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FOR IMMEDIATE RELEASE
January 31, 2007

Finance Committee Approves EMS Tax Reform Measure
 
Installment withholding, spending restrictions set by SB 218

Senator Pat Browne's efforts to bring about significant reforms to the Emergency Municipal Services Tax took a step forward with the Finance Committee's approval of Senate Bill 218.

SB 218, the first bill reported out of the Finance Committee since Senator Browne took over as Chairman for the 2007-08 Legislative Session, would end the lump-sum maximum payment of $52 and set specific restrictions on how taxing entities may use revenues raised by the levy.

The bill is now headed to the Senate Appropriations Committee and could come before the full Senate for consideration as early as next week.

Senator Browne's bill mirrors the language of Senate Bill 157, of which he was the prime sponsor during last session. That measure was approved by the General Assembly, but vetoed by the Governor, who said the legislation did not provide adequate time for municipalities to prepare for the changes.

"That is not an issue this time," Senator Browne said. "I am optimistic that we can move this legislation through the process in an expeditious manner. This is essentially the same bill that was approved 47 to 3 in the Senate and 193 to 1 in the House last year. It makes common sense changes that make this tax less onerous, especially for low-income workers."

SB 218 would require that the tax, which would be renamed as the "Local Services Tax," be withheld on a payroll-period basis with a maximum deduction of $1 per week. Employers would be required to remit the LST collections on a quarterly basis. It also exempts those earning $12,000 or less per year from the tax.

The measure restricts the use of the revenue raised by the LST to only the following:

•  Emergency services including police, fire and emergency medical services;
•  Road construction and maintenance;
•  Property tax reduction; and/or,
•  Property tax relief through the use of homestead/farmstead exemption.

"Many municipalities adopted the Emergency and Municipal Services Tax at the maximum rate of $52 per year and withheld that in one lump sum, which created a tremendous financial burden for many lower-income workers." Senator Browne said. "Under this measure, low-income workers will be exempt and everyone else will see the tax burden reduced to $1 per week.

"Further, the Local Services Tax specifically states how taxing bodies may use the funds," Senator Browne continued. "The intent of the original bill was that the revenue was to be used for public safety and essential public works projects. This measure ensures that the money goes to those efforts or is used to provide property tax relief or reductions."

Contact:

Stacey M. Connors
(717) 787-1349