Governor Corbetts 2013-2014 Budget and The Department of Revenue - PowerPoint PPT Presentation

Governor Corbett’s 2013-2014 Budget and The Department of Revenue Dan Meuser Secretary of Revenue

Governor Corbett’s Mission Three primary goals for the commonwealth: 1.A stable and reliable financial future 2.A job available for every Pennsylvanian that wants one 3.A trained and educated workforce ready for the jobs of today and tomorrow …Helping all Pennsylvania Families

Tax Reform in Gov. Corbett’s First Two Years • 100 percent bonus depreciation • Restarted capital stock/foreign franchise tax phase-out • Job creation tax credit programs, including PRM tax credit • Property tax reform • Tort and regulatory reform • E-commerce fairness • Appeals reform • Inheritance tax relief for farmers • 100 percent single sales factor • Unemployment compensation reform • Energy – jobs proposal

Impact of Marcellus Shale Workforce Impact Jobs  29,810 employed in core industries (first quarter of 2012)  177 percent increase since the first quarter of 2009  204,201 employed in ancillary industries (first quarter of 2012)  Increase of 7.2 percent since the first quarter of 2009  150,616 new hires from the fourth quarter of 2009 to the second quarter of 2012 Revenue  Total business taxes – $303 million in 2012  Added funding from impact fees total $206 million

Job Growth In Gov. Corbett’s First Two Years Private Sector Jobs: •Up more than 100,000 since Gov. Corbett took office Manufacturing Jobs •Up 7,200 since Gov. Corbett took office Public/Government Jobs •Down 6,800 over the last year •Down 35,800 since Gov. Corbett took office Labor Force •In January 2013 the Pennsylvania labor force reached an all-time high of 6,553,000 •The labor force has increased by 103,000 since January of 2011 •Labor force growth is an indicator that not only have more Pennsylvanians found jobs, but also that PA’s unemployed have renewed faith in the economy and are looking for jobs once again.

General Fund: Collections Compared to Estimate (in millions) Fiscal Year Actual Estimate Deficit/Surplus % 2006-07 27,449.30 26,799.50 649.8 2.4% 2007-08 27,928.10 27,760.60 167.5 0.6% 2008-09 25,529.80 28,784.40 -3,254.60 -11.3% 2009-10 27,648.20 28,824.70 -1,176.50 -4.1% 2010-11 27,497.20 26,711.70 785.5 2.9% 2011-12 27,678.00 27,840.8 -162.8 -0.6% 2012-13 28,590.00 232* 0.8%* 2013-14 29,254.00 *Estimated

2013-14 General Fund Revenue Sources Non-Tax Revenues, Nearly three- 1.8% Other Taxes, quarters (72 percent) Cigarette Tax, 3.5% 8.5% of General Fund revenues are derived Gross Receipts Tax, 4.4% from the Personal Income Tax and the Sales and Use Tax. Corporate Net Personal Income Income Tax / Capital Tax, 40.2% Stock and Franchise Tax, 9.6% Sales and Use Tax, 32.0%

2013-14 General Fund Budget - $28.4 Billion Spending on Education, Spending on Education, All Human Service Debt Service Human Service $1.20 B Other�$2.84 B programs, Corrections programs, Corrections 4.2% 10.0% and Debt Service and Debt Service Corrections/ comprises 90 percent of comprises 90 percent of Probation and 7.3% total General Fund Parole total General Fund Pre K-12 Education $2.07 B obligations. obligations. $9.55 B 33.6% 6.4% Higher Education $1.81 B Other Human Services�$4.4 Medical Assistance 8 B and Long-term 15.7% Living $6.49 B 22.8%

2013-14 Budget Highlights • Governor Corbett’s plan provides a balanced budget that keeps spending in line with available revenues and does not raise taxes on Pennsylvania families and businesses. • Spends $28.4 billion – 2.4 percent increase over FY 2012-13. • Major reform initiatives: – Sell the state liquor system to invest in education – Modernize Pennsylvania’s transportation infrastructure – Overhaul the state pension systems – Comprehensive tax reform • Enhanced support for basic education, public safety, older Pennsylvanians, and individuals with disabilities.

Fiscal Discipline in the 2013-14 Budget Governor Corbett’s plan provides for a balanced budget that keeps • spending in line with available revenues and does not raise taxes on Pennsylvania families and businesses. Continues reductions in administrative spending, now down a total • of 6.3 percent since 2010. Eliminates more than 900 positions, including about 400 layoffs. • Keeps most agency general operating budgets at level funding • despite increases in salary and benefit costs. Since Governor Corbett took office in January 2011, Since Governor Corbett took office in January 2011, filled staffing levels have declined by 2,029 positions, or filled staffing levels have declined by 2,029 positions, or 2.6 percent (76,663  74,634). Additionally, the Corbett 2.6 percent (76,663  74,634). Additionally, the Corbett administration has implemented significant reforms to the administration has implemented significant reforms to the commonwealth’s fleet and travel programs to enhance commonwealth’s fleet and travel programs to enhance program accountability and reduce costs. program accountability and reduce costs.

Department of Revenue Efficiencies • Decreased general government operations budget (non-personnel) by more than 15 percent ($5.7 million) between 2010-11 and 2013-14: • Postage/printing reductions • Telecommunication savings • Modifying IT contracts, including initial savings from Revenue Modernization Project (These savings assume legislative approval of proposed electronic filing and payment mandates, as well as internal efficiencies including and discontinuing printing of PA-40 books.) • Reduced complement by 7.5 percent (127 positions) between 2010-11 (actual) and 2013-14: • Includes 16 percent reduction in administrative positions (clerical, scanning, mailroom, forms handling) • Will continue to capture processing efficiencies as RMP is implemented across additional tax types • Consolidated office space returning 18,000 sq. ft. for the use of other state agencies.

Efficiencies Detail Legislative Internal  Provide electronic 1099-G's ($250,000 annual savings)  Discontinue printing/mailing PA-20S/65 booklets ($310,000 annual savings)  Reduce EFT payment threshold from $20,000 to $10,000  Eliminate unneeded phone lines and transition telecom to Accomplished for corporation and trust fund taxes ($100,000 annual VOIP ($400,000 annual savings) savings)  Consolidated 2 field offices ($278,000 annual savings)  Consolidated headquarters office space  Repeal certified mail assessment requirement ($750,000  Revenue Modernization Project ($648,000 savings already annual savings) due to staffing reductions and data expenditures savings)  Inheritance tax return examinations (reduced assessment turnaround time from 6 to 3 months)  Tax practitioner E-Hotline  Reduce e-file mandate for 3rd party preparers from 50 to 11  New 2013 e-filing platforms (2014 processing year; $536,000 returns ($260,000 annual savings) annual savings)  Reduce EFT payment threshold to $1,000 for corporation, Proposed  Discontinue printing/mailing PA-40 booklets ($150,000 net trust fund and personal income taxes ($430,000 annual savings) annual savings)  Act 46 (2003) expanded enforcement authority: reduce  Discontinue printing RCT-101 booklet ($7,000 annual sales tax license revocation appeal period from 90 to 30 savings) days

Pennsylvania is Open for Business Governor Corbett, in partnership with the business community, will create a more competitive tax structure in PA through the following: •Elimination of the capital stock/foreign franchise tax •Reduction the corporate net income tax •Increasing the cap on net operating loss deductions •Providing for like-kind exchanges and start-up business deductions •Repeal of the corporate loans tax •Implementation of sales factor market sourcing •Tax code changes to level the playing field and provide for fair and equitable tax policy •Repeal of nuisance taxes and obsolete taxation and administrative provisions IMPACT: 18,000 more jobs over the next 10 years; state GDP increases $2.8 billion by 2030; personal income grows by $1.9 billion by 2030 More than $1 billion in new tax revenue through 2030.

Divesting From Government Controlled State Liquor System Divest of the retail and wholesale functions in a two-step, four-year process • End state run monopoly and invest in schools • The Plan: • Focus government on regulation and law enforcement • Convenience for Pennsylvanians • Private sector and market place set price and locations • Revenue neutrality • Focus the private sector on sales and distribution • Protection for current employees • One time funding of $1 billion for schools “Selling liquor is not a core function of government; education is.” – Governor Tom Corbett