June 30 is the end of the state fiscal year and it appears that the legislature is planning to take a few days more to finish work on the new state budget.

Unlike last year, there do not seem to be major new taxes pending to make up budget shortfalls; in fact, there is a projected $600 million budget surplus forecast.

The one tax change that may happen is a speed up in the phase out of the Capitol Stock and Franchise Tax, proposed by Sen. Robert J. Thompson (R-Chester).  His Senate Bill 1155 would reduce millage from 6.99 to 5.50 for 2005 instead of 5.99 and phase it out completely a full year earlier than the current schedule.

The Pennsylvania Business Tax Reform Commission issued a heavily qualified interim report (http://www.revenue.state.pa.us/tax_reform/lib/tax_reform/BusinessReport.pdf) on June 21 and immediately asked to have until November 30 to complete their work. Governor Edward G. Rendell agreed.

The five-page report contains interim recommendations to: reduce the Corporate Net Income Tax rate to seven percent and make every effort to get to six percent; impose a new tax of up to two percent on pass through entities (sub S corporations, partnerships, etc.) on top of the current Personal Income Tax rate of 3.07 percent; change the sales factor for apportionment purposes to be "market sourced;"  eliminate the cap on Net Operating Losses going forward (but not the removal of the cap for existing NOLs); and switch to combined/consolidated reporting.

More than 20 members of the Senate have formed a new, bipartisan Life Sciences Caucus to promote the state’s $5.5 billion bioscience industry. It is expected that more Senators will join the Caucus in the upcoming weeks. The bi-partisan Caucus is being lead by Senator Robert J. Thompson (R-Chester).

Pennsylvania is home to more than 2,000 world-class biotech research, pharmaceutical and medical device companies and institutions that contribute over $5.5 billion to our economy. The objective of the Caucus is to find ways to build on this strength to create even more opportunities for Pennsylvania’s citizens.

In a presentation before the Caucus, Pennsylvania Bio President Fritz Bittenbender reviewed the association’s new study of the industry (available at www.pennsylvaniabio.org). Bittenbender told Caucus members that Pennsylvania has many advantages that make it a leading location for the biosciences, including world-class industry and research institutions, a geographical location well positioned between the financial and regulatory centers of New York and Washington DC, and a supportive state government.

Bittenbender also announced to the Caucus that next year Pennsylvania will host BIO 2005, the largest conference for bioscience professionals in the world, underscoring Pennsylvania’s arrival as a major player in the bioscience community. 

The Caucus is an important expression of the interest Pennsylvania state government has in the bioscience industry. A similar Caucus is expected to be formed in the House.