Budget and Finance

            *** 1984-85 General Fund Budget -A basically controversial general fund budget for 1984-85, contained in SB 878, was approved and signed into Act 7A on June 29, less than 48 hours before the July 1 deadline for enactment.

            The general fund budget, which supports state governmental operations and subsidizes school districts and health and welfare programs, totaled $8.07 billion for 1984-85. Another $420 million in 41 separate non-preferred spending bills for state related colleges and health and cultural institutions brought total general fund expenditures for 1984-85 to nearly $8.5 billion, or $500 million more than the previous year's spending.

            Senate Bill 878 also includes spending authorizations for federal money and state lottery funds, bringing the total to about $10.7 billion.

            The lack of any vehement controversy over this fiscal year's budget can be attributed to the absence of any tax increase to support it. The $7.9 billion general fund budget for 1983-84 (Act 7A) by contrast required a $495 million tax hike package around which controversy swirled until enactment of the budget three weeks beyond the fiscal year's July 1 deadline.

            Apparently, revenues generated by the previous year's tax increases resulted in about a $50 million surplus by the close of the 1983-84 fiscal year. This, combined with the governor's increased use of lottery funds for programs previously supported by general fund tax revenues led to enactment of a business tax cut for 1984-85 (see related story).

            Senate Bill 878 taps into the lottery fund for about $189 million to cover what previously were general fund expenditures. These are:
            --$140 million in lottery proceeds for long term care facilities or nursing homes. The precedent for shifting from tax revenues to the lottery to subsidize nursing homecare was set in 1983-84 when $100 million in lottery money was used;
            --$22 million for in-home care and other health care services;
            --$25 million for the state's share of the Supplemental Security Income program and Medicare payments;
            --and $1.5 million for Department of Aging administrative costs. Two years ago, some $16 million of the department' s program costs were transferred from the general fund to the lottery fund.

            Senate Democrats, in exchange for their reluctant support to use lottery proceeds for some items previously paid for with tax money, succeeded in winning an expansion of the senior citizens co-pay drug prescription program. Senate Bill 878 raises the income eligibility for co-pay for single
people from $9,000 to $12,000 and for couples from $12,000 to $15,000 effective April 1, 1985 at a cost of $15.6 million. The program, which began July 1, 1984, requires participants to pay $4 for each prescription, with the state paying the balance from lottery proceeds. (Also, see story on HB 1301 under Aging and Youth).

            The $76 million budget surplus accumulated by the end of June, 1984 was partly established by tax increases the previous year: the personal income tax had been increased from 2.2 to 2.45 percent, the six percent sales tax extended to cigarettes, and other taxes accelerated. The 2.45 percent personal income tax automatically dropped to 2.35 percent July 1, 1984.

            Senate Bill 878 provided $30 million for a new statewide student testing and remediation program. The governor had asked for $48 million.

Under the new budget, school districts received a $126 million increase in aid for basic instruction, with a total allocation of nearly $1.9 billion.

            Also, $11.5 million in teacher pension increases were awarded. The state college system was given a $15 million boost to $250 million.

            An emergency mortgage loan program totaling about $26 million was included in the new budget at the insistence of Senate Democrats. The program is intended to assist unemployed homeowners who have fallen behind in their mortgage payments because of adverse economic conditions.

            Philadelphia received an additional $27 million through various program increases, money the mayor said was needed to balance the city's budget.

            Initiatives begun two years ago at the insistence of Democratic legislators to improve the state's economy were continued in the 1984-85 budget.

            For example, the so-called Ben Franklin Partnership - a consortium: of government, business, education and labor groups to encourage the growth of advanced technology industries - was given $8.3 million more in 1984-85, or an 80 percent boost, bringing its allocation up to $18.6 million.

            There was also a first time $4 million Enterprise Development Area Program to encourage public-private partnerships designed to improve the business climate and create jobs in economically distressed neighborhoods.

            Also, welfare recipients were given a five percent increase in their cash grants under the new budget.

            ***Non-Preferred Appropriations -About $420 million was allocated to state related schools and charitable institutions in 41 non-preferred appropriations bills (House Bills 2052 to 2092) which the governor signed into law July 3 (Acts 13A to 53A). This part of the 1984-85 general fund budget was about $34 million more than the previous year's $386 million non-preferred
expenditure.

            Of the $420 million total, more than $350 million went to the state related universities: Penn State, $162.7 million ($149.4 million in 1983-84); University of Pittsburgh, $87.2 million ($81.4 million); Lincoln University, $6.7 million ($5.8 million); and Temple University, $98.9 million ($90.6
million).

            The University of Pennsylvania received the largest share in the category of state-aided schools, with an appropriation of $26.4 million, which compared with $23.7 million in 1983-84.

            Other major recipients of non-preferred funding, with 1983-84 funding in parenthesis, are: Hahnemann Medical College, $4.1 million ($3.8 million); Jefferson University Medical School, $6.6 million ($6.3 million); Western Psychiatric Institute, $6.1 million ($5.9 million); Medical College of
Pennsylvania, $2.6 million ($2.4 million); Philadelphia College of Osteopathy, $4.2 million ($4 million); and Drexel University, $4.4 million ($4.2 million).

            ***Bond Financed Economic Developmental Package -- Intimately tied to the passage of the 1984-85 budget, was the approval by both chambers of an 11-bill package authorizing a $190 million bond issue to launch an economic development program for the commonwealth.

            This was the bargaining chip insisted upon by Democrats in exchange for accommodating many of the governor's budget requests.

            The bills (SBs 1432-34, 1436, 1438-39 and HBs2291-93, 2295 and 2297) authorize the bond sale approved by voters in the April, 1984 referendum and specify several programs to be financed by these bond proceeds. They were signed by the governor July 2 into Acts 104-114.

            Senate Bill 1432 actually authorizes the $190 million bond sale and establishes the Pennsylvania Economic Revitalization Fund through which the proceeds will be funneled to specific programs, with the approval of the General Assembly.

The remaining ten bills:
            -provide $30 million for the rehabilitation and development of recreational facilities. A total of $12 million will be appropriated from the revitalization fund to the Department of Environmental Resources for site development and other costs. The remaining $18 million will go to the
Department of Community Affairs for grants-in-aid to municipalities for land acquisition and rehabilitation;
            --create a Pennsylvania Conservation Corps, a two-year program totaling $15 million to employ economically disadvantaged youth between 18 and 21;
            -establish a $5 million program to promote the development of employee owned enterprises;
            -appropriate $27 million for vocational-technical secondary schools and community colleges to upgrade their equipment;
            --appropriate $16 million for so-called business infrastructure development. Private firms participating in the program would provide matching money to expand their businesses in return for state infrastructure development grants;
             --appropriate $3 million for schools to upgrade engineering equipment.  There is a match requirement of $3 for every $1 provided by the fund;
            --stimulate minority businesses with a $1.7 million appropriation;
            --establish a small business incubator program by appropriating $5 million for loans and $3 million for seed capital that would be matched on a three to one basis by recipients;
            --appropriate $5 million for a capital loan fund;
            -and establish a $10 million agricultural development program of guaranteed loans to farmers.

Some of the programs listed are for three years, but the expenditures noted are for one year.

***Bond Referendum--Approval for the $190 million bond issue to stimulate the commonwealth's economy came from voters in the April, 1984 primary. This referendum was provided for in SB 547, which was signed into Act 19 on Feb. 24, 1984.

***Corporate Tax Cut - The General Assembly passed and the governor signed into law a measure (SB1310, Act 94/1984) reducing the state's Corporate Net Income (CNI) tax from 10.5 percent to 9.5 percent effective January 1, 1985.

Billed as an attempt to promote business growth, the corporate tax cut was expected to result in an estimated $16 million revenue loss to the state in fiscal 1984-85. Eventually, the reduction will result in a $90 million annual loss.

Although the legislation won overwhelming support in the end, passing the Senate (47-0) and the House (192-7), unsuccessful attempts were made in the Senate to tie any cut in corporation taxes to investment in Pennsylvania and to give individuals an extra break on the personal income tax.

At one point prior to final passage of the tax bill in the Senate, an amendment was inserted to reduce the personal income tax rate for individuals to 2.325 percent which would have reduced citizen taxes an additional $25 million when compared to a previously scheduled reduction from 2.45 percent to 2.35 percent that became effective July 1, 1984.

The 2.325 percent amendment was deleted on a voice vote and under pressure from the administration.

***Motor License Fund Budget (1984-85) -A $1.3 billion highway budget for 1984-85 (SB 1409) was approved unanimously in both chambers and signed into Act 8A June 29,1984. It provided for nearly a $50 million boost in highway maintenance work.

This Motor License Fund budget was nearly $100 million more than the 1983-84 budget, which had to be propped up with two tax increases. Taxes were not increased for 1984-85.

Essentially, the 1984-85 budget provided a total of $567 million for maintenance of the state's roads and bridges. This compares with a $518.6 million expenditure for 1983-84.

Highway and safety improvement programs received $120 million, an increase of $27 million over 1983-84.

In 1983, the state's per gallon tax at the pump was increased from 11 cents per gallon to 12 cents per gallon (SB10, Act 32/1983). Additionally, the state's 3.5 percent oil franchise tax on the wholesale price of gasoline was boosted to 6 percent. The combined tax increase generated about $145 million in additional revenues.

***Emergency Mortgage Assistance -A supplemental appropriation for the 1984-85 general fund budget to provide funding for emergency mortgage assistance to homeowners who are unemployed or otherwise economically hurt by the recent recession was signed into Act 73 May22.

The measure (SB 1357) appropriated $25.8 million to the Pennsylvania Housing Finance Agency (PHFA) to make loans to homeowners who have fallen 60 or more days behind in their mortgage payments. The three-year loans carry a 9 percent annual interest charge.

A mortgage assistance program was established the previous year when HB 500 was signed into Act 92 Dec. 23, 1983. However, only $5 million was appropriated from the 1983-84budget for the program, with additional funding expected to cone from business tax credits that were taken from the Neighborhood Assistance Program and given to mortgage assistance. The funding never materialized.

Senate Bill 1357, which Democrats say now adequately finances the mortgage assistance program with general fund money, also restored the business tax credits to the Neighborhood Assistance Program.

***Public Employee Pension Boost and Venture Capital-School teachers and state employees with 30 years or more of service will have an opportunity to take an early retirement in 1985 because of legislation (HB 2114) approved and signed into Act 95 June 29, 1984.

The measure also provided for a unique plan to invest a small percentage of teacher and state employee pension money in venture capital programs to stimulate new businesses in Pennsylvania. A third major provision granted a cost of living increase to retired teachers and state employees.

Under the early retirement provision, state employees and teachers who are 53 or older with 30 years of service will receive full pensions if they choose to retire between July 1, 1985 and June 30, 1986. Also, during this period, teachers and state employees between 50 and 53 with 30 years of service could also retire early, but with their pensions reduced by 0.25 percent for each month that retirement precedes their 53rd birthday.

Teachers and state employees who retired before July 1, 1982 became eligible for an increase of $1 a month for each year of service and $2 a month for each full year of retirement as of July 1, 1983. Retirees also received an additional two percent on their monthly annuity, not to exceed $20.

Venture capital investments intended to create new businesses are limited to up to one percent of the value of the two pension funds. This would translate into an investment of about $60 million from the State Employees' Retirement Fund, and about $40 million from the School Employees Retirement Fund.

The use of pension money to stimulate the state's economy was part of the Democratic platform in the 1982 gubernatorial campaign.

***Professional Affairs Funds-A routine housekeeping appropriations bill (HB 2110) took on some significance with the governor's line item veto of money to finance the operations of the State Registration Board of Professional Engineers.

In signing the measure into Act 11A June 30, the governor vetoed a separate $525,000 appropriation for the engineers' board for the 1984-85 fiscal year.

However, funding for the engineer's board was subsequently taken care of with the enactment of HB 193 into Act 55 Sept. 25. This bill amended the 1984-85 general fund budget to increase the Professional Licensure Augmentation Accountably $1,025,000 from $7,970,000 to $8,995,000 and removed language prohibiting the account funds from being used for the operation of
the engineer's board.

***PUC Budget, 1984-85 -- The Public Utility Commission received a $22,733,000 budget for 1984-85 under legislation (HB 1919) approved by both chambers and signed by the governor into Act 5A June 28.

The PUC budget bill was approved after a Senate amendment to earmark $1 million to combat water supply contamination was removed.

Several senators, concerned with the outbreak of giardiasis, a stomach disorder caused by micro-organisms in water supplies, had inserted the amendment to signal the PUC against granting rate increases to utility companies with polluted water reservoirs. The senators wanted the cleanups
performed without inflicting rate increases on consumers, who were already penalized with stomach disorders.

With the PUC sufficiently alerted, the Senate then removed the $1 million budget restriction.

The PUC budget, funded by assessments against the state's utilities, will be $1.2 million higher than the 1983-84 level of $21,543,000.

***Consumer Advocate Budget, 1984-85 - A $2,033,000 budget for the consumer advocate's office for 1984-85 was approved with the passage of HB 1920 which was signed into Act 5A March29.

The consumer advocate's budget is derived from assessments against the state's utilities. The funding approved for 1984-85 represents a 17 percent increase over the 1983-84 budget of $1,732,000.

***Supplement To 1983-84 Budget -A supplemental appropriation bill for the 1983-84 general fund budget (SB 952) was signed into Act 4A May25, after the governor line item vetoed some $66 million from the $80 million supplement.

Among the items deleted by the governor were $7.8 million in state money and $10 million in fec1eral augmentation money for long-term medical care facilities.

The attempt to supply this funding sterns from 1983 when the state Welfare Department announced federal regulations required a redefinition of "skilled nursing care." Patients were reclassified according to the new definition between skilled care and intermediate care, resulting in reduced reimbursements for 16,000 patients in the state's Medical Assistance Program.

Senate Democrats favored offsetting this reduction by raising the ceiling for governmental aid and approving supplemental state and federal money.  The governor's line item veto means the reduction caused by reclassifying patients under intermediate care will continue.

Other line item vetoes included $19.5 million for pupil transportation, $4.6 million to the State System of Higher Education for maintenance, $5.5 million for social security payments for public school employees, and $28.4 million for the Public School Employees Retirement Fund.

***Earlier Supplement To 1983-84 Budget -The approval of a conference committee report on SB 877 and its enactment Feb. 7, 1984 as Act 1A gave the commonwealth a $97 million supplemental appropriation for the 1983-84 fiscal year.

The supplemental appropriation involved a total of $35 million in state funds and $62 million in federal funds.

Of the $35 million in additional state money,$2 million was earmarked for farmers and processors whose poultry flocks were destroyed in an effort to contain a deadly avian flu epidemic that ravaged southeastern Pennsylvania flocks late in 1983.

Other supplemental expenditures of state funds included: $25.5 million for pupil transportation costs; $1.12 million for services to non-public schools; $3.7 million for mental retardation residential services; $944,000 for mental retardation community based services; and $850,000 for the Crime Victim's Compensation Board.

Of the $62 million in supplemental federal funds, $22.2 million was for Medicare, cash grant assistance and food stamp programs. Additionally, $10.9 million went for energy assistance for low income residents, and $14 million for the Women and Infant Children Feeding Program (WIC).

***Capital Budget1984-85 -A $302 million capital budget for 1984-85 (SB 1424) was signed into Act 117 July 3. Of the bond-financed total, $180 million was for the Department of General Services for construction and equipment, $80 million for highway projects, and $42 million for redevelopment assistance projects.

***Supplement to 1984-85 Capital Budget-The 1984-85 capital budget was expanded by legislative action to authorize $85,724,000 in transportation assistance projects contained in SB 905 which was signed Dec. 20 into Act 228.

The measure includes $440,000 for SEPTA to reconstruct the Columbia Avenue bridge in Philadelphia.

A total of more than $42 million is authorized for SEPTA's mass transit operations, and another $31.9 million is earmarked for the Port Authority of Allegheny County's mass transit.

Other mass transit authorities throughout the commonwealth are slated to receive $2.1 million. Another $7.9 million raised from bond financing will be for rural and intercity rail projects.

***Capital Budqet1983-84 - About half the spending authorizations were line item vetoed by the governor before signing a 1983-84 capital budget bill (SB 985) into Act 62 May18, 1984.

The authorization for bond-financed public improvement projects in the 1983-84 capital budget totals $379,669,000. The General Assembly had sent the governor a capital budget totaling $650 million.

Projects left intact include renovation and construction work at the state prisons, totaling about $7C million. Also, a $43.9 million expenditure is authorized for a new Philadelphia convention center, and $22 million to renovate the old museum at the capitol complex in Harrisburg.

Penn State will spend $5 million to renovate laboratory space at the University Park campus, and another $9.5 million to renovate its mechanical and electrical engineering facilities at the main campus.

***Rural Transit Reimbursements-Rural transportation agencies will receive equitable state reimbursements for free transit services provided to the elderly under legislation (SB 450) signed by the governor Oct. 10 into Act 163.

Senate Bill 450 actually corrects technical difficulties contained in legislation enacted last spring (Act 49) that increased funding for mass transit authorities and increased reimbursements from the state Lottery to mass transit agencies providing free rides to senior citizens.  Reimbursements were increased from 75 percent of the cost of free rides for senior citizens to 100 percent.

Rural transit agencies, however, are in danger of having their senior citizen service reimbursements diluted because average costs were based on a mix of bus, rail and urban transportation fares.

Senate Bill 450 stipulates that urban and rural assistance programs be considered separate operating divisions.

***Falk Clinic Appropriation -- An appropriation of $2.5 million for fiscal 1984-85 to the University of Pittsburgh for the operation of the Falk Clinic is contained in SB 1487 which was signed by the governor Oct. 12 into Act 56A. The clinic provides outpatient care to Pittsburgh and area
residents, many of whom are indigent.

***Appropriation for the Berean School - The Senate approved (48-0) and the House concurred (187-7) in SB 265, which increases by $23,000 to $647,000 the appropriation to the Berean Training and Industrial School in Philadelphia for fiscal 1984-85. It was signed into Act 58A by the governor Dec. 18.

***Small Corporation Tax Break - The General Assembly passed and the governor signed a bill (HB743, Act 90/1983) granting tax relief to small corporations.

Under the legislation, corporations with fewer than 35 stock holders are no longer subject to the state's corporate net income tax rate. Instead, the company profits are distributed to shareholders and then taxed at the rate of the state's personal income tax.

The break, which was expected to lower the taxes of some small corporations by as much as 75 percent, was intended to provide incentive for business expansion and job creation. Revenue loss to the state was estimated at $12million annually.

Additionally, the legislation exempted firewood used in residences from the state's 6 percent sales tax, imposed a new $75 minimum capital stock and franchise tax, authorized an installment payment of state income tax on profits from installment sales contracts, and excluded dividend and interest income from the sales apportionment factor used in determining a corporation's
taxes.

***Capital stock Tax Revision - Legislation (SB 533, Act 89/1983) revising Pennsylvania's 140-year-old corporate capital stock and franchise tax cleared the Senate (50-0) and the House(133-65) and was signed into law.

The legislation created a fixed formula for determining the value of a company's capital stock in an effort to eliminate a previously unpredictable method of valuation for tax purposes.

The new formula takes into account a company's income as well as assets so that the tax is based more on a company's ability to pay.

The previous complicated system provided for a series of optional methods for computation of the tax which resulted in controversy and led to numerous appeals and lawsuits. Some firms apparently were paying more and others less than their fair share depending on the outcome of individual negotiations with Revenue Department officials on which method of computation to use.

While still complex, the legislation provided for a set system. Capital stock valuation is now determined by multiplying one-half times the sum of the average net income over five years of the entity capitalized at 9 1/2 percent plus 75 percent of net worth.

The stock and franchise tax is a supplement to the state's Corporate Net Income tax and brings the state some$350million annually.

Act 89 of 1983 also established a penalty of five percent per month on unpaid portions of gross receipts taxes charged out-of-state electric companies for Pennsylvania-generated power. Pending the disposition of a federal court case, West Virginia power companies were not paying the
Pennsylvania gross receipts tax on electricity they purchased from Pennsylvania and the penalty for failure to pay was intended to encourage payment.

***New Bank Tax -- In a move to head off a potential fiscal crisis for the state, legislation (SB 302, Act 66/1983) was enacted to establish a new tax on banks in Pennsylvania.

The action was necessitated by a September, 1983 state Supreme Court ruling which declared the state's previous bank shares tax unconstitutional.

The court order placed the state in the precarious position of possibly having to refund as much as $430million to banks throughout the commonwealth.

The legislation not only provided for a replacement levy intended to meet court objections to the previous tax, but also contained provisions which would allow the state to recoup refunds to banks it might be forced to make as a result of the Supreme Court ruling.

The permanent bank tax created under the legislation allows banks to make a deduction for federal securities on a pro rata basis. The old bank tax, which was declared invalid, assessed banks on total net equity, including federal securities -- in violation of federal law. If for some reason the new permanent tax would be stricken by the courts, the state Revenue Department is authorized to impose an income tax on banks.

***Business Tax -Reform- -- Signed into law was a bill (SB 1872, Act 172/1984) intended to provide some measure of tax relief to high volume, but low net profit retailers.

The new law places limitations on local mercantile or business privileges taxes in recognition of the fact that flat taxes based solely on gross receipts are inequitable and unfair to high-gross-receipts low percentage-of-profit businesses.

The legislation also limits the base upon which an amusement tax is levied at ski facilities and golf courses.

And, it eliminates the payment of real estate transfer taxes when the transfer is between brothers and sisters or their spouses or from a sole proprietor family member to a family farm corporation.

***Philadelphia Business Tax Change- Enacted was a measure (HB 1004, Act 69/1984) giving the city of Philadelphia the authority to replace its mercantile and general business taxes with a more equitable business taxing structure - one that's based more on a company's real profit or "ability to pay" as opposed to the previous taxes which were based more on gross receipts or a company's "volume of business".

The new system, allowing businesses several options in determining the payment of their city tax obligations, was expected to generate $105 million for the city annually.

The new tax was to place a 3.05 mill tax on gross receipts and a 3.7 percent tax on profits. The legislation also provided for a broadening of the business tax base in the city by allowing it to further tax regulated industries such as banks, utilities and insurance companies.

*Philadelphia Wage Tax - A measure (SB 88) to reduce the Philadelphia wage tax imposed on suburban Pennsylvania residents who work in the city cleared the Senate (26-23), despite solid Democratic opposition, and died in the House.

The bill would have lowered the wage tax imposed on non-resident commuters who work in Philadelphia to 2.9 percent from a previous 4.31 percent. Additionally, it contained provisions that would have allowed Philadelphia to tax city residents on unearned income (net profits, gains, dividends, interest, etc.)

***Tax Boost - As part of the final agreement on a 1983-84 general fund budget, the Senate (29-21) joined the House (103-93)in passing a tax package (HB 22, Act 29/1983) to eliminate a budget deficit from the previous fiscal year and fund expenditures in fiscal 1983-84.

The legislation was to generate an additional $495 million in revenue.

Most of that came from an increase in the state personal income tax from 2.2 percent to 2.45 percent, applied retroactively to January 1, 1983.

Language of the legislation, however, provided that the 2.45 percent rate was only in effect until July 1, 1984whenit declined, as stipulated, to 2.35 percent.

The legislation also extended the state's 6 percent sales tax to cigarettes to generate an estimated $68.8 million; accelerated sales tax collection from businesses (45 days to 20 days) to generate an estimated $9 million; required prepayment of public utility realty taxes to generate an
estimated $56.2 million; and required that state taxes on lottery winnings be paid for by the Lottery Fund instead of by lottery winners to generate an estimated $11million.

Republicans in both the Senate and House put up most of the votes to pass the tax legislation. In the Senate, only six Democrats voted to support the bill.

***Treasury Cash Flow - A bill (SB 1139) to allow the state to borrow funds through the state treasurer's issuance of tax-exempt commercial paper was signed into law (Act 83/1984) after winning unanimous legislative approval.

The legislation allows the state to supplement the use of tax anticipation notes in an effort to provide greater flexibility in dealing with cash flow problems.

***Vendor Registration - A bill (HB 92) was enacted (Act 82/1983) to require so-called "gypsy" or' transient vendors to register annually with the state Department of Revenue and to post a $500 bond to ensure compliance with the state's sales tax law.

The legislation was aimed primarily at discounters who sell merchandise out of trucks or hotel rooms without a permanent place of business in the commonwealth.

***Pension Transfer - A bill (HB 1662) that would permit certain former members of the Public School Employees' Retirement System (PSERS) to transfer the employer contributions and accumulated interest of their retirement plan to a third class county pension system became law (Act 10/1984).

The legislation applies only to former PSERS members who had their job positions transferred involuntarily from a public school system to a county of the third class. The measure was introduced to handle a particular situation in Erie County where school librarians were transferred to the county.

***Race Track Taxes - Legislation (HB 1391, Act 93/1983) lowering state taxes on race tracks and creating a single fund for the collection of track tax revenues was enacted with the governor's signature on December 30, 1983.

The Horse Racing Fund and the Harness Racing Fund were merged into one State Racing Fund. A 15 percent admission charge tax at thoroughbred tracks was reduced to 10 percent, retroactive to September, 1981, and to 5 percent, retroactive to September, 1982.

The Philadelphia School District which previously received a guaranteed percentage of the state track taxes lost that guarantee under the measure.

***Retirement System Addition - The General Assembly passed a bill (SB 639, Act 42/1984) to permit ernp10yeesof the federally funded Applied Research Laboratory at Pennsylvania State University to join the State Employees' Retirement System. The group was previously barred from participating in either the federal or state pension systems and belonged instead to a private
pension program.

***Allegheny County Pension - Legislation (SB 808, Act 6/1984) amending the Second Class County Code to increase from eight to 15 years the amount of necessary service by employees of Allegheny County before they can qualify for retirement benefits was enacted. The change, requested by the county in an effort to ensure solvency of its pension fund, applied only to new workers hired after the effective date of the act.

***Service Credit to County Employees - Both houses passed and the governor signed into law a measure (HB 7, Act 54/1983) that allows county employees who previously worked in public school districts the ability to purchase service credit for the school employment in county pension systems.

***School Tax Returns - Enacted was legislation (HB 219, Act 6/1983) requiring residents of the Pittsburgh School District to file annual earned incorrect tax returns for school tax purposes. The school tax return was to be combined with the Pittsburgh city earned income tax return.

*Cancelled Debts - Passed by the Senate was a bill (SB 1306) that would permit loan and transfer agents, under the authorization of the governor, Auditor General, or state Treasurer, to destroy bonds and other instruments of indebtedness which have been cancelled. Currently, such instruments are destroyed by the issuing officials. The House never took final action on the bill.

Education

*** Basic Education Subsidies -- As part of the state budget process for 1984-85, the General Assembly approved increases in subsidies for education.

House Bill 690 was signed into law as Act 93 on June 29, 1984.

House Bill 690 calls for $125 million more for the Equalized Subsidy for Basic Education (ESBE) and $24million more for Excellence in Education.

The $125million will be distributed through the existing program providing that no district receives an increase of less than two percent or more than 7.45 percent.

Of the $24million for Excellence in Education, $17million will be given to all school districts which participate in a statewide testing program for math and reading skills in 1984-85, and also offered remedial education programs for their students in the 1983-84year. $7 million will be distributed to school districts which participate in the statewide math and reading program in 1984-85and submit an approved plan for providing remedial education for those students who fail the tests.

Non-public students would be eligible to receive these services through intermediate units. Funds would be distributed based on the number of students identified by the test as needing remediation.

House Bill 690 also establishes the program of testing and remediation in reading and mathematics for public and non-public school students to be administered by the Department of Education.

In addition, House Bill 690 does several other things. It raises the threshold for ,competitive bidding for expenditures made from student activities from $300to $1,000. It also establishes $10,000 as the threshold for required competitive bidding by districts for construction, reconstruction and repair work. Districts would also be enabled to have district personnel perform this type work for projects costing less than $5,000.

There are other provisions for teacher grievance procedures and the clarification instruction days for students who are educated in private residential rehabilitative institutions and day treatment centers.

*** Philadelphia School Subsidy - House Bill 947, which will provide more money for Philadelphia and several other school districts, was signed into Act 73 (1983} by the governor December 20.

The bill, whose original provision of retaining the current number of Pittsburgh school director districts remains, was amended to provide the Philadelphia School District with an additional subsidy of up to $13 million by removing a cap on state aid imposed in 1981.  An additional $500,000 was divided among three financially-distressed school districts - one in Erie County and two in Beaver County.

The bill also corrected a problem created when the administration failed to include language in the 1983-84 budget to provide special education subsidies to private schools.

*** School Subsidies and Pension Changes - As part of the final compromise on the 1983-84 state budget, the General Assembly devised a new state school subsidy formula and increased public employee contributions to two pension systems. The measure implementing the changes, Senate Bill 385, was signed into law as Act 31 (1983) on July 22, 1983.

The bill replaced existing subsidy formulas with the Equalized Subsidy for Basic Education (continued with House Bill 690, mentioned above).

The bill also raises the employee contribution rate by 1 percent for members of the Public School Employees Retirement System and by 1.25 percent for members of the State Employees Retirement System. The higher contribution rate reduced school districts' contributions. This section was recently struck down by the state Supreme Court and reimbursements are scheduled to begin
shortly for state employees.  Those hired after July 22, 1983 are not affected by the court ruling.

*** State Board of Education - The General Assembly has roved to change the composition of the State Board of Education. Signed into law as Act 14, February 17, 1984, House Bill 682 adds four legislative n=members to the board, specifically the minority and majority chairs of the standing committees on education.

The bill also expands the number of the slots allotted to members of the Higher Education Council from two to three and provides that at least one of these three be an administrator and one be a faculty member. Traditionally, one of those seats had been filled with a faculty member but the current administration has appointed college ac1rrdnistrators to the positions. With this provision, the legislature clearly defines its preference.

The bill also contains language to require the Department of Environmental Resources to notify affected municipalities when various permits (Air Quality, Water Allocation, Water Obstruction, Water Quality, Solid Waste and Hazardous Waste) are filed.

In addition, Act 14 creates a 20-menber academic advisory board to the Ben Franklin Partnership.

*** PHEAA Funds Deposited in Treasury - The Pennsylvania Higher Education Assistance Agency (PHEAA) has independent control over its funds, which were not deposited in the state treasury. In order to win the governor's approval of a bill allowing PHEAA to sell tax exempt bonds to finance student loans, legislators agreed to bring PHEAA funds into the treasury.

Under House Bill 520, PHEAA monies will be deposited into a special account within the treasury with the PHEAA board directing investments. House Bill 520 became Act 5 (1983) on May 13.

*** PHEAA Interest Rates - Act 77-1983 (Senate Bill 198) gives PHEAA's Board of Directors authority to set the interest rate of student loans.

*** Community College Reimbursement - Pennsylvania's community colleges received an increase in the amount of state reimbursement for full-time students under Act 44 (1983), signed by the governor October 10, 1983. Act 44 (House Bill 177) increases the reimbursement ceiling from $600 to $800, or one-third of the tuition costs per student. The total cost increase is estimated at $14 million.

*** School Closings - Signed into law April 4, 1984, Act 38 (House Bill 1397) provides for notification to communities of school closings.

Whenever a public school board proposes to close a building or substantially curtail the programs within a building, a public hearing must be held, under provisions of this Act.

The intent is to insure public input into the process of determining if and how such closings shall occur. The language of the bill makes it clear this does not apply to emergency closings due to inclement weather.

The bill also provides authority for the state treasurer to collect necessary information to recover overpayments made in the years 1979, 1980 and 1981. During those years many school districts collected and paid social security tax on sick leave pay.

The IRS since determined the income derived from sick leave pay is not subject to social security tax. Since the employee and the employer share an equal liability for social security costs, employees should receive half the recovered funds, while the state and local school districts will evenly split the remainder.

*** Building Authorities for Education -Acts 26 and 27, signed March 23, 1984 amend two education building financing acts.

Act 26 (House Bill 1616) amends the state Public School Building Authority Act so that the Authority can make secured loans to public school districts or the boards of trustees of community colleges.

Act 27 (House Bill 1617) amends the Pennsylvania Higher Education Facilities Act to permit greater flexibility in the type of financing it can offer.

*** Library Support - Signed as Act 90 June 27, 1984, Senate Bill 658 removes the cap on local tax support for public libraries.

Previously, the amount of local tax support for libraries could not exceed the equivalent of three mills of property tax. By removing the cap, local communities may now increase the level of their support.

In addition, Act 90 keeps confidential library circulation records containing the names of borrowers. The measure prevents library records from being used for fundraising, harassment or investigations. In a criminal proceeding, however, records could be opened with a court order.

"V" Teacher Certification - The governor vetoed Senate Bill 1346 December 20, 1984. The bill would have provided that the Secretary of Education should issue teacher certification, following regulations set up by the Board of Education.

In addition, the Department of Education would have been required to recommend its proposals for continuing education requirements for all professional school employees by April 1, 1985.

* State Honors Program - A special state honors program for high school students was unanimously approved by the Senate. Senate Bill 1175, apparently patterned on the New York Regents examination, recognizes students scoring a certain level without regard to financial need. The bill stalled in the House Appropriations Committee.

The Pennsylvania Department of Education would have been required to recommend an honors curriculum for high school students during the 1984-85 school year. In 1987-88, an honors test, based on this curriculum would be administered to high school seniors. Students who score at a certain level would receive a State Honors Diploma. The top one percent of all students taking the examination would receive a $1,000 grant.

All seniors who are Pennsylvania residents, as well as students from other states attending Pennsylvania schools, would have been eligible for participation in the program.

The Pennsylvania Higher Education Assistance Agency would have administered the grant portion of the program. It was expected $10 million would be necessary to implement the program during 1987-88.

***Sabbatical Leaves - Legislation designed to reduce a backlog of sabbatical leaves at the 14 state universities has been approved by the Senate and the House. It was signed by the governor October 12, 1984 (Act 180).

Senate Bill 794 provides that the decision to grant or deny a sabbatical leave would reside with the campus president. It conforms with the State System of Higher Education Act.

*** Service Credits for Teachers- Senate Bill 1341 has been signed by the governor as Act 226 following unanimous passage by the House and Senate this session. The bill grants service credit to school employees formerly employed as nurses by the county. Under the measure, the employee could purchase a year of service for retirement benefits for every three years credited to county service.

"C" Contract Bargaining for Administrators - Legislation enabling school administrators below the level of assistant superintendent to discuss compensation issues with their local school boards died in a conference committee for lack of action before the session ended.

Senate Bill 928 would have required local school boards to meet with these administrative employees if a majority of them requested the meeting.

Issues discussed could have included salary, fringe benefits, evaluation procedures and district-managed early retirement programs.

Supporters of the legislation maintained that principals and other related employees are in an ambiguous position. They are excluded from collective bargaining under Act 195, but they are not generally in the same category as the top administrators.

Objectors were concerned about whether middle management employees should be permitted to organize a quasi-bargaining unit.

*** Short-Term "Revenue Anticipation" - Senate Bill 1445, signed by the governor as Act 185 October 12, 1984, provides the Pennsylvania Higher Educational Facilities Authority with the ability to float short term "revenue anticipation" notes on behalf of certain colleges and universities. It was approved unanimously by the House and Senate. It applies only to those colleges and universities which are entitled to participate in the authority.

* Tuition For Emotionally Disturbed Students - Special Education students enrolled in an approved private school, who reach the age of 21, could continue to be educated by the school, and the school would continue to receive reimbursement, under legislation approved 49-0 by the Senate this session.

Senate Bill 1382 would also provide that the parents of students under six who are socially and emotionally disturbed would not have to bear any of the costs of such treatment.

The cost of a pre-school special education program is approximately $8,000 per pupil, which is now borne entirely by the parents.

Environmental Resources and Energy

*** Safe Drinking Water -- Act 43-1984 (Senate Bill 201) modernizes state laws affecting water supplies and adopts federal drinking water standards. The Department of Environmental Resources would enforce standards as they apply to public water systems. The DER would monitor, permit and inspect these systems.

Municipalities could consider the future demand for water and the source, location and availability of water supplies. Water supplies could also be a consideration in zoning and subdivision approval.

The legislation also authorizes DER to respond to emergency and other hazardous situations. The program is funded through a $1.2 million federal appropriation.

*** Storm Water Management -- Act 63-1984 (Senate Bill 447) extends the availability of state grants for storm water management plans from counties to municipalities with particular storm water problems.

This bill increases the grants from 50 to 75 percent of eligible costs and allows payments for the cost of administration, enforcement and implementation.

*** Coal and Clay Mine Subsidence -- Act 151-1984 (House Bill 1858) broadens and increases mine subsidence insurance coverage. Owners of buildings under construction are eligible for protection against mine subsidence damage.

The insurance would extend for a maximum period of 18 months or until the project was 80 percent completed.

Coverage under the bill could not exceed $100,000and policyholders could purchase inflation protection.

Other provisions insure homeowners of prompt action on insurance requests, requiring the Mine Subsidence Insurance Board to act on a written request for insurance within 60 days.

*** Transportation of Hazardous Wastes -- The General Assembly repealed the Hazardous Transportation Act and created a new Vehicle Code chapter to be known as Hazardous Materials Transportation.

Under Act 99-1984 (Senate Bill 1239), PennDOT has been made responsible for administering the program. An advisory committee was also created with the duty to advise PennDOT on all matters concerning the highway transportation of such materials.

The maximum penalty for violations of the law have been reduced from $5,000 to $1,000.

* Hazardous Substance Emergencies -- Under Senate Bill 247, the Pennsylvania Emergency Management Agency (PEMA) would have become the central coordinator in the event of a hazardous substance emergency in Pennsylvania.

Senate Bill 247, which died in the House Conservation Committee required PEMA to prepare a hazardous substance emergency response plan; to coordinate state, local and federal responses to hazardous substances and other incidents; and to operate a 24-hour state Emergency Operations Center to which all hazardous waste incidents must be reported.

*** Coal Lands Reclamation-- Two pieces of legislation which will specifically provide for the Clean-up of coal mine areas in Pennsylvania were approved by the General Assembly and signed by the governor this session.

Senate Bill 1078 (Act 181), signed by the governor October 12, 1984, will strengthen the regulation of surface mining.

Federal officials have been critical of the lack of surface reclamation in the state. Millions of federal dollars have been spent on underground mines where subsidence, fire and acid discharge can pose serious public health and safety standards.

Under this legislation, the general public would have more input into permit applications. Objections to a license would be allowed within thirty days of a published notice.

Senate Bill 1078 also includes a detailed reclamation plan and timetable for accomplishments within the plan and directions for spending reclamation funds.

On the other hand, Senate Bill 1309, signed as Act 158 by the governor October 4, 1984, provides incentives for coal operators to re-mine previously affected areas which still have recoverable coal in them, but were abandoned by a previous owner. There are approximately 250,000 acres of abandoned mine lands in Pennsylvania.

The bill is the result of months of intensive public hearings and research by the Joint Legislative Air and Water Pollution Control and Conservation Committee.

The mine operator would have to show that a proposed pollution abatement plan would result in a significant reduction of the baseline pollution load and the land could be reclaimed.

As an incentive to operators, DER is authorized to credit an operator with the amount of funds previously forfeited on the site.

The proposal also calls for a ground cover of living plants to be not less thon can be supported by the best available topsoil or other suitable material in a re-affected area and at a minimum adequate to control erosion and safeguard water quality.

*** Bond Rates -- Under legislation approved this session, the Susquehanna River Basin Commission can determine interest rates on bonds. Act 84-1984 (Senate Bill 1285) provides flexibility needed to determine interest rates making the bonds attractive to potential investors. Previously, the commissions old bonds at an annual six percent interest rate.

*** Limit on PEDA Bonds-- Act 26-1983 (House Bill 84) limits the total amount of Pennsylvania Energy Development Authority bonds to $200million. The new authority is to sell tax exempt bonds to make loans for energy projects based in the state.

* Utility Conservation Efforts -- Senate Bill 641 would have allowed electric and gas utilities to implement conservation, load management and alternatives to energy programs and to include the cost of these programs in their rate bases or to recover the cost in other ways.

The amended bill was reported out of the House Consumer Affairs Committee and referred to the House Appropriations Committee, where it died.

* Water Planning -- Municipalities could consider the need for safe, reliable, adequate water supplies in their planning and in their comprehensive plan under Senate Bill 200, which failed to be reported out of the House Conservation Committee under Senate Bill 200, municipalities could have considered water supplies in zoning, set standards for water supplies in approving subdivisions, and stopped land development if the water supply was inadequate.

** Gas-Oil Regulations -- A conference committee report on Senate Bill 402 would require the registration and bonding of all oil and gas wells.

The legislation spells out circumstances to be considered in reviewing the impact of well permits.

Surface landowners or water surveyors whose supply is within 1,000 feet of a well must be notified of drilling intent.

Also under the bill, a landowner or water purveyor experiencing pollution may request DER to investigate and make a determination within 30 days of the investigation. DER may order temporary replacement of the water supply if the pollution maybe of a limited duration.

According to the bill, unless the operator specifically rebuts the charges, under one of five defenses described in the legislation, it is presumed the operator is responsible for the pollution within 1,000 feet of the polluted well, if the pollution occurs within six months after drilling or alteration.

The bonding requirements were drafted to relieve smaller operators from a heavy financial burden and to recognize that many smaller producing wells had marginal profits.

Senate Bill 402 has been sent to the governor for his signature.

*** Gas Well Spacing/Regulation -- The Senate approved two pieces of legislation that would do the same thing.  One of them, House Bill 2100, went to the governor, who signed it as Act 214 Decenber18, 1984.

The intent of House Bill 2100 is to coordinate the vertical and horizontal mining of oil, gas and coal which lie in the same or adjoining tracts of land by requiring minimum distances between wells.

House Bill 2100 was requested by the coal and gas and industry in response to the proliferation of gas wells which have sprung up, particularly in Indiana and Crawford counties. The administration falls under the jurisdiction of DER.

The other version, Senate Bill 1386, died in the House Conservation Committee.

*** Block Grant Distribution - The General Assembly has approved and the governor has signed Senate Bill 1379 (Act 179) which will allow the disbursement of $44 million in federal block grant money to communities in 54 Pennsylvania counties which do not already receive direct federal block grants money.

The legislation includes information used to determine, by population and other established criteria, which communities receive the funds.

The grants -- used for housing rehabilitation, sewer improvements, water repairs and other projects -- had been distributed through a competitive bidding process. Under this bill, after 1985, qualifying communities with more than 4,000 people would receive guaranteed yearly entitlements.

Originally, Senate Bill 1379 added "cirsium vulgarie," commonly known as bull thistle or spear thistle, to the list of the Noxious Weed Control law.

** State Park and Forest Development- HB 615, originally intended to serve as a blueprint for DER's participation in the economic development initiatives created by the $190 million bond issue, was amended and passed by the Senate too late for House concurrence.

The legislation would have required DER to devise a plan for the development of state parks and forests. The basic intent was to provide jobs for Pennsylvania citizens as well as the needed construction of camps, cabins, environmental centers, boating areas and hiking and ski trails.

A Senate amendment would have allowed DER to grant a franchise or necessary license, right-of-way or lease for the construction, operation and maintenance of any hydroelectric facility on state properties. DER was prohibited from directly operating or developing those facilities.

* Contaminated Water Relief Fund-- Originally intended to create a relief fund to provide emergency assistance to a municipality whose public water supply was contaminated by a halogenated or aromatic hydrocarbon chemicals, Senate Bill 38, never got out of the House Conservation Committee.

While still in the Senate, the bill's $1 million appropriation was increased to $20, although there was some question about amending a fund that had been approved by the voters (the Water Facilities Loan Fund).

** Chesapeake Bay Pollution Abatement- House Bill 2196, was amended in the Senate, but never received concurrence by the House, ending for this session the possibility of creating a special account for the administration of the Chesapeake Bay Pollution Abatement program. The General Assembly had already approved $1 million for the program in the FY84-85 budget. House Bill 2196 would have insured money not spent by June 30, 1985, could have been
carried over to the following year.

*** Environmental Board Salaries/Hershey Medical Center - House Bill 552, signed by the governor Decerrber21, 1984, gives the Executive Board the power to determine the salaries of the chairman and other members of the Environmental Hearing Board. Salaries are not to exceed $45,000 for the chairman and $42,500 for the other members.

In addition, an amendment on the Senate floor, later concurred by the House, would allow Hershey Medical Center to bypass a Certificate of Need for its planned $32 million expansion project.

*** State Conservation Commission-House Bill 2226 (Act 221) defines the powers and duties of the State Conservation Commission in the Department of Environmental Resources, by reenacting and amending the Soil Conservation Law of 1945. The legislation also lists specific duties of conservation district directors. The governor signed the legislation December 19, 1984.

*** Chain Dam Lease - Signed as Act 222, December19, 1984, House Bill 2470 will allow the Department of Environmental Resources to develop and lease hydroelectric facilities located at Chain Dam.  The dam is on the Lehigh River in Northampton County.

Although the state now holds an exemption from the Federal Energy Regulatory Commission, which permits DER to develop more than twenty dams around the state, that exemption runs out early in 1985. House Bill 2470 insures the DER can proceed with this project.

State Government

"V" Cross-Filing - The governor has vetoed two pieces of legislation concerning cross-filing for candidates this session.

Senate Bill 421, vetoed October 28, 1983, would have eliminated the ability of candidates for district justice, judge and school director to cross-file petitions. It was originally proposed to help eliminate the confusion caused by the number of candidates seeking these offices, knowing names would appear at least twice on the primary ballot.

Senate Bill 421 also provided that district justices could participate in the political process by debating issues important to a particular campaign.

House Bill 1270, vetoed July 3, 1984, would have done the same thing.

This bill also contained language which would have provided for the duties of magistrate or district justices on primary and general election days.

* Free Speech for Judicial Candidates - Legislation aimed specifically at freeing judicial candidates to take part in the political process and to debate issues died in the House State Government Committee. Senate Bill 175 addressed one of the provisions in Senate Bill 421 (mentioned above).

Currently, the state Supreme Court's Code of Judicial Conduct, Canon 7, bars judicial candidates from discussing controversial issues and from attending certain political meetings. The bill would have prohibited any governmental authority from exercising such a ban.

Supporters say the Supreme Court's "gag order" helps to make judicial candidates the least visible of all major candidates. The court, however, maintains that the restrictions are necessary because judges must be impartial and non-political.

** Absentee Ballots for County Employees - House Bill 902, which became Joint Resolution 3 (filed with the Secretary of the Commonwealth, June 29, 1984), provides that county employees who cannot vote because of their election day duties may vote by absentee ballot. A floor amendment will also provide for absentee ballots for those whose religious holiday falls on an
election day.

If approved in the 1985-86 session, this legislation would be placed on the statewide ballot for voter approval, amending the constitution if received.

* Absentee Ballot Verification - In order to help uncover voter fraud and to allow voters to verify that the county received their absentee ballots, Senate Bill 97 would have required county election bureaus to compile lists of voters who returned absentee ballots. A check could be made at polling places if a voter claimed he or she never received his or her absentee ballot. Some counties already voluntarily follow this procedure. The bill never left the House State Government Committee.

*** Skin Color on Voter Registration Cards - Current law requires voters to list his or her skin color on voter registration cares for identification purposes.  Senate Bill 173, signed as Act 70 May 31, 1984, allows  voters to refuse to list their color when they register to vote.

*** Voter Reinstatement - Persons who have not voted in any election for two consecutive years can be removed from the voter registration polls after they are notified. Previous law allowed them10 days to respond to the notice in order to reinstate their registration. House Bill 61 gave inactive voters 30 days to request reinstatement. After that time, they must reregister.  The bill was signed into law as Act 7 on June 3, 1983.

** Voter Assistance - Senate Bill 453 would have changed the language in the Election Code referring to assistance in voting. "By reason of blindness, disability or inability to read or write," would have replaced "because of illiteracy." The word "condition" would have replaced disability" in other sections. The bill also specified who may assist a voter.

Senate Bill 453 was returned to the Senate for concurrence on House amendments.  It never left the table in the Senate.

*** Petition Signature Requirements- Senate Bill 387, signed as Act 190 on December 12, 1984, increases the number of signers and filing fees required for certain nomination petitions of candidates at primaries. The legislation was prompted by the large number of candidates who file petitions in primaries. Proponents said the increases would eliminate "frivolous" candidates.

For instance, candidates running for governor, or other statewide offices, would be required to submit 2,000 signatures, including at least 100 from each of at least five counties, an increase of 1,000 signatures. In addition, such candidates would have to pay a $200 filing fee, up from $50.

It is the first major change in the petition law in almost 50 years.

* Elections Code- Senate Bill 589 would have provided for a County Board of Elections to maintain an electors list, such as a computer print-out, rather than an electors file which has been criticized for the considerable time and expense in maintenance. Although Senate final Passage was 47-0, the bill never left the House State Government Committee.

*** Protection for Boxers- Senate Bill 632 became Act 62 when signed into law November 3, 1983.

This legislation will better protect against serious and permanent boxing injuries. It creates new safeguards recommended by the American Medical Association. While previous law required a doctor to be present at ringside, Act 62 allows the doctor to stop a fight to examine a boxer and to end the contest if continuing it would result in severe injuries.

The bill requires heavier gloves for boxers. Boxers between 135 and 160 pounds would be required to wear gloves weighing at least six ounces. Boxers over 160 pounds would be required to wear gloves weighing at least ten ounces.

The state Athletic Commission would establish a register of all professional boxers licensed in Pennsylvania and would record results and injuries from each boxing contest. The commission would suspend boxers who sustain certain injuries.

Senate Bill 632 also outlaws so-called "tough man" contests involving amateurs fighting for prizes in an unregulated match with little or no safeguards.

*** Buy American Cars - Under Senate Bill 437, signed into law as Act 40, April 4, 1984, all state and local agencies would be required to purchase or lease only motor vehicles assembled or manufactured in the United States.

Non-American vehicles could be chosen only if the head of any agency certified that American vehicles would be too expensive or their purchase inconsistent with public interests.

*** Steel Procurement - This legislation closes loopholes that had permitted state agencies to buy certain steel products that were foreign-made.

By amending the Steel Products Procurement Act, House Bill 1636 provides that when unidentified steel products are supplied under contract, the person under contract must supply documentation, including but not limited to, invoices, bills of lading and mill certification, to prove compliance with the law.

A Senate floor amendment extended the act to Specifically include buses, railway cars, transit systems, terminals and other transportation-related items under the provisions of the Act.

The definition of steel products includes machinery and equipment made of, fabricated from or containing steel components. Products which contain both foreign and domestic steel shall be considered U.S. steel if at least 75 percent of the cost of the articles, materials and supplies have been mined, produced or manufactured in the United States.

In addition to facing withheld payments, any person who willfully violates any of the Act's provisions shall be banned from submitting any bids to any public agency for any contract for a period of five years from the date that the violation is determined to have occurred.

House Bill 1636 was signed as Act 144 on July 9, 1984.

* Buy American in Public Works - Although the Senate approved a measure (Senate Bill 517) requiring American-produced or manufactured products to be used in all public works projects in the commonwealth 47-2, the bill never left the House State Government Committee.

Exemptions would have been provided when materials are not produced in the United States, are produced in limited quantities or are too expensive. If a contractor fails to use domestic materials, the company could have been barred for three years from receiving any governmental projects in Pennsylvania.

*** Bid-Riggers - Senate Bill 199, now Act 45, places tough Penalties on companies which rig their bids on government contracts. This is Pennsylvania's first anti-trust law.