Library Wants Tax Vote

The Carnegie Library of Pittsburgh wants to know if city residents are willing to raise their property taxes to help keep the system in the black. The library and its volunteers have launched a petition drive to place a referendum on the November ballot that would ask voters to raise their property taxes by .25 mills.

“That would be used exclusively, only, for the operation and maintenance of this system, which thousands upon thousands upon thousands of us across this entire city, and really this region, value as a corner stone,” said Library Board Member and Pittsburgh City Councilman Patrick Dowd.

The tax amounts to $25 dollars for every $100,000 of assessed value on residential and commercial property. The millage rate increase would raise between $3.25 and $3.5 million dollars a year. The library system is facing a projected deficit of $5 million in 2014.

Board Member and Allegheny County Judge Frank Lucchino says the library is looking at other income generating options. Also being pursued is a campaign to increase the library’s endowment, asking the Regional Asset District for more money, doubling individual giving, increasing corporate and foundation giving and working with state and local governments to find ways to boost revenues. Lucchino tired to fend off arguments that a tax increase would make the city less competitive in the fight for economic development. “The library is the future of the city and the library makes it more competitive.”

“115 years this library has been here and now the people will have a voice on deciding do they want this library to continue,” said Lucchino, “It will be up to them.”

To get on the ballot, supporters need to collect about 2,800 signatures. Lucchino has set a goal of collecting 9,000 signatures to avoid any problems if names are disqualified.

More Shale Tax Ideas Floated

Two more severance tax proposals are joining the party in Harrisburg.

The new bills come from Republicans legislators from the southeastern corner of the state where there is little or no Marcellus shale. However, they are the latest sign of growing support for some sort of tax on Marcellus Shale drilling. At least five tax or fee proposals are now in front of the General Assembly.

Senate Majority Leader Dominic Pileggi and Rep. Nick Miccarelli are both introducing levies that would direct revenue toward tax relief. The two measures are a far cry from Senate President Pro Tem Joe Scarnati’s impact fee, which would funnel money to local governments in the Marcellus Shale formation, as well as environmental and infrastructure projects.

Pileggi’s measure would fund a property tax freeze for senior citizens. According to a co-sponsorship memo distributed to senators, “all revenue would be deposited into a dedicated fund to provide a school property tax freeze for Pennsylvania residents 65 and older. …the tax burden would be shifted from seniors, many of whom are struggling to stay in their homes on a fixed income, to companies involved in natural gas drilling in Pennsylvania.” Pileggi’s memo doesn’t mention a specific tax rate, but claims the “reasonable and competitive tax” would raise $250 million over the next five years.

Miccarelli’s measure would impose a three percent tax on drillers. “The money would go directly to reducing the personal income tax from 3.07 percent to 2.99 percent,” explained Miccarelli. The tax would eventually increase to five percent, and, he claims, “would generate, by fiscal year 2015, $1.1 billion.”

Pileggi and Miccarelli both represent districts in the Philadelphia area, where support for a severance tax is most intense. Neither of their constituents would see any benefit from Scarnati’s impact fee, which limits revenue to communities where drilling is actually taking place. In his memo, Pileggi writes he, “support[s] Senator Scarnati’s approach,” but if a tax or fee becomes law, the Republican wants to spread its funds around. “My view is that the entire commonwealth needs to benefit from an extraction tax, regardless of whether or not communities have wells or pipelines in their own area,” he said, on the day Scarnati unveiled his plan. Scarnati’s chief of staff, Drew Crompton, did not respond to a request for comment on the new proposals.

Neither new tax has been formally introduced yet. Miccarelli said he’ll release his bill next week. It’s unclear when Pileggi’s plan will be unveiled.

Corbett Admin Says Drillers Are Paying Taxes

The Pennsylvania Department of Revenue released an analysis showing natural gas companies have paid more than 1.1 billion dollars in state taxes since 2006. According to the Department, 857 of the companies have already paid 238.4 million dollars in taxes, exceeding last year's collection. This report comes after a group of Democratic Senators claimed the Commonwealth is losing money to the "Delaware Loophole".

The "Delaware Loophole" is when subsidiaries of companies register in Delaware so they do not have to pay corporate income tax in Pennsylvania. According to Senator Tina Tartaglione of Philadelphia, 70% of the companies doing business in Pennsylvania do not pay the corporate net income tax, while businesses in Delaware have grown to 115,000.

Elizabeth Brassell, spokeswoman for the Department of Revenue, says the statistic of 70% of companies not paying taxes is misunderstood. "The majority of those aren't paying because they shouldn't. Companies that don't make money in a particular year or are inactive for a particular year, and we're finding that that's about 65% of the corporate net income taxpayers, they don't have profits to pay taxes on."

Brassell says the "Delaware Loophole" has become a political buzzword and some studies have shown that eliminating it would decrease the amount of revenue for the state. She says the state will continue to see revenue from gas companies because it is a growing industry.
Brassell says there will be monthly reports on the tax payments by drilling companies at the urging of Governor Corbett.

Senate Dems Want Drillers to Pay State Income Tax

The Commonwealth is losing out on hundreds of millions of dollars in revenues because corporations with subsidiaries that operate in Pennsylvania continue to register them in Delaware to avoid paying Pennsylvania's corporate net income tax. That's according to a group of Democratic State Senators who are urging the Department of Revenue to aggressively audit the tax filings of Marcellus Shale drilling companies.
Senator Tina Tartaglione of Philadelphia is the prime sponsor of legislation that would require "combined reporting" for businesses in Pennsylvania and close the so-called "Delaware Loophole." 23 of the 45 states with a corporate income tax have already adopted a combined reporting standard.
Under combined reporting, the parent firm and its subsidiaries are viewed as 1 entity with their profits combined and then taxed by the state based on the level of business that entity conducts in the state compared to its business in other states.

Tartaglione says about 70% of companies doing business in Pennsylvania do not pay the corporate net income tax, and the number of businesses registered in Delaware over the past 20 years has soared from 6,000 to 115,000.
“The boom in natural gas drilling in Pennsylvania has been mirrored by a similar rise in the number Delaware subsidiaries registered by Marcellus Shale energy companies,” Tartaglione said. “All Pennsylvania taxpayers should question the reason for these
numerous affiliates and seek assurance that energy companies are paying
their share of state taxes.”

Tartaglione says that more than 500 Delaware business entities have been registered in the names of Marcellus Shale drilling companies in the past five years even though Delaware doesn’t have a single gas well.

Tartaglione and Senate Democratic leader Jay Costa of Allegheny County say if there is no severance tax on the drillers then the loophole on income tax should be closed.
The Democrats say several years ago, the revenue department estimated that $400
million in corporate taxes could be recouped by adopting a combined reporting standard.
Past legislative efforts to adopt the standard have failed.

Transfer Tax Loophole?

There is some question about whether the recent $250 million sale of the U.S. Steel Tower is subject to the real estate transfer tax, which would amount to about $10 million for the city, the school district and the state.

The state Department of Revenue is responsible for enforcing the tax. Pittsburgh School District Solicitor Ira Weiss says some transactions are exempt from the transfer tax, but so far it looks like it should be paid, so they're asking the state to look into it. Apparently the tax is required if a new owner is recorded on the deed, which has not happened.

The U.S. Steel Tower is at 600 Grant Street and is now topped by the logo of UPMC, the largest tenant. Other major tenants are U.S. Steel and PNC Bank.

PA Lawmaker Introduces Severance Tax

Despite facing a major uphill battle, Democratic Pennsylvania State Senator John Yudichak of Luzerne County has moved a bill that would tax natural gas as it comes out of the ground. The bill calls for a tax on the gross value of the gas.

In the first three years of production, a well would be taxed at 2% and then jump up to 5% in year four. It would stay at that level until production fell below 150 MCF of natural gas per day. Once that threshold is reached, the tax would slip back to 2% as long as it stays above 60 MCF per day. Any well below 60 MCF would be exempt from the tax.

Yudichak says the tax would bring in $125 million in the first year and as much as $400 million a year after five years.

The measure is unlikely to win approval despite having Republican State Senator Edwin Erickson of Delaware County as a co-sponsor. Most Republicans in Harrisburg are against such a tax and the GOP holds a 30-20 majority in the PA senate. Yudichak says it is time to listen to the residents not the party, “The need to enact a natural gas severance tax is obvious to more than 60% of Pennsylvanians.” Yudichak was sighting recent polls that show public support for such a tax. “Gas drilling can potentially impact us all, in every corner of Pennsylvania,” says Yudichak.

Republicans have argued that such a tax will kill the young Marcellus Shale industry before it has a chance to grow. Yudichak disagrees, “We can have a thriving natural gas industry in Pennsylvania but it must be responsibly regulated and taxed to protect our communities, our land and our water.”

Even if it gets past the Republican controlled legislature, it would most likely face a veto from Governor Tom Corbett who made it a campaign pledge to not tax shale gas extraction. However, in recent weeks the governor and much of the rest of the party have begun to indicate that they may be willing to enact an impact fee that would stay with a host municipality.

In an effort to appeal to the Republicans, a third of the tax under Yudichak’s bill would be set aside for water supply and waste water issues, a third would go to an environmental stewardship fund and the rest would stay with local governments.

Free PNC Programs Help Retain Tax Refunds

Pittsburgh-based bank PNC is offering two free programs to help low-income taxpayers access their tax return money this year.

PNC says people without a bank account can opt for either a tax refund debit card or free refund check cashing when they use one of eight local Volunteer Income Tax Assistance (VITA) programs in the area. Neither requires the creation of a PNC account and both are free of charge.

PNC Community Development Program Manager John Florio says the programs are meant to help people avoid “high-fee financial services” at tax return time.

“They’re legitimate businesses, but because of their proximity, because of the way they do business, they tend to charge higher fees,” says Florio. “The ones that we’re talking about are the check-cashers and the payday lenders.”

Florio says these businesses usually charge 3-5% fees to people cashing their refund checks, often resulting in a loss of $50 and more from the total refund.

He says the VITA programs in the region are run by United Way and its partners to help people file for tax refunds, and help them avoid fees once the refund checks come back to them.

Florio says for low-income families, it’s often better to use VITA services than a tax preparer.

Poll: 53% Think Tax Hike Needed to Balance PA Budget

A new survey indicates support is growing for Tom Corbett who became Pennsylvania's new governor a month ago.

A Quinnipiac University poll shows 65% of those questioned are optimistic about the state, up from 59% in December, a month before he took office.

A month into the Corbett Administration, half of the poll participants said they had no opinion yet of Corbett's performance. But of those who have formed an opinion, the job approval rating is 3-1 in favor.

The governor is to release his budget for the fiscal year beginning July 1 and has said he would not raise taxes. However, Peter Brown, assistant director of the Quinnipiac Polling Institute, says by a 53% to 33% margin those surveyed don't believe Corbett will be able to balance the budget without a tax increase. That's a slight change (55% to 31%) from December's poll.

The sampling error margin is plus or minus 2.7 %.

State Senator Would Halt Tax Code Change

A measure in the Pennsylvania Senate would stop a 2009 business tax code amendment before it goes into effect.

The upcoming change to the state’s Sales and Use Tax would double the amount of business tax collections in a year, requiring businesses to file for taxes twice a month.

Senator Jim Ferlo says while that’s not a problem for big companies with plenty of resources, small companies that do their own accounting will see a sharp rise in “administrative costs.”

Ferlo says his new bill to stop this change would maintain the current method of filing taxes once a month.

“It does mean that the Revenue Department has to wait longer, longer being a month’s period of time, in order to receive the receipts of that revenue for investment and for obligations the state has incurred,” says Ferlo. “We are continuing to be in a financial dilemma, but I don’t know that that burden should rest solely on the shoulders of the small business community.”

The Highland Park Democrat says he’s heard outcry from several small businesses in his district, like The Original Mattress Factory and 43rd Street Concrete. His bill is currently in committee.

United Way Offers Tax Preparation

Families earning up to $40,000 and individuals making up to $20,000 are entitled to free tax preparation. United Way and The Money In Your Pocket Coalition have launched their third Free Tax Preparation Campaign to help workers claim maximum tax refunds.

Julie DeSeyn, a Program Manager for the United Way, says that volunteers come from various backgrounds. "We do get a number from major corporations in the area, people are students majoring in accounting, or people who are involved in finance some way but not directly in tax preparation. Or people that just, and I was amazed at the number of people out there that just really enjoy doing taxes."

She says that United Way held three weekend sessions for volunteers, each going through 18 hours of training in tax law and software.

The United Way and Money In Your Pocket Coalition have opened six locations in Pittsburgh. Taxpayers looking for help can call the United Way Helpline at 412-225-1155 to get information on the nearest tax location to them and appointment times.

Councilman wants Voting on Taxes

In the future, Pittsburgh residents might have more of a say over their taxes. City Councilor Ricky Burgess (District 9) introduced legislation that will allow property tax raises to be put to a vote. If the legislation passes, it will force Allegheny County election officials to put a referendum in the May primary over whether voters want that authority.

Burgess says that by voting on tax increases directly, citizens will have more voice in the way officials present information. "It really gives us a chance to have policy decisions on whats the best way to move into the future, (or) if there are needed cuts in the budget, what's an equitable way of sharing that pain or making those cuts? So I think it leads to greater participation by the public."

He also says that other states that tried putting tax hikes to referenda have seen success in voters stepping up and accepting the raises in times of need. Burgess says, under this system, he expects Pittsburgh voters to accept higher taxes if real need ever arises.

PA Ranks High in Economic Development Disclosure But.....

A new report on all 50 states' online disclosure of companies receiving tax breaks, grants and other job creation subsidies indicates Pennsylvania ranks 10th but has "a great deal of room for further improvement."


Stephen Herzenberg, economist and executive director of the Keystone Research Center, says this new report from Washington, D.C.-based Good Jobs First, reinforces his organization's study earlier this year of economic development disclosure. Herzenberg says both reports come to the same conclusion that Pennsylvania is better than most states in providing public information on what companies get subsidies from the state to create jobs....


"But we can do a lot better, building on a platform that was created in the (Governor Tom) Ridge Administration, an online site where you can get a lot of information like...'did companies actually create jobs, what did they pay.' We have a real opportunity to build on strength and have disclosure and transparency that is a model for the nation."

Herzenberg says this is a natural issue for the new governor...."this administration has a chance to create a second generation transparency database and really deliver the accountability that candidate Corbett promised and again that Pennsylvanians want."

Herzenberg says this type of information is especially important now when tough budget decisions are being made......
"We're in a situation where there are going to be cuts in economic development programs. This is the time to take a hard look at the ways the state tries to create jobs."

He says citizens have a right to know whether the companies that get taxpayer-financed subsidies actually deliver in job creation.

House Could Vote Today or Tomorrow on Compromise

On an 81-19 vote, the U.S. Senate this afternoon approved compromise legislation to extends the Bush tax cuts and federal jobless benefits. Now the measure goes to the House for consideration
Pittsburgh area Congressman Tim Murphy (R- PA18), says he's leaning towards voting "yes". He says that there is a lot in the bill that he doesn't agree with; like tax credits for motor sports arenas, Virgin Island Rum, and Ethanol. But he believes that the compromise is important to aid the economy.

Murphy says he doesn't like the position that voting on jobless benefits has put him and his colleagues in. He believes some unemployed are taking advantage of the benefits, which aren't much less than their paychecks. But Murphy added there are others who really need the money, and this legislation creates a Catch 22 for elected officials.

He also says that Democrats in the House who want to eliminate the estate tax exemption do not clearly understand small business owners. "They're holding onto their money and not making the investments (they should), because they're expecting to take a big hit. Again that's not a big hit on a tax when they die but that's a big hit on what they have to invest in over the next several years on those elements on insurance and other fees in anticipation of holding/staving off this tax that would otherwise destroy their business."

Murphy says that through his polling and what he's heard from his constituents, people understand that the bill is a compromise and want it to pass.

Rendell to Senate: Keep Your Promise

Pennsylvania Governor Ed Rendell wants the Senate to return to work Monday, Columbus Day to "honor their commitment" and approve a severance tax on Marcellus Shale natural gas. The Senate is scheduled to work Tuesday, Wednesday and Thursday and then adjourn for the year.
Rendell says lawmakers promised when they approved the budget in July to pass a severance tax by October 1st. The House okayed a severance tax last week.....39 cents per thousand cubic feet of gas....but Senate Republicans have said that's too high. The Senate GOP leaders also say the House-passed tax is illegal because all revenue measures must start in the House, and the tax was amended into a Senate bill.
Rendell said he and the General Assembly made a promise to Pennsylvanians.... “Legislators are shirking their duty and breaking their promise. The commitment to enact a severance tax is now a week past due, and it’s essential that we honor that commitment.”

Rendell invited legislative leaders to meet with him and industry officials on Oct. 11, when state offices will be closed for Columbus Day. But the Senate Republican Caucus issued a statement saying they won't be there, that they have been working on a tax.

It's a Tax

The group who authored Republican gubernatorial nominee Tom Corbett’s “no tax increases” pledge says his proposal to hike employee contributions to Pennsylvania’s unemployment compensation fund would count as a tax hike.
However, that group says Corbett could increase the levy, and stay within the bounds of his pledge.
.08 percent of Pennsylvania workers’ salaries currently go into the unemployment compensation fund, which is billions of dollars in debt to the federal government. Pennsylvania is one of just three states to tax employees to pay for unemployment compensation.
Corbett says he’d consider increasing the amount, and argues the bump wouldn’t count against his “no new taxes” pledge, since it’s a contribution, rather than a tax.
Patrick Gleason, the director of state affairs at Americans for Tax Reform, who authored the pledge, says “not so fast.”

"That would definitely fall into the category of a payroll tax increase. I know some in the state refer to it as a contribution – even the state does – so it’s a little confusing. But it is a payroll tax. Raising that would be a tax increase."

But Gleason says the pledge is about the state’s net tax structure so Corbett could stay within its boundaries by reducing other levies, like the sales or income tax.
The next governor will likely face a multi-billion dollar deficit, leading many Capitol observers and lawmakers wondering how Corbett or Democrat Dan Onorato could balance the budget without new taxes.

Is It A Tax Or Not?

For the past week, Democrat Dan Onorato has hammered away at Republican opponent Tom Corbett for saying he’d consider hiking employee contributions into Pennsylvania’s unemployment compensation fund.
During the first gubernatorial debate, Attorney General Tom Corbett said he’d take a look at upping employee contributions, but he’d avoid increasing the amount companies pay into the fund.
Allegheny County Executive Dan Onorato said he’d consider both, in order to help pay back the billions of dollars Pennsylvania has borrowed from the federal government to pay unemployment compensation.
Onorato says Corbett’s suggestion is the latest violation of the Republican’s vow not to raise taxes.

"The no tax pledge is purely a political stunt for him, because he signed it and got the press. But when he starts talking about governance, the first thing he said is, he would look at raising a tax on employees. And if he doesn’t see that as a violation of a no tax pledge, he simply doesn’t understand how state government works, or the tax pledge was actually an irrelevant document that he just did for a PR stunt."

Corbett’s spokesman, Kevin Harley, disagrees, arguing the unemployment deduction isn’t a tax.

"The law clearly says it’s a contribution of both the employer and the employee, and it is essentially a premium that pays for insurance. It is not a tax in the sense that it goes into a general fund. "

Onorato and other Democrats counter anything that gets deducted from a person’s paycheck and goes to the government is a tax, though.
Earlier this year, the Republican said the pledge didn’t cover increased fees on vehicle registration and other items – despite saying the opposite a few months beforehand.

PA Revenues Exceed Projections

After a more than billion dollar deficit in the last fiscal year, tax revenues in Pennsylvania are running $76 million ahead of projections for the first quarter of the 2010-11 fiscal year. Governor Ed Rendell says in September alone revenues were nearly $70 million, or 3.1% above expectations....
"To keep this in perspective, this is the first quarter of sustained revenue growth since the third quarter of 2007-2008 fiscal year. So that’s extraordinarily good fiscal news for the commonwealth."
Personal income tax and realty transfer taxes were down, but corporate and sales tax figures made up for those losses.
Corporate taxes were 52.7 million dollars above estimates in September. For the first 3 quarters, those revenues are $50.9 million or 9.4 percent above expectations.

No Legislative Action on Major Issues

The House and Senate completed their week in Harrisburg without making progress on any major issues.
Resolutions marking a week in September “Miles of Pillowcase Smiles Week,” creating “Eunice Kennedy Shriver Day” and making October “Parent Involvement Month” are some of the actions the House and Senate approved this week.
The chambers also passed bills changing laws related to wills and estates; and borough, township and county codes – but didn’t take action on any of the major issues facing them such as severance tax, pension reform, transportation funding or any other high-profile legislation.
Tim Potts of government reform group Democracy Rising PA says he’s disappointed, but not surprised.

"You’ve got these enormous issues that have tremendous potential for good and ill in Pennsylvania. And yet they still are unprepared to deal with them. We’re paying 30-thousand dollars a day for per diems for these guys. The least they can do is show up ready to work."

Governor Rendell remains optimistic a severance tax will clear the House this month.
He says he’s working with Democratic leaders to hash out differences on how the revenue would be distributed. However, the bigger stumbling block for a severance tax is the rate of the levy.

No Agreement On Severance Tax Yet

As the General Assembly's October 1 deadline for passing a natural gas severance tax draws closer, more and more supporters of the efforts are losing faith that it will be approved. The Democratic-controlled Pennsylvania House has yet to call a vote on a severance tax, and it's unclear when or even if that will happen.
During a rally at the Capitol rotunda against gas drilling, Delaware County Democratic Representative Greg Vitali, who supports a severance tax, said that leaders from both parties were just posturing on the issue, and don't plan on passing the tax.....

"Don't let them fool you. If the House shoots over a bill to the Senate, and the Senate shoots over a bill to the House, and they try to tell you they've worked on this issue, they're just not telling the truth. What they want to do is, they want to get out of town, do no harm and get themselves reelected."

Bu Brett Marcy, a spokesman for House Majority Leader Todd Eachus, says leaders have been working...
"I think there's a big difference between what you see in public and what you see in private. And the bottom line is, we've been having an awful lot of discussions with all the stakeholders on this issue for months now...and not just weeks, but months. So I would not be discouraged. The House Democratic Caucus remains committed to this issue."

Senate Republican leaders say they're waiting for the House to pass a tax before they take up the issue. The Republican leaders wants a lower tax rate than the levy that Democrats are pushing for. Governor Ed Rendell says he will veto a rate he considers to be too low.

PA Takes Step 2 in Collecting Back Taxes

As a follow-up to this spring’s tax amnesty window, Pennsylvania’s Revenue Department is publishing the names of 39,000 tax delinquents on its website. The number of tax dodgers posted on the site is ten times larger than previous lists. In the past the department only listed delinquent companies, but now, Revenue Secretary Dan Hassell says the site shows the names, home counties and lien amounts for individuals as well. “This is something that we don’t do lightly,” says Hassell, “I don’t like to be in a position where we have to embarrass people into doing the right thing. But sometimes sending the letter or making the phone call doesn’t have the desired effect, and we don’t have any other choice but to do that.” The amnesty program offered earlier this year brought in $260 million. Last year PA Governor Ed Rendell promised to ramp up efforts to collect delinquent taxes by hiring 40 new revenue collection agents, but the department suffered nearly $9 million in budget cuts, so Hassell says those new positions were never created. Hassell says they are launching this program because it is the fair thing to do for residents who pay their taxes on time. And he thinks it will work, “Many times we would contact somebody and say, hey if you don’t get this resolved now then your name is going to be on the Internet as someone who doesn’t pay their taxes. And that will motivate them to make their payment,” says Hassell.