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Senate Approves Sweeping State Spending Control Measures
Creates Taxpayer Fairness Fund
for Income Tax Reductions
HARRISBURG -- The
Senate today overwhelmingly approved historic legislation that would limit state
government spending and set aside surpluses in a new fund to reduce the state
Personal Income Tax, according to sponsors Senate Majority Leader David
Brightbill (R-48) and Senate Majority Whip Jeffrey Piccola (R-15).
Senate Bill 4, the Taxpayer
Fairness Act, would hold state spending increases to inflation by statute. A
companion measure, Senate Bill 884, would make the spending limits part of the
state constitution.
“These bills will impose
strong -- but fair -- fiscal discipline by establishing reasonable standards to
manage the growth of state government,” said Brightbill. “The ultimate
beneficiaries will be taxpayers across the state who will have a very palpable
benefit: When we have a surplus, the Taxpayer Fairness Fund will grow and the
taxpayers will benefit by seeing their tax bills go down.”
In addition to restricting
state spending growth, the bills would set aside half of surplus revenues in the
state's Rainy Day Fund for use in times of economic necessity, and half in a new
Taxpayer Fairness Fund to reduce the state Personal Income Tax.
Thirty states have spending
controls, revenue controls or both. Pennsylvania is in the minority of states
which have no controls.
“These measures are
comprehensive, carefully written and long overdue,” said Piccola. “I believe
Senate Bill 884 is especially important for the long term because it will put
these spending controls in the state Constitution. It also allows the citizens
of the Commonwealth to have a voice on the issue through a referendum.”
The measures approved today
would restrict state spending growth to the lesser of: the average annual rate
of change of personal income in Pennsylvania for the three preceding years; or
the average rate of inflation plus the average percentage change in state
population for the three preceding years.
Exceeding the spending limit
would require the support of two-thirds of the General Assembly. Both Senate
Bill 4 and Senate Bill 884 include exceptions for emergencies or disasters.
Under the legislation:
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50 percent of surplus revenues will go to
the Rainy Day Fund; 50 percent will go to the new Taxpayer Fairness Fund.
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When the Rainy Day Fund reaches 10 percent
of General Fund Appropriations, all surplus revenues will go to the Taxpayer
Fairness Fund.
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Money in the Taxpayer Fairness Fund will be
distributed to taxpayers through a temporary reduction in the Personal
Income Tax.
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The lower PIT rate will be in effect Jan. 1
to Dec. 31 of the following calendar year.
The Taxpayer Fairness Act is
part of the Republican Playbook for Progress, a positive agenda for Pennsylvania
unveiled earlier this year by Senate and House GOP leaders.
The measures were sent to the
House of Representatives for consideration.
Sen. David J. Brightbill's (R-48) Floor Remarks
Taxpayer Fairness Act
Senate Bill 4 and Senate Bill 884
Senate Bill 4, the Taxpayer Fairness Act, and Senate
Bill 884, its companion constitutional amendment, mark a sea change in the way
Pennsylvania does business.
Whatever the reason – and plenty of commentators
will rush to point fingers –government spending in Pennsylvania has been growing
too fast. I am not here today to point fingers.
These bills will impose strong – but fair – fiscal
discipline by establishing reasonable standards to manage the growth of state
government.
Senate Bill 4 and Senate Bill 884 were crafted
carefully in order to avoid some of the problems confronted by other states with
spending and revenue controls. For example, the ability to exceed our spending
cap with a supermajority vote means that Pennsylvania will have some flexibility
to respond when dramatic needs arise.
In other words, we are developing common-sense
restraints on government spending.
The primary goal of these bills is to protect
taxpayers. And the ultimate beneficiaries will be taxpayers across the state
who will have a very palpable benefit: When we have a surplus, the Taxpayer
Fairness Fund will grow and the taxpayers will benefit by seeing their tax bills
go down.
On January 21, 2003, during his inaugural speech,
the governor said this: “Like working families across the state, we must find a
way to make government live within its means.”
We believe that he meant it.
By our vote here today on Senate Bill 4 and
Senate Bill 884, we are signaling that we also mean it.
  Brightbill
Piccola
Corman
Regola
Wenger
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