We are writing to update you on the status of budget negotiations in the Pennsylvania General Assembly. The potential storage tax that we wrote about earlier this week is currently off the table, but current talks include an increase in the hotel tax rate. The idea of an increased hotel tax developed rapidly from closed door negotiations and caught the hotel and tourism industries by surprise. As indicated in our McNees Client Alert and media coverage, there was a proposed storage tax in arevenue proposal circulating earlier in the week.  The opposition to this tax voiced significant concern about the broadly written language that would be detrimental to the logistics and warehousing industry as well as economies in Pennsylvania.  As a result, the idea lasted no more than a few days because there was not enough support for the revenue plan.  It came apart by Tuesday afternoon.

After it emerged, the hotel tax idea and related revenue plan moved fast yesterday and was included in an omnibus amendment to the Tax Code. House leaders continue their work to secure support to pass the new revenue plan including this hotel tax.  However, we expect this tax proposal to receive significant opposition much like the warehousing tax.  So, its future remains unseen. Meanwhile, expanded gambling remains part of the House revenue package. It is not clear if the Governor supports the hotel tax and other items in the revenue package.

We are monitoring developments in the capitol today and will be reviewing language of the amendment to the Tax Code as well as other pieces of legislation that will be filed with respect to the budget. Please contact us should you have any questions.