1 COMMONWEALTH OF PENNSYLVANIA HOUSE OF REPRESENTATIVES HOUSE APPROPRIATIONS COMMITTEE THE MAIN CAPITOL ROOM 14 0 HARRISBURG, PENNSYLVANIA TUESDAY, FEBRUARY 1, 2 011 10:30 A.M. PUBLIC HEARING ON STREAMLINED SALES TAX BEFORE: HONORABLE WILLIAM F. ADOLPH, JR., CHAI^IAN HONORABLE JOSEPH F. MARKOSEK HONORABLE JOHN C. BEAR HONORABLE MARTIN T. CAUSER HONORABLE JIM CHRISTIANA HONORABLE GORDON DENLINGER HONORABLE BRIAN L. ELLIS HONORABLE MAUREE GINGRICH HONORABLE GLEN R. GRELL HONORABLE DAVID R. MILLARD HONORABLE T. MARK MUSTIO HONORABLE SCOTT PERRY HONORABLE SCOTT A. PETRI HONORABLE TINA PICKETT 2 CONTINUED: HONORABLE JEFFREY P. PYLE HONORABLE MARIO M. SCAVELLO HONORABLE CURTIS G. SONNEY HONORABLE H. SCOTT CONKLIN HONORABLE PAUL COSTA HONORABLE DEBERAH KULA HONORABLE TIM MAHONEY HONORABLE MICHAEL H. O'BRIEN HONORABLE CHERELLE L. PARKER HONORABLE JOHN P. SABATINA, JR. HONORABLE STEVE SAMUELSON HONORABLE RONALD G. WATERS ALSO PRESENT: HONORABLE KERRY A. BENNINGHOFF HONORABLE PHYLLIS MUNDY HONORABLE SCOTT W. BOYD HONORABLE MARK B. COHEN HONORABLE WILLIAM C. KORTZ, II HONORABLE MICHAEL P. McGEEHAN EDWARD NOLAN, EXECUTIVE DIRECTOR (R) STACIA RITTER, ASSISTANT EXECUTIVE DIRECTOR (D) BRENDA S. HAMILTON, RPR REPORTER - NOTARY PUBLIC 3 INDEX NAME PAGE OPENING REMARKS BY CHAIRMAN ADOLPH 4 OPENING REMARKS BY REP. MARKOSEK 5 CHRISTOPHER RANTS, MAIN STREET FAIRNESS 9 COALITION 4 P R O C E E D I N G S CHAI^IAN ADOLPH: Good morning. I'd like to welcome everyone to the balmy Pennsylvania. First of all, on some -- some housekeeping, the reason why we're delayed, and I apologize for that, we had a gentleman coming up from the Philadelphia area from Global Insights to do an economic report for us and about 9:15 we received an e-mail from him and he was unable to continue to travel, last on the Pennsylvania turnpike, and he was turning around. So we were very, very fortunate to be able to get ahold of our first speaker, who was actually our afternoon speaker, Christopher Rants, who had the good sense of coming from Iowa yesterday, I guess. Okay. And we have only delayed this meeting for about 30 minutes. For the members, we have also been able to juggle our afternoon speaker. Eileen McNulty, who works here in the city of Harrisburg. I think she was scheduled to be in tomorrow. So she was going to be coming in this afternoon at one o'clock. So what I'd like to do before I introduce our speaker is have everyone introduce themselves. I believe that this informational meeting of the House Appropriations is being televised live on PCN and 5 possibly some other local stations. So I'll start off by saying my name is Bill Adolph. I'm from the 165th Legislative District in Delaware County and I'm the Republican chairman of the Appropriations Committee. Chairman Markosek. REP. MARKOSEK: Thank you, Chairman Adolph, and great to be here. This is really a great thrill for me personally. This is really my first official Appropriations Committee meeting as the -- as the minority chair and I'm very glad to be here. I just want to say how -- how wonderful it is to serve with Chairman Adolph, who I've known for many, many years, and I look forward to working with him and the committee as we move forward in a very difficult year. Before we go on, I just want to -- I'd like to introduce Chairman Phyllis Mundy, who is our chairman of the Finance Committee, who we have invited to be here as well, and our members of the committee. Chairman Adolph has asked if each member of the committee would approach the mike and just introduce themselves. Start with Steve Samuelson. REP. SAMUELSON: Steve Samuelson. 135th 6 District in the Lehigh Valley. REP. SABATINA: John Sabatina, 174th District, Philadelphia. REP. CONKLIN: Scott Conklin, 77th District, Centre County. REP. PARKER: Cherelle Parker, 200th District, Philadelphia. REP. KULA: Deberah Kula, 52nd, Fayette and Westmoreland Counties. REP. O'BRIEN: Mike O'Brien, 175th District, Philadelphia. REP. MAHONEY: We need to dance here. Tim Mahoney, 51st District, Fayette County. REP. PAUL COSTA: Good morning, everyone. I'm Paul Costa. I represent the eastern suburbs of Allegheny County, and I'm looking forward to today. REP. WATERS: Ron Waters, Philadelphia and Delaware Counties. REP. MARKOSEK: Thank you, Mr. Chairman. CHAI^IAN ADOLPH: Okay. Thank you. To my left is the executive director of the House Appropriations Committee, Dr. Nolan, and to his left is Representative Kerry Benninghoff who is the Republican chair of the Finance Committee, and I appreciate Representative Benninghoff's attendance at the 7 meeting. REP. BENNINGHOFF: Thank you. CHAI^IAN ADOLPH: Okay. And then if the individual members could introduce themselves. REP. MILLARD: Dave Millard, Columbia County, 109th District. REP. GINGRICH: Good morning. Representative Mauree Gingrich, 101st District, Lebanon County. REP. GRELL: Good morning. Representative Glen Grell, 87th District, Cumberland County. REP. SONNEY: Curt Sonney, 4th Legislative District, Erie County. REP. SCAVELLO: Good morning. Mario Scavello, 176th District, Monroe County. REP. PYLE: Good morning. Jeffrey Pyle, 60th Legislative District, Armstrong and Indiana Counties. REP. CAUSER: Good morning. Marty Causer, 67th District, McKean, Potter and Cameron Counties. REP. ELLIS: Brian Ellis, 11th District, Butler County. REP. PERRY: Good morning. Scott Perry, the great 92nd, northern York and southern Cumberland. REP. MUSTIO: Good morning. Mark Mustio, 8 Allegheny County. REP. PICKETT: Tina Pickett, Bradford, Sullivan, and Susquehanna Counties, 110th District. REP. PETRI: Scott Petri, 178th District, Bucks County, Pennsylvania. REP. CHRISTIANA: Jim Christiana, Beaver County, 15th District. REP. MARKOSEK: Mr. Chairman, I'm sorry. I forgot to mention one of the most important people in the room, our staff, Ms. Stacia Ritter, who is the assistant executive director of the Appropriations Committee. Thank you. CHAIRMAN ADOLPH: Thank you, Chairman Markosek. These hearings are a new component that traditional department -- departmental hearings that the Appropriations Committee normally has after the Governor gives his budget address. However, I thought it was important that we were able to gather together and try to learn from some national experts. As we all know, we are facing some very difficult fiscal issues for the upcoming budget. So I think you'll find that our speakers over the next several days are very knowledgeable and are going to bring the Appropriations hearings some ideas that we -- 9 we are to work with. Our first speaker, Christopher Rants, is president and board member at the Legacy Foundation. Christopher is the former Speaker of the House of the Iowa House of Representatives and he has developed a system that is catching on nationwide and some of our members have had the privilege to listen to Christopher give his speech and inform them of -- of this sales -¬ sales tax system that is catching on nationwide. So without further ado, I want to welcome to Pennsylvania Christopher Rants. MR. RANTS: Thank you, Mr. Chairman, members of the committee. It is a pleasure to be with you here this morning, particularly because it's actually better weather in Pennsylvania than it is in Iowa. So it's definitely a good thing to be here. And, Mr. Chairman, while I appreciate the gracious introduction, I cannot claim credit for the Streamlined sales tax system. I've been involved with it for the last ten years, but as a member of the National Council of State Legislatures Task Force on the -- on the streamlined sales tax. However, I am here today representing the Main Street Fairness Coalition, which is a coalition of retailers, technology companies, communication companies, 10 and the SST Governing Board, which is a public entity, all of which are looking to encourage legislatures across the country to pursue joining the Streamlined Sales Tax Compact. I'll take you back in time just a little bit. In 1993 was my first year in the Iowa General Assembly. I came in. I sat down at my desk. I was the first guy to come in and put a laptop down on his desk. And back in 1993 laptops weighed like 20 pounds. They're not like we think about laptops today. And that was an important year, because in 1993 the United States Supreme Court in Quill versus the State of North Dakota took away the right and ability of states to collect sales and use tax from remote sellers. So the Pennsylvania government lost the ability to collect a tax on a citizen or transaction that took place with someone in Iowa, and Iowa lost our ability to collect that tax on a transaction that took place with a seller in Pennsylvania. What that means today is there are over $706 million in Pennsylvania taxes that are owed to the state of Pennsylvania that are currently going uncollected. There's similar amounts all across the country. My state, being a much smaller state, it's a smaller amount. 11 But in times of great budget challenges, none of our states, either a small state like Iowa or a larger state like Pennsylvania, we can no longer afford to let taxes that are owed go uncollected. That's looking at it from a government standpoint. Let me challenge you to look at it from a private sector standpoint. If I'm a Pennsylvania business that is competing with businesses out of state, as that Pennsylvania business, I'm collecting that sales tax. And I believe you have a property tax here, and an income tax, worker's comp, unemployment comp, maybe a few other associated taxes or fees on the side that I as a Pennsylvania business am collecting and paying. But my out-of-state competition does none of that.