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Tax Law

State Net Capitol Journal – November 16, 2015; Movement on Pennsylvania Budget Impasse

Budget & Taxes

Movement on PA Budget Impasse

A deadlock between Pennsylvania Gov. Tom Wolf (D) and lawmakers has left the state budget-less four months into the current fiscal year. But the governor’s office and legislative leaders said last week they’d reached a tentative agreement on a framework for a new budget.

That framework includes increases in funding for education, a sales tax hike and property tax relief, according to Republican House and Senate leaders. But there are issues that still need to be worked out. For instance, a spokesman for Gov. Wolf said Republicans had committed to increases in the main line of funding for K-12 education and funding for pre-K and special education over the next two years, but aids to top Senate Republicans said that wasn’t entirely true.

Still, the mood in Harrisburg seemed cautiously optimistic.

“I think we can resolve these other issues in a fairly short period of time, but until they’re resolved, I can’t tell you we’re done because we’re not,” said Senate Majority Leader Jake Corman (R). But he also said, “We’re moving, which is obviously a huge step forward for all of us.” (PITTSBURGH POST-GAZETTE)

WA Voters Approve Tax-Curbing Intiative

Ballots trickling in after Election Day in the vote-by-mail state of Washington indicate that voters there have approved an initiative giving lawmakers an ultimatum: Pass a constitutional amendment by April 15 requiring a two-thirds majority vote for tax proposals in the Legislature or accept a 1-percent cut in the state’s 6.5-percent sales tax. The ballot measure, Initiative 1366, was supported by about 52 percent of voters.

“We really did our homework, and we really think that this is going to get the job done and give people permanent protection from higher taxes in our state OR the largest tax cut in Washington state history,” said conservative political activist Tim Eyman, who sponsored the measure.

With Democrats holding a slim 51-47 majority in the House, Republicans holding an even slimmer 25-24 majority in the Senate, and constitutional amendments also requiring a two-thirds majority vote, passing the supermajority requirement for tax measures could be a tall order. But the state’s Office of Financial Management has estimated the sales tax cut would reduce revenue by $8 billion through the middle of 2021, which could be unsustainable, given the fact that the state is under a contempt order for its lack of progress on education funding.

Lawmakers’ only hope may be opponents of I 1366, who, despite being unsuccessful at keeping the measure off the ballot, have vowed to challenge it in court, saying it unconstitutionally attempts to alter the state’s constitution via the initiative process and also defies the state’s single-subject requirement for ballot measures.

“This initiative is blatantly unconstitutional and beyond the scope of what an initiative can be,” said Andrew Villeneuve, founder and executive director of the Northwest Progressive Institute. “So it’s the court’s job to strike it down and show everyone that initiatives that violate our plan of government so flagrantly will not stand.”

That action isn’t entirely out of the realm of possibility. Eyman has backed multiple voter-approved initiatives over the years mandating a supermajority vote on tax measures, but the state’s Supreme Court ruled that requirement unconstitutional in 2013. (ASSOCIATED PRESS, KOMO NEWS)

Budgets In Brief - November 16 2015

MN Road Funding Gap: MINNESOTA’s Department of Transportation has released a new estimate for the cost of repairing and expanding the state’s roads that predicts a nearly $4 billion, or 30 percent, bigger gap in unfunded road costs over the next 20 years than the $12.5 billion funding gap projected two years ago. State experts attribute the increase to a variety of factors, including inflation, the further deterioration of the state’s roads and better data about road repair costs (DULUTH NEWS TRIBUNE, ST PAUL PIONEER PRESS). * OK Tax Amnesty: OKLAHOMA’s Tax Commission has collected over $92.8 million in past-due taxes over the past two months in connection with its PAYRight OK tax amnesty program. That sum is over 165-percent more than the $35 million initially protected for the program (OKLAHOMAN [OKLAHOMA CITY]). * KS Cuts Revenue Estimate: KANSAS has revised its revenues for the rest of the fiscal year downward by $159 million, necessitating $124 million in budget adjustments, including a transfer of $48 million in transportation money (KANSAS CITY STAR).

- Compiled by KOREY CLARK

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