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TOUGH TIMES - TOUGH DECISIONS

State spending must be controlled in Pennsylvania. Theommonwealth faces a $525 million revenue shortfall inhe current fiscal year, yet the governor is still proposingo increase state spending by more than $1.2 billion, or 4.6percent.This budget relies on $2.76 billion in federal stimulusdollars to balance spending. The governor has proposedsing these funds to increase his overall spending total.he more the state relies on stimulus funds to increaseunding today, the larger the hole it creates next year whenall existing stimulus dollars are gone. More than $850illion of these stimulus funds are awaiting Congressionalapproval.In previous budgets, the Legislature has cut programsand expenditures to prevent a broad-based tax increase. Inough economic times, I believe tax increases are the wrongapproach.

Dear Friends,

This certainly has been aninteresting winter with theamount of snow we’ve had toendure. Fortunately, it won’t belong before we’re seeing therst signs of Spring.At the state Capitol, it isbudget season. Members ofthe General Assembly are justbeginning to undertake the taskof putting together a spendingplan for Fiscal Year 2010-11amidst the continued difﬁculteconomic conditions we areexperiencing as a state and acountry.This will be a challenging task, just as you and your householdace tough spending decisions.As members of the Legislature,we must lead by example andbe good stewards of your hard-earned taxpayer dollars.Governor Ed Rendell haslaid out his spending plan,and I want to take some timeto brieﬂy share with you someof the terms of his proposaland offer you opportunities toprovide feedback on theseideas. You should know that asthe proposal currently stands, Ioppose any new taxes.As your state representative,am charged with servingmy constituents and beingour voice in Harrisburg. It isa responsibility I do not takelightly. Because of that, weneed to have a conversationabout the budget. Thisnewsletter is designed to initiatethat discussion.Here’s hoping this newsletternds you and your family well.Best regards,

RepBeyer.com

Governor Rendell’s 2010-11 Proposed Bud

Spending Growth:

$27.74 billion for Fiscal Year 2009-10. The governor cut $135 million from the

2009-10 state budget to account for the revenue shortfall. These monies came from proposed cutso the following programs: public television, Council of the Arts, rural affairs, Commission on Crimeand Deliquency, grants to the arts, agricultural research, farm safety and more.The 2010-11 Rendell budget would increase spending by $1.29 billion or 4.6 percent.

Revenue and Taxes:

This budget increases taxes in Fiscal Year 2010-11 by $874 million and$1.4 billion in FY 2011-12. These new taxes do not support the governor’s new spending for Fiscalear 2010-11.Rendell proposes the new taxes are to be deposited into a new account called the Stimulusransition Reserve Fund. The fund is proposed to help manage the loss in stimulus funds and to help

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*All Other

includes:

Dept. of AgricultureDept. of EnvironmentalProtectionState PoliceDept. of Community &EconomicDevelopmentDept. of Health*Other Taxes

include:

Realty/transfer Table gamesrevenueLiquor taxInheritance tax

Visit my Web site at: RepBe

Total spending

: $29.03 billion, made up of $26.27 billion in state dollars and $2.76 billion intimulus funds.The governor is assuming $850 million in Federal welfare funds being approved and has built thisr

evenue into his budget proposal. If these funds are not approved, this proposal would be out ofalance by approximately $850 million.The budget proposal is reliant on no broad-based tax increases. The major spending increasesre in basic education, public welfare, corrections and debt service.

get: IT’S YOUR MONEY!

address the looming multi-billion dollar spike in the state’sension systems.

The governor’s proposed new tax increases includehe following:

◆

Sales Tax Changes:

his plan would lower the rate topercent and expand the scope of the sales tax,removing 74 current exemptions. This would generate$531.5 million in Fiscal Year 2010-11.

◆

Eliminate the Vendor Sales Tax Discount :

Thiswould remove a current discount on businesses that remitsales taxes to the state in a timely manner. This wouldgenerate $73.6 million in Fiscal Year 2010-11.

◆

Smokeless Tobacco and Cigars:

Implement a newtax on these items – 30 percent of theoduct’s value – to generate $41.6 million in Fiscal Year 2010-11.

◆

Severance Tax:

Impose a 5 percent tax on the value onatural gas at the wellhead (plus 4.7 cents per thousandcubic feet of gas severed). This would generate $160.7million in Fiscal Year 2010-11.

◆

Business Tax Package

he governor wants tochange the way corporations report their income tothe Commonwealth by moving to combined reporting. The package would also, among other things, reduce theCorporate Net Income tax to 8.99 percent. His proposalwould generate $66.6 million in 2010-11.

Welfare Costs Climb, Fraud is a Problem

I believe cuts will be necessary to control spending. Decisions will be toughbut they are needed and controlled spending can be met through two avenues:

• Limited growth, with increases reﬂecting onlywhat can be afforded.• Cuts to existing budget expenditures.

There are definite areas where waste has been documented. Auditor General Jack Wagner has released several Department of Public Welfare(DPW) audits that cite fraud and abuse in the department. Before another dimein new spending is set aside for the department, it should be determined thatthe approximately $9.7 billion appropriated is being spent properly and notwasted.The state needs to review its Medical Assistance program within DPW.It is the department’s largest expenditure and has grown dramatically sincethe Rendell Administration took office in 2003. About 600,000 people havebeen added to the state’s Medical Assistance rolls since 2003 – equal toabout 5 percent of the state’s population. Approximately 400,000 of these newrecipients were added BEFORE the economic decline started in spring of 2008,and 2.1 million are on Medical Assistance now.We need to examine whether or not all of these people truly meet thestate’s Welfare eligibility requirements. An audit released by the auditor generalin January 2009 indicated there were improper eligibility determinations for asignificant number of Medical Assistance recipients between 2005-2008. A long hard look must be taken at existing programs to determine whichare needed and which are not due to ineffectiveness or duplicative purpose. Asone of the state’s largest and fastest growing expenditures, the Department of Corrections costs should also be reviewed.With prison populations growing dramatically, thus driving up costs, maybeit is time to review sentencing guidelines and to start considering alternativepunishments for non-violent and low-risk public threat offenders.

Proposed Tax of New Items

While keeping food, clothing, prescriptionmedications, health care services andeducational tuition exempt from state tax,the governor wants to repeal the exemptionon 74 items.Here is a sampling of some of theitems he has proposed to tax:

Accounting, auditing and bookkeeping services Advertising and public relations services Air transportation Airline catering Amusement and recreation industries Architectural and engineering servicesBasic televisionCandy and gumCaskets and burial vaultsCatalogs and direct mail advertisingCoalCoin operated food and beverage vending machinesConsulting servicesCustom programming, design and data processingDry cleaning and laundry servicesElectric use (residential)Electrical, plumbing, heating & AC service feesFinancial institutions feesFirewoodFlagsResidential fuel oil and gasFuneral parlors, crematories and death care servicesGratuitiesHorses sold to out of state purchasersInvestment metal bullion and investment coinsLegal servicesLiquor or malt beverage purchased from retail dispenserMagazinesMotor vehicles (out-of-state purchases)Museums, historical sites, zoos and parks for profit NewspapersNon-prescription drugsParking lots and garagesPersonal care servicesPersonal hygiene productsRecreational parks, camps and campgroundsSpectator sports admissions (excludes schools)Stair lift devicesTelephone use (residential)TextbooksTheater, dance, music and performing arts admissions for profit

Transit and ground transportationTruck transportationVeterinary feesWarehouse storageWaste management and remediation servicesWater and sewage services