PA Auditor Clarifies Stance On State CUs' Tax-Exempt Status

HARRISBURG, Penn.-Concerns over the possibility of CU taxation have subsided in Pennsylvania, following a proposal to help whip the state's budget into shape by reducing or eliminating tax exemptions for non-profit entities.

State Auditor General Jack Wagner had sent a list of recommendations to Gov. Ed Rendell and the General Assembly to consider as alternatives to raising state income taxes — which Rendell favors — to resolve the state's budget impasse that has been in effect since July 1 (CU Journal, Aug. 18). Pennsylvania CU Association President Jim McCormack sent a letter of opposition to Wagner, who has since clarified his position, stating to McCormack in a letter that he was not recommending taxing CUs.

Wagner offered seven suggestions that could raise at least $1.3 billion in revenue to close the budget gap. They included reducing eligibility errors in the state's Medicaid program, increasing efforts to recoup $3.2 billion in uncollected taxes, offering an early retirement incentive to state employees, tapping into the state's Rainy Day Fund, adding table games to Pennsylvania's slots casinos, asking the General Assembly to return half of its own $200 million budget surplus, and reviewing all tax credits and tax exemptions and closing tax loopholes provided to select individuals and organizations.