1Establishing spending limitations on the Commonwealth; providing
2for the disposition of surplus funds; establishing the
3Taxpayer Protection Fund; and repealing provisions of The
4Fiscal Code relating to the funding of a stabilization
5reserve.

6The General Assembly of the Commonwealth of Pennsylvania
7hereby enacts as follows:

8Section 1.  Short title.

9This act shall be known and may be cited as the Taxpayer
10Protection Act.

11Section 2.  Definitions.

12The following words and phrases when used in this act shall
13have the meanings given to them in this section unless the
14context clearly indicates otherwise:

15"Appropriation limit."  The total of the amounts approved as 
16executive authorizations by the Governor plus the total amounts 
17of preferred and nonpreferred appropriations made by the General 
18Assembly from the General Fund during the fiscal year 
19immediately prior to the budget year under consideration, 

1adjusted by the lesser of:

2(1)  the average percentage change in personal income in
3this Commonwealth for the three preceding calendar years as
4reported by the Federal Government or as determined pursuant
5to an act of the General Assembly; or

6(2)  the average percentage change in inflation for the
7three preceding calendar years plus the average percentage
8change in the State population for the three preceding years
9as reported by the annual Federal census estimates, such
10number being adjusted every decade to match the official
11Federal census.

12"Average percentage change in inflation."  The average of the 
13percentage change for each of the three calendar years, from 
14October to October, immediately preceding the calendar year in 
15which a given executive budget is submitted by the Governor, in 
16the Consumer Price Index for All Urban Consumers (CPI-U), not 
17seasonally adjusted, all items index or its successor index, as 
18officially reported by the United States Department of Labor, 
19Bureau of Labor Statistics.

20"Average percentage change in personal income."  The average 
21of the percentage change in personal income estimates for this 
22Commonwealth, from second calendar quarter to second calendar 
23quarter, for each of the three calendar years immediately 
24preceding the calendar year in which a given executive budget is 
25submitted by the Governor, as reported by the United States 
26Department of Commerce, Bureau of Economic Analysis, SQ4 
27quarterly income summary for this Commonwealth or its successor 
28index or as determined pursuant to an act of the General 
29Assembly.

30"Average percentage change in State population."  The average 

1of the percentage change in State population for each of the 
2three most recent years immediately preceding the calendar year 
3in which a given executive budget is submitted by the Governor, 
4as reported by the United States Census Bureau for July 1 of 
5each year.

6"Mandated service."  Any program or service administered by a 
7political subdivision of the Commonwealth as a result of being 
8required to provide that program or service by State law.

9"Total spending by the Commonwealth."  All General Fund 
10appropriations made by the General Assembly and all 
11appropriations from a constitutionally or statutorily 
12established fund created after the effective date of this 
13section.

14Section 3.  Spending limitations.

15(a)  General rule.--Total spending by the Commonwealth in any
16fiscal year shall not exceed the spending appropriation limit as
17set forth in this act.

18(b)  Mandated expenses for political subdivisions.--The
19State's limit under subsection (a) shall be reduced by the
20amount of the reduction in State appropriations to a political
21subdivision for administration of a mandated service, without an
22equal or greater reduction in State-mandated expenses for said
23local government or a repeal of the mandate to provide a program
24or service.

25(c)  Exceptions.--The appropriation limit of the Commonwealth
26may be exceeded in any fiscal year for the following:

27(1)  To respond to a presidential or gubernatorial
28declaration of emergency if the General Assembly approves by
29two-thirds affirmative vote of the members elected to each
30house of the General Assembly. In no case shall the excess

1spending authorized by exceeding the appropriation limit in
2this manner be included in the computation base of the
3appropriation limit for any subsequent fiscal year.

4(2)  In other situations if the Governor so requests, in
5writing, 30 days prior to the constitutional deadline for
6adoption of a budget for the next fiscal year, and
7simultaneously publishes that written notice in a newspaper
8of general circulation in each county and senatorial and
9representative district in which such newspapers shall be
10published, and the General Assembly subsequently approves by
11an affirmative vote of two-thirds of the members elected to
12each house of the General Assembly.

13Section 4.  Disposition of surplus funds.

14(a)  Transfer of surplus.--

15(1)  Except as provided under paragraph (2), for any 
16fiscal year in which the Governor certifies that a surplus 
17exists, 25% of that surplus shall be deposited by the end of 
18the next succeeding quarter into the Budget Stabilization 
19Reserve Fund established in section 1701-A of the act of 
20April 9, 1929 (P.L.343, No.176), known as The Fiscal Code, 
21and 75% of that surplus shall be deposited by the end of the 
22next succeeding quarter into the Taxpayer Protection Fund 
23which is hereby established in the State Treasury.

24(2)  For any fiscal year in which the State Treasurer
25certifies that the balance in the Budget Stabilization
26Reserve Fund equals or exceeds 5% of the total of all General
27Fund appropriations, 100% of the surplus certified by the
28Governor under paragraph (1) shall be deposited into the
29Taxpayer Protection Fund.

30(b)  Distribution.--

1(1)  Subject to the provisions of subsection (c), the 
2moneys in the Taxpayer Protection Fund shall be distributed 
3to taxpayers who have liability for the tax imposed under 
4Article III of the act of March 4, 1971 (P.L.6, No.2), known 
5as the Tax Reform Code of 1971, through a reduction in the 
6rate of such tax, which reduction shall be established by an 
7act of the General Assembly to be effective for January 1 
8through December 31 of the subsequent calendar year.

9(2)  The Secretary of the Budget, in conjunction with the
10Secretary of Revenue, shall certify the rate reduction for
11the tax imposed under Article III of the Tax Reform Code of
121971, for the upcoming calendar year no later than September
1330. The new rate shall be published in the Pennsylvania
14Bulletin, posted on the State's publicly accessible Internet
15website and reported to the chairman and minority chairman of
16the Appropriations Committee of the Senate and the chairman
17and minority chairman of the Appropriations Committee of the
18House of Representatives.

19(c)  Accumulation.--No moneys shall be distributed from the
20Taxpayer Protection Fund pursuant to subsection (b) until such
21time as the Secretary of the Budget certifies that the moneys
22deposited therein are sufficient to provide a reduction of at
23least 0.01% in the tax rate of taxation for the tax imposed
24under Article III of the Tax Reform Code of 1971.

25(d)  Appropriated funds.--The General Assembly may at any
26time provide additional amounts from any funds available to the
27Commonwealth as an appropriation to the Budget Stabilization
28Reserve Fund.

29Section 5.  Repeals.

30Repeals are as follows:

1(1)  The General Assembly declares that the repeal under
2paragraph (2) is necessary to effectuate the provisions of
3this act.

4(2)  Section 1702-A of the act of April 9, 1929 (P.L.343, 
5No.176), known as The Fiscal Code, is repealed.

6Section 20.  Effective date.

7This act shall take effect immediately.