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PRINTER'S NO. 2905
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1990
Session of
2019
INTRODUCED BY LEWIS, GROVE, O'NEAL, KEEFER, OWLETT, RYAN, JONES,
GLEIM, DUSH, BERNSTINE, MILLARD, BARRAR, B. MILLER, MOUL,
STAATS, THOMAS, KAUFFMAN, TOOHIL, WALSH, GILLEN, ECKER AND
DIAMOND, NOVEMBER 19, 2019
REFERRED TO COMMITTEE ON STATE GOVERNMENT, NOVEMBER 19, 2019
AN ACT
Amending Title 72 (Taxation and Fiscal Affairs) of the
Pennsylvania Consolidated Statutes, providing for Council on
State Finances.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Title 72 of the Pennsylvania Consolidated
Statutes is amended by adding a chapter to read:
CHAPTER 20
COUNCIL ON STATE FINANCES
Sec.
2001. Definitions.
2002. Establishment of council.
2003. Meetings.
2004. Report on finances.
§ 2001. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
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context clearly indicates otherwise:
"Council." The Council on State Finances established under
section 2002.
"Department." The Department of Revenue of the Commonwealth.
"Fund." The Budget Stabilization Reserve Fund.
"Other postemployment benefits." Benefits offered by the
Commonwealth for employment after an employee retires a pension
benefit.
"Secretary." The Secretary of Revenue.
"Volatility." The standard deviation from the average
percent change in revenue collections over the prior 15 fiscal
years.
§ 2002. Establishment of council.
(a) Establishment.--The Council on State Finances is
established to review finances of the Commonwealth.
(b) Council composition.--The council shall be composed of
the following members:
(1) The Auditor General.
(2) The secretary.
(3) The Secretary of the Budget.
(4) The chairperson and minority chairperson of the
Appropriations Committee of the Senate.
(5) The chairperson and minority chairperson of the
Appropriations Committee of the House of Representatives.
(6) The Director of the Independent Fiscal Office.
(7) The State Treasurer.
(8) One member of the public appointed by the Governor
with a background in private or public finance.
(9) One member of the public appointed by the President
pro tempore of the Senate with a background in private or
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public finance.
(10) One member of the public appointed by the Speaker
of the House of Representatives with a background in private
or public finance.
(c) Chairperson and vice chairperson.--The secretary shall
serve as chairperson of the council and the Secretary of the
Budget shall serve as vice chairperson of the council.
(d) Staffing.--The council shall be staffed by the
following:
(1) Employees of the department selected by the
secretary.
(2) Employees of the Governor's Office of the Budget
selected by the Secretary of the Budget.
§ 2003. Meetings.
(a) Initial and monthly meeting.--The council shall hold its
initial meeting no less than 30 days after the effective date of
this section and shall meet once a month to discuss the
following:
(1) Commonwealth Annual Financial Report.
(2) The overall financial condition of the Commonwealth.
(3) Long-term financial trends of the Commonwealth over
the prior 10 fiscal years.
(b) Review and assessment.--The council shall review and
assess the following:
(1) revenue projections and estimates for the current
and ensuing fiscal year;
(2) the accuracy and error rate of the revenue
projections and estimates compared to prior fiscal years;
(3) a stress test of the General Fund and operating
budget, comparing projected future expenditures of the
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Commonwealth to projected revenues for the Commonwealth under
the following economic scenarios:
(i) estimated revenues if the Commonwealth
experienced a moderate economic recession; or
(ii) estimated revenues if the Commonwealth
experienced a severe economic recession;
(4) volatility of the revenue sources of the
Commonwealth;
(5) changes in the overall debt of the Commonwealth
during the current fiscal year and anticipated changes in the
cost of the debt for the following fiscal year, including
changes in the debt incurred by the Commonwealth Financing
Authority and other entities empowered under current law to
issue and incur debt by the Commonwealth;
(6) the cash flow of the General Fund, including, but
not limited to, whether the Commonwealth is anticipated to
borrow money to make payments for the obligations of the
General Fund;
(7) expenditures and obligations of the General Fund,
including the need for a potential supplemental appropriation
during the following fiscal year;
(8) expenditures and obligations of the special and
restricted funds of the operating budget;
(9) the financial health of the pension system of the
Commonwealth, including, but not limited to:
(i) the overall funding ratio of the pension system;
(ii) changes in the overall funding ratio of the
pension system over the past 10 fiscal years;
(iii) the amount appropriated for the management of
the pension system during the current fiscal year; and
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(iv) the return on investment received under 71
Pa.C.S. Pt. XXV (relating to retirement for State
employees and officers) compared to the other states and
other retirement programs;
(10) the financial health of the Commonwealth's other
postemployment benefits which shall include, but are not
limited to:
(i) the overall funding ratio of other
postemployment benefits;
(ii) changes in the overall funding ratio of other
postemployment benefits over the past five fiscal years;
and
(iii) comparison of the funding ratio of other
postemployment benefits offered by the Commonwealth in
relation to other state governments;
(11) the 20 largest cost drivers in both the total
operating budget of the Commonwealth and the General Fund;
(12) the growth of each cost driver over the past 10
fiscal years and if that growth exceeded growth of the
Commonwealth's revenue over the same time period;
(13) the approved capital budget for the current fiscal
year;
(14) the policies for financial management used by the
Commonwealth; and
(15) other financial data the council deems to be
pertinent to the overall financial condition of the
Commonwealth.
(c) Right-to-know.--The council 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).
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§ 2004. Report on finances.
(a) Report.--No later than April 6, 2020, and each year
thereafter, the council shall present a report to the Governor
and members of the General Assembly on the finances of the
Commonwealth.
(b) Adoption of report.--The council shall adopt the report
prior to sending the report to the Governor by a two-thirds
majority vote.
(c) Underlying data required.--If the council fails to adopt
a report under subsection (b), the council shall provide the
Independent Fiscal Office with the underlying data necessary to
compile the report. The department shall provide the Independent
Fiscal Office with assistance from the staff of the council and
pay for any costs incurred to provide the report under this
section to the Governor and General Assembly by December 16,
2020, and each year thereafter.
(d) Additional requirements.--In order to determine the
volatility of the revenue sources of the Commonwealth, the
report required under subsection (a) shall also include the
following:
(1) If the source of revenue is a tax, fee or nontax
revenue source.
(2) The percentage the source of revenue comprises of
the total General Fund revenue.
(3) The percentage the source of revenue comprises of
the total revenue collection.
(4) Changes in collection for the source of revenue over
the previous five fiscal years.
(5) Anticipated changes in the collection of revenue for
the source during a moderate or severe economic recession.
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(6) If the source of revenue is considered by the
council to be stable or volatile.
(7) The percentage of the total revenue collected
considered by the council to be volatile.
(8) A recommended amount to transfer into the fund. The
following shall apply:
(i) If the current amount in the fund is sufficient
to cover the volatility of the revenue collections of the
Commonwealth, the recommendation for transfer shall be
zero.
(ii) If the current amount in the fund is sufficient
to cover at least one-half of the total volatility in the
revenue collection of the Commonwealth, the report shall
recommend an amount to be transferred into the fund to
fully cover the total volatility in the revenue
collection of the Commonwealth.
(iii) If the current amount in the fund is
insufficient and cannot cover at least one-half of the
total volatility in the revenue collection of the
Commonwealth, the report shall recommend an amount to be
transferred into the fund to cover no less than one-half
of the total amount of the volatility in the revenue
collection of the Commonwealth.
Section 2. This act shall take effect immediately.
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