Regular Session 2021-2022 House Bill 0052 P.N. 0031

PRINTER'S NO. 31

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

Session of

2021

INTRODUCED BY LEWIS, GROVE, KEEFER, O'NEAL, STAATS, GREINER,

KAUFFMAN, RYAN, HAMM, ROTHMAN, JOZWIAK, OWLETT, SANKEY AND

GREGORY, JANUARY 11, 2021

REFERRED TO COMMITTEE ON STATE GOVERNMENT, JANUARY 11, 2021

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

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 of the Commonwealth.

"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

public finance.

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(10) One member of the public appointed by the Speaker

of the House of Representatives with a background in private

or public finance.

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

Commonwealth to projected revenues for the Commonwealth under

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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

(iv) the return on investment received under 71

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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 the 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.

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).

§ 2004. Report on finances.

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(a) Report.--No later than April 6, 2021, 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.

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,

2021, 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.

(6) If the source of revenue is considered by the

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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 collection 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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