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Budget & Taxes
PHILADELPHIA CIGARETTE TAX IN LIMBO: The cash-strapped school district and city of Philadelphia have been pushing for a bill imposing a $2 surcharge on every pack of cigarettes sold in the city to provide enough funding to avert 1,300 layoffs and the ballooning of class sizes to 40 or more. But last week the Republicans who control the state's Senate made some last minute changes to the bill (HB 1177) that threw it into legislative limbo.
Philadelphia Mayor Michael Nutter attributed the Senate's action to the tobacco lobby, which he said he was told was "weighing in and literally trying to take away money from the schoolchildren in Philadelphia."
The Senate amendments included a provision that would phase out the tax in five years, which Philadelphia School Superintendent William R. Hite Jr. said "throws us back into uncertainty."
"Ending the tax in five years will exacerbate our structural deficit, complicate our long-term planning efforts, and make it harder to access the capital markets, and strip our schools of educational services and supports," he said.
That change and others allowing some municipalities to levy hotel taxes and offer tax incentives for economic development will also make it "very difficult" to muster the votes in the House to approve them, according to a spokesman for Republicans in the chamber
Mayor Nutter didn't seem too optimistic about the situation.
"This is terrible for schoolchildren, for teachers, for parents, and for the taxpayers in the city of Philadelphia," he said. "We are caught in a vortex of political hell with no way out." (PHILADELPHIA INQUIRER)
IL HEADED FOR '$2B COLLAPSE': Illinois state finances are headed for "a $2 billion collapse" next year, according to the state's comptroller, Judy Baar Topinka. State lawmakers approved a temporary 1.25 percent increase in the state income tax in 2011 that is set to expire in January, leaving a budget hole that Topinka — a Republican facing an election challenge in November from Democratic Lt. Gov. Sheila Simon — compared to a "heart attack" to the state's finances. Gov. Pat Quinn (D) has called for an extension of the tax hike, but the idea has gained little traction with this being an election year. (CHICAGO SUN-TIMES, STATE NET)
TOP NY FINANCIAL REGULATOR PROPOSES 'BITLICENSE': New York's superintendent of financial services, Benjamin Lawsky, has proposed a regulatory framework for companies that issue, store or exchange virtual currencies like bitcoins for cash.
Under Lawsky's proposal, such companies would be required to obtain a license from the state. They would also have to maintain a virtual currency reserve large enough to cover what they owe their customers and adhere to anti-money laundering rules, including those mandating the verification of customers' identities and addresses.
"Setting up common-sense rules of the road is vital to the long-term future of the virtual currency industry, as well as the safety and soundness of customer assets," Lawsky said in a statement.
The proposed regulations will be open for public comment for 45 days beginning July 23. (INSURANCE JOURNAL)
BUDGETS IN BRIEF: A report from the state auditor of UTAH indicates the state may have collected $100 million less in property taxes over the past decade than it was entitled to because of a "significant error" in the calculations used to set certified property tax rates around the state. Tax collectors reportedly have been mistakenly double counting the amount that should be deducted from the calculation for reappraisal values in redevelopment areas (SALT LAKE TRIBUNE). • ILLINOIS has reduced its backlog of overdue bills to $3.9 billion from $9.9 billion in 2010. Gov. Pat Quinn (D) said the state "is in a stronger financial position than we were five years ago" in part because of the "tough decisions" he's made (CHICAGO SUN-TIMES). • Also in ILLINOIS transportation officials plan to test using smartphones to pay tolls on the Tri-State Tollway (I-294) (CHICAGO TRIBUNE).
- Compiled by KOREY CLARK
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