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For Immediate Release
10/31/05
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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 Sen. John Pippy (R-37), co-sponsor of the bills. 

Pippy said 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.  

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, the senator said. 

"Thirty states have spending controls, revenue controls or both.  Pennsylvania has none of these controls. It's time to change that," said Pippy. "This legislation will force state government to live within its means, which is what Pennsylvania families do every year. And, it makes clear that surplus revenues should be used to cut taxes." 

Pippy said 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: 

• 50 percent of surplus revenues will go to the Rainy Day Fund; 50 percent will go to the new Taxpayer Fairness Fund.
• When the Rainy Day Fund reaches 10 percent of General Fund Appropriations, all surplus revenues will go to the Taxpayer Fairness Fund.
• Money in the Taxpayer Fairness Fund will be distributed to taxpayers through a temporary reduction in the Personal Income Tax.
• 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 measure was sent to the House of Representatives for consideration. 

CONTACT: Matt Campion (412) 571-3822