDED

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY DeLUCA, LEVDANSKY, BELFANTI, BEYER, CALTAGIRONE, CARROLL, D. COSTA, GIBBONS, GINGRICH, GOODMAN, GRUCELA, HARKINS, HESS, HORNAMAN, KOTIK, MANDERINO, MELIO, MILLER, QUINN, READSHAW, SANTONI, SIPTROTH, SOLOBAY, STURLA, WATERS, FRANKEL, KORTZ AND YUDICHAK, OCTOBER 29, 2009

SENATOR BROWNE, FINANCE, IN SENATE, RE-REPORTED AS AMENDED, SEPTEMBER 28, 2010   

AN ACT

Establishing the Sales and Use Tax Study Commission; and 

<--

Independent Fiscal Office; providing for its powers and

<--

duties, including a study and report on sales and use tax;

and making a related repeal.

<--

WHEREAS, Since the enactment of this Commonwealth's first

<--

sales and use tax, significant changes in the structure of the

State's economy have occurred; and

WHEREAS, These changes have had both salutary and detrimental

effects on business and consumers in this Commonwealth; and

WHEREAS, The sales and use tax has become checkered with more

than 50 exclusions and exemptions; and

WHEREAS, The addition of certain exclusions and exemptions

has caused confusion for consumers and vendors in the payment

and collection of the sales and use tax; and

WHEREAS, Many of the existing exclusions and exemptions have

become antiquated and obsolete; and

WHEREAS, Ensuring greater fairness in the sales and use tax

will create a fair and more competitive climate leading to

greater economic growth and stability in this Commonwealth; and

WHEREAS, Viable opportunities to broaden the sales and use

tax base should be comprehensively explored to enable this

Commonwealth to lower the overall tax burden on the citizens of

this State while also protecting the stability of the State

budget.

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 Sales and Use

Tax Study Act.

Section 2.  Purpose.

The purpose of this act is to establish the Pennsylvania

Sales and Use Tax Study Commission to study and analyze the

existing sales and use tax law, and to propose recommendations

to the Governor and the General Assembly for amending the tax

to:

(1)  eliminate obsolete and unnecessary provisions;

(2)  expand the tax base as necessary;

(3)  ensure a competitive economic market in this State;

and

(4)  protect the stability of the Commonwealth's budget.

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:

"Commission."  The Sales and Use Tax Study Commission

established under this act.

"Department."  The Department of Revenue of the

Commonwealth.

Section 4.  Pennsylvania Sales and Use Tax Study Commission.

(a)  Establishment.--There is hereby established the

Pennsylvania Sales and Use Tax Study Commission.

(b)  Purpose.--The purpose of the commission shall be to

evaluate the current sales and use tax structure in the

Commonwealth and recommend changes to the sales and use tax

structure that will eliminate obsolete provisions and broaden

the tax base, as necessary, thereby allowing the overall tax

burden to be reduced and creating a better tax climate in this

Commonwealth.

Section 5.  Tasks.

(a)  Study.--The commission shall study viable options for

increasing fairness and competitiveness in the sales and use tax

structure of the Commonwealth. The commission shall develop

solutions to ensure that the portion of State general funds

derived from the sales and use tax is not diminished.

(b)  Report.--The commission shall provide a comprehensive

report of the study conducted under subsection (a). The report

shall thoroughly discuss options and viable recommendations

considered and express clear rationales for options not

recommended. Specific changes to the sales and use tax

recommended by the commission shall be included in the report.

The commission shall present the report to the Governor, the

chairman and minority chairman of the Finance Committee of the

Senate and the chairman and minority chairman of the Finance

Committee of the House of Representatives on or before  March 1,

2012.

Section 6.  Composition of the commission.

(a)  Members.--The commission shall consist of the following

members:

(1)  Seven members appointed by the Governor. The

appointees shall be members of various constituencies

affected by or knowledgeable about the sales and use tax and

its impact on this Commonwealth's economy. These

constituencies include, but are not limited to, corporations,

tax policy experts and tax practitioners.  Five of the

Governor's seven appointees, one from each organization,

shall be members of the Pennsylvania Bar Association, the

Pennsylvania Chamber of Business and Industry, the

Pennsylvania Institute of Certified Public Accountants, the

Pennsylvania Bankers Association and the Pennsylvania

Retailers Association.

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

Minority Leader of the Senate and the Speaker of the House of

Representatives and the Minority Leader of the House of

Representatives shall each select one private sector citizen

representative from constituencies affected by or

knowledgeable about the Commonwealth's business taxes.

Staff from organizations representing business organizations are

not eligible for membership on the commission.

(b)  Chairperson.--The Secretary of Revenue shall chair the

commission and shall serve as a member.

(c)  Staffing.--The Commonwealth shall, through the

department, provide reasonable and necessary clerical, research

and administrative support and may contract for research,

analysis and editorial work in support of the commission as

necessary.

Section 7.  Public meetings.

All meetings, except for organizational meetings and planning

sessions shall be conducted as open meetings under 65 Pa.C.S.

Ch. 7 (relating to open meetings).

Section 8.  Cooperation by State agencies.

The department shall serve as the administrative support

agency of the commission and shall provide facilities, personnel

assistance, information and services necessary to fulfill the

mission of the commission. All other Commonwealth agencies are

directed to cooperate with and assist the commission in

fulfilling its duties and responsibilities.

Section 9.  Expiration.

This act shall expire 180 days after the submission of the

report provided for under section 5.

Section 10.  Effective date.

This act shall take effect  July 1, 2011.

Section 1.  Short title.

<--

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

Fiscal Office 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:

"Committee."  The Independent Fiscal Office Selection and

Organization Committee.

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

board, multistate agency or commission of the executive branch.

The term includes:

(1)  The Office of the Governor.

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

the Auditor General and the Treasury Department.

(3)  An independent agency as defined in 62 Pa.C.S. § 103

(relating to definitions).

(4)  A State-affiliated entity as defined in 62 Pa.C.S. §

103 (relating to definitions).

(5)  The General Assembly.

(6)  The Judiciary.

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

"Office."  The Independent Fiscal Office established in

section 3.

Section 3.  Office established.

There is established a nonpartisan Independent Fiscal Office

as an independent agency.

Section 4.  Duties of office.

(a)  Mandatory.--The office shall:

(1)  Prepare revenue estimates to include Federal funds,

State revenues and funds from other resources, including any

projected revenue surplus or deficit for a given fiscal year,

as provided under section 5.

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

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

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

The assessment shall take into account the state of the

economy, demographics, revenues and expenditures.

(3)  Develop performance measures for executive level

programs and departments and evaluate performance measures

and results as promulgated and reported by executive level

departments. Performance measurements shall be outcomes-based

and include, but not be limited to, activity cost analysis,

measures of status improvement of recipient populations,

economic outcomes and performance benchmarks against similar

State programs.

(4)  Provide an analysis, including economic impact, of

all tax and revenue proposals submitted by the Governor or

the Office of the Budget.

(5)  Study and analyze the existing sales and use tax law

and propose recommendations to the Governor and the General

Assembly for amending the tax to:

(i)  eliminate obsolete and unnecessary provisions;

(ii)  expand the tax base as necessary;

(iii)  ensure a competitive economic market in this

Commonwealth; and

(iv)  protect the stability of the Commonwealth's

budget.

(6)  Establish an Internet website.

(b)  Discretionary.--The office may:

(1)  Develop and use econometric models to annually

forecast State revenues and update the models. The office

shall make the equations of a model and any historic

databases related thereto available to the chairman and

minority chairman of the Appropriations Committee of the

Senate, the chairman and minority chairman of the

Appropriations Committee of the House of Representatives, the

Majority Leader and Minority Leader of the Senate and the

Majority Leader and Minority Leader of the House of

Representatives.

(2)  Provide an analysis of the executive budget,

including budgetary projections, economic outlook and

economic impact. The budget analysis may include performance

recommendations to secure greater efficiency and economy.

(3)  Provide an assessment of the Pennsylvania economy

and the national economy and the impact of the existing or

emerging State or national economic trends on revenue

performance for the current year and the forecasted or

projected revenue collections for the budget year and the

succeeding year.

Section 5.  Revenue estimates.

(a)  Initial revenue estimate.--By May 1, the office shall

submit to the General Assembly an initial revenue estimate for

the next fiscal year.

(b)  Official revenue estimate.--

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

official revenue estimate for the next fiscal year.

(2)  A revenue estimate submitted under this section

shall establish the maximum amount of revenue which may be

considered for the General Appropriation Act for the ensuing

fiscal year. No changes in a revenue estimate submitted by

the office under paragraph (1) shall be made by the office

thereafter unless changes in law affecting revenues and

receipts are enacted or proposed to be enacted with the

annual State budget or unless significant changes in economic

assumptions occur prior to June 30. The office shall submit

the amended revenue estimate to the General Assembly within

ten days of the change.

(3)  The office shall publish the methodology used to

develop revenue estimates.

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

minority chairman of the Appropriations Committee of the Senate,

the chairman and minority chairman of the Appropriations

Committee of the House of Representatives and the Secretary of

the Budget all data, assumptions or econometric models used to

develop projections and revenue estimates.

(d)  Required information.--

(1)  A revenue estimate submitted by the office under

subsection (b) shall include:

(i)  Projected revenue collections by specific tax or

revenue source, including Federal funds, the General

Fund, the Lottery Fund and the Motor License Fund.

(ii)  All data, assumptions and econometric models

used to develop a revenue estimate.

(iii)  Any projected revenue surplus or deficit for

the current fiscal year.

(2)  A revenue estimate shall be based on existing law

and tax policy and existing or emerging State or national

economic trends.

(e)  Proposed change in law.--The office shall prepare a

revenue estimate of any change in law affecting revenues and

receipts, including increases in regulatory fees, proposed or

considered as part of the annual State budget. If the proposed

change in law will have a fiscal impact in excess of $10,000,000

in any fiscal year, the estimate shall be prepared on the basis

of assumptions that estimate the probable behavioral responses

of taxpayers, businesses and other persons to the proposed

changes and shall include a statement identifying those

assumptions. The information may be used to revise the revenue

estimate under subsection (a).

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

conjunction with the Secretary of the Budget shall make revenue

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

(g)  Governor.--The Governor shall certify that any

appropriation bill does not cause total appropriations to exceed

the official revenue estimate under subsection (b) plus any

unappropriated surplus as provided in section 618 of the act of

April 9, 1929 (P.L.177, No.175), known as The Administrative

Code of 1929.

Section 6.  Budget information.

The office shall be notified and shall attend any briefings

provided by the Governor or the Secretary of the Budget under

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

as The Administrative Code of 1929.

Section 7.  Expenditures.

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

monthly expenditure data available to the office. The data shall

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

monthly data shall include a summary of the last monthly

submission. The data shall be provided in finished reports or

electronically, as provided in the act of April 9, 1929

(P.L.177, No.175), known as The Administrative Code of 1929. The

data shall be provided by fund, by appropriation, by department

and by organization within each department and shall include:

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

(2)  Itemized personnel vacancies and their cost.

(3)  New positions created and their cost.

(4)  Wage and overtime costs.

(5)  Allotments and expenditures for itemized personnel

expenses.

(6)  Allotments and expenditures for itemized operating

expenses.

(7)  Allotment and expenditures for itemized fixed

assets.

(8)  The rate of expenditures in appropriations for major

subsidy and grant programs during the month.

(b)  Revenue reports.--The Governor shall direct that monthly

revenue reports be submitted to the office. The revenue reports

shall show the actual collection of revenue itemized by source

and a comparison of the actual collections with estimated

collections for each month. The comparison shall include an

analysis of any change in collection patterns which will cause a

shortfall or overrun on annual estimates of more than 1%.

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

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

time to time by the office.

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

confidential pursuant to statute, the office shall have access

to all information available under this section on inquiry-only

screens through an integrated central computer system.

Section 8.  Revenue conference.

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

meeting with the Secretary of the Budget, the Secretary of

Revenue and the chairman and minority chairman of the

Appropriations Committee of the Senate and the chairman and

minority chairman of the Appropriations Committee of the House

of Representatives to discuss the following:

(1)  The Pennsylvania economy and the national economy

and the impact of the economic trends on revenue performance

for the budget year and the succeeding year.

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

tax or revenue source, including Federal funds, the General

Fund, the Lottery Fund and the Motor License Fund and

variations that may be occurring in the revenue estimate

submitted under section 5(a).

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

recommended by the Governor or the General Assembly for the

next succeeding fiscal year.

Section 9.  Access to information.

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

information, data, expense information, estimates and statistics

directly from a Commonwealth agency or a political subdivision.

All Commonwealth agencies and political subdivisions shall

furnish the director with all reports of expenditure for each

agency and any other available material or data which the

director determines to be necessary in the performance of the

duties of the office, other than material the disclosure of

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

authorized, upon agreement with the head of any Commonwealth

agency or political subdivision, to utilize the services,

facilities and personnel of the agency with or without

reimbursement.

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

functions of the office, the director is authorized to obtain

information, data, estimates and statistics developed by the

Office of the Budget and all Commonwealth agencies. The Office

of the Budget shall submit to the office copies of final agency

budget requests at the same time they are submitted to the

General Assembly under the act of April 9, 1929 (P.L.177,

No.175), known as The Administrative Code of 1929.

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

under this act, the office shall have access to any computerized

database of a State agency that is required to aid the office in

the performance of its duties, except that any statutory

requirements regarding privacy of individuals' records shall be

observed in providing access.

(d)  Daily revenue data.--

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

Budget shall post revenue collection data for each deposit

day and make the information available to the office and the

chairman and minority chairman of the Appropriations

Committee of the Senate and the chairman and minority

chairman of the Appropriations Committee of the House of

Representatives.

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

General and the State Treasurer shall cause to be prepared

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

(e)  Tax information.--For the purposes of carrying out its

official duties under section 5 and notwithstanding any other

law, the office shall be authorized to access any information in

the possession of the Department of Revenue that is obtained

from tax payments, returns or reports, including adjustments or

corrections made by the department. The information accessed

under this section shall be confidential except for official

purposes and any person divulging the information shall be

subject to section 731 of the act of April 9, 1929 (P.L.343,

No.176), known as The Fiscal Code.

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

Commonwealth agency or political subdivision within a reasonable

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

head, stating the authority to receive the information. The

agency head shall have 15 days to respond. If the information is

not provided within 15 days of the receipt of the agency

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

agency head to provide the information.

Section 10.  Selection and organization committee.

(a)  Selection and organization committee.--The Independent

Fiscal Office Selection and Organization Committee is hereby

established to organize the office and select the director of

the office. The committee shall consist of the following:

(1)  The chairman and minority chairman of the

Appropriations Committee of the Senate and the chairman and

minority chairman of the Appropriations Committee of the

House of Representatives.

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

Senate and the Majority Leader and the Minority Leader of the

House of Representatives.

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

Speaker of the House of Representatives.

(b)  Duties of committee.--By January 15, 2011, the selection

and organization committee shall deliberate the following:

(1)  The procedures to be adopted to select the director

of the office.

(2)  The operational budget for the office.

Section 11.  Appointment.

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

appointed by the selection and organization committee by May 30,

2011. The appointment shall be made without regard to political

affiliation and solely on the basis of fitness to perform the

duties of the office based on qualifications published by the

selection and organization committee.

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

director who shall perform such duties as assigned by the

director and who shall during the absence or incapacity of the

director or a vacancy act as the director.

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

years. An individual appointed as director to fill a vacancy

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

unexpired portion of that term. An individual serving as

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

a successor is appointed.

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

resolution passed by the Senate and the House of

Representatives.

Section 12.  Powers and duties of director.

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

compensation of personnel as necessary to carry out the duties

and functions of the office. All personnel of the office shall

be appointed without regard to political affiliation and solely

on the basis of their fitness to perform their duties.

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

functions of the office, the director may procure the temporary

or intermittent services of attorneys, experts or consultants or

organization thereof by contract.

Section 19.  Records.

The office shall be a legislative agency for purpose of the

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

Know Law.

Section 39.  Repeal.

(a)  Intent.--The General Assembly declares that the repeal

under subsection (b) is necessary to effectuate the purposes of

this act.

(b)  Provision.--Section 618 of the act of April 9, 1929

(P.L.177, No.175), known as The Administrative Code of 1929, is

repealed to the extent it is inconsistent with this act.

Section 40.  Effective date.

This act shall take effect as follows:

(1)  This section shall take effect immediately.

(2)  Section 10 shall take effect November 30, 2010.

(3)  The remainder of this act shall take effect May 1,

2011.