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Legislative Update

Week Ending March 10, 2006

• Week in Review
• Political News & Notes
• Will Pennsylvanians Ever See Property Tax Relief?
• A View from The Inside
• More Good Economic News for Pa.
• Medicare Part D Bulletin Proposed by GASB
• SEC Solicits Comments on Draft Final Report
• Resolution Program Looking for Comments

Week in Review

Tuesday, March 7, was the deadline for candidates to file their nominating petitions for the May 16 primary. Although nearly 600 candidates submitted their nominating petitions, the count is considered unofficial as some candidates will get knocked off the ballot because of challenges to signatures they collected. Gov. Rendell filed with 53,000 signatures while his challenger Republican Lynn Swann filed with 28,000 signers. If this was indicative of who would win election, we would be talking about Gov. Mike Fisher today. Four years ago, Fisher had 42,000 signatures to Rendell's 24,000.

The Senate Appropriations Committee completed its round of FY 2006-07 budget hearings this week, meeting with the departments of Education, Public Welfare, Corrections, Transportation, Labor and Industry, and Aging, and the PA State Employees Retirement System and PA School Employees' Retirement System. With the public review of Gov. Rendell's budget now completed, high-level talks between the administration and leaders of the four caucus can begin. 

Political News & Notes

Retirements Keep Coming. Add two more names to the list of House members not seeking re-election this year. Bucks County Republican state Rep. Charles McIhinney, who was elected in 1998, will not seek reelection to the House, but is seeking his party's endorsement to run for the state Senate seat being vacated by the retirement of Sen. Joe Conti. The other retirement is Rep. William Rieger, who was elected to his seat representing North Philadelphia in 1966. Twenty-six House and three Senate members are opting to voluntarily retire this year.  

Hoeffel Changes Mind. On Tuesday, Joe Hoeffel announced his candidacy for the Democratic nomination for Lieutenant Governor. Less than a day later he withdrew from the race at the request of Gov. Rendell. It was the first public and definitive move by Rendell to protect the reelection chances of his current Lieutenant Governor Catherine Baker Knoll, who still has three opponents filed against her-Allegheny County Recorder of Deeds Valerie McDonald Roberts, mid-state activist Gene Stilp and William A. Hall III.

Will Pennsylvanians Ever See Property Tax Relief?

Call him the eternal optimist. Gov. Ed Rendell continues to insist that Pennsylvanians will see property tax relief sooner rather than later. Maybe that's because he's running for reelection this year and giving homeowners a break on their property taxes would help him win a second term.

Visiting the home of a Luzerne County senior citizen this week, Gov. Rendell said enacting a property tax relief package will eliminate school property taxes for nearly 200,000 senior citizen homeowners.

Little progress has been made recently, however. The House this week named its three members-Republican Reps. Lynn Herman and David Steil and Democrat Rep. Mike Veon-to a House-Senate conference committee that will try to hammer out an acceptable bill on property tax reduction.

The conference committee can't begin meeting until three senators-two Republican and one Democrat-are named. That should happen next week.

In a letter this week to Speaker of the House John Perzel, Gov. Rendell said the conference committee should negotiate a bill based on House Bill 39, with certain modifications. He said with his suggested changes, the law would accomplish the following:

• Enable school districts to impose or shift to a Personal Income Tax;
• Increase the income threshold for seniors and others eligible for the Property Tax/Rent Rebate Program to $30,000;
• Ensure the appropriate application of the back-end referenda for school districts that cross county lines;
• Establish the date that the act becomes law as the date certain for school districts not currently participating in Act 72 to have issued debt that is permissible without referenda consideration; and
• Increase the flexibility offered to school districts to permit taxes to be paid in installments rather than lump sums.

The Governor is pressing the legislature to approve a property tax relief bill by the end of March - don't hold your breath. After next week, the House will recess until April 3. 

A View from The Inside

The PICPA's 6^th Annual Day on the Hill legislative program is set for Tuesday, June 6, 2006 in Harrisburg. The theme for the day is "A View from the Inside." Join your fellow CPAs from across the state as they learn more about the legislative process and current issues of interest to the profession.

Leaders of the four caucuses have been invited as featured presenters to discuss their caucus's legislative initiatives.

More Good Economic News for Pa.

Site Selection magazine released its rankings this week of states with the most new and expanded corporate facilities and Pennsylvania is among the top 10 states in the nation-out performing all states in the Northeast. This is the first time since at least 1999 that Pennsylvania has ranked first among all Northeast States.

Additionally, the national economic development magazine said Pennsylvania ranked fourth nationally in the number of new manufacturing facilities in 2005. Since 2002, the number of new manufacturing projects in the state has nearly tripled to 76 projects in 2005.

Only three states-Ohio, North Carolina and Texas-ranked higher than Pennsylvania in terms of new corporate manufacturing projects. Pennsylvania had 76 while Texas had 77 and North Carolina had 81. Ohio ranked highest with 102.

Just last week Washington, D.C.-based Tax Foundation announced that its survey ranked Pennsylvania's business tax climate 16^th nationally.

For information on Site Selection's rankings, visit www.siteselection.com.

Medicare Part D Bulletin Proposed by GASB

The GASB has published a proposed staff Technical Bulletin intended to clarify the proper reporting of payments that an employer or a defined benefit other postemployment benefit (OPEB) plan receives from the federal government under Medicare Part D.

The Technical Bulletin looks at four specific questions:

1. How should an employer account for and report a Medicare Part D payment from the federal government to the employer?
2. How does a Medicare Part D payment from the federal government to an employer affect the accounting for the transaction and financial reporting by a defined benefit OPEB plan?
3. How should an employer account for and report a Medicare Part D payment from the federal government to the plan?
4. How should a defined benefit OPEB plan account for and report a Medicare Part D payment from the federal government to the plan?

Comments are due April 17, 2006.

SEC Solicits Comments on Draft Final Report

The Securities and Exchange Commission's Advisory Committee on Smaller Public Companies has published for public comment an exposure draft of its final report and proposed recommendations to the Commission.

The Advisory Committee was established by the SEC to examine the impact of the Sarbanes-Oxley Act and other federal securities laws on smaller companies. The Committee has been meeting, and has held hearings in various parts of the country, since April 2005.

The comment period ends April 3, 2006. The final report is due to the SEC by April 23, 2006.

Resolution Program Looking for Comments

Business taxpayers and associations may seek resolution of problematic tax issues through the IRS's Industry Issue Resolution (IIR) Program. The objective of the IIR program is to resolve business tax issues common to significant numbers of taxpayers through new guidance. 

Submissions received by March 31, 2006 will be considered for IIR project selection and inclusion in the 2006-2007 Treasury and IRS Guidance Priority List.