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Legislative Update

Week Ending Sept. 21, 2007

• Statewide School Employee Health Benefits System Proposed
  
• Lawmakers Urged to Act Swiftly on Mortgage Reform
  
• House Republicans Unveil Tax-Free Energy Plan
  
• Judicial Elections Are Important
• Professional Issues Updates: Hear What You’re Missing

Statewide School Employee Health Benefits System Proposed

Gov. Ed Rendell called on the General Assembly to adopt legislation creating a statewide health benefits system for school employees, saying the rising cost of health care is one of the greatest challenges facing Pennsylvania’s 501 school districts.

“School districts spend $1.5 billion on medical and prescription drug coverage and the health care premiums paid by districts soared by a shocking 24 percent from 2003 to 2005,” Gov. Rendell said. “We must act now to protect taxpayers, preserve the quality of benefits our educators receive, and safeguard students by making strikes far less likely once health care is no longer part of contract negotiations.”

House Bill 1841 will not annul any existing collective bargaining agreement. Instead, school districts would enter the proposed statewide program after existing contracts expire. Participation would be mandatory for all school districts except Philadelphia, and the program could serve approximately 230,000 school employees.

The program would be run by a 12-member board divided evenly among the Commonwealth, school employees and school boards – with major decisions like plan design and any employee cost-sharing requiring the agreement of representatives of all three parties.

Under the legislation, the Commonwealth will become a partner in funding school employee health benefits. Once any initial surplus in the system is exhausted, the state would pay up to half of the annual increase in health care costs. As an incentive for school districts and employees to control costs, the state would not be required to pay more than the inflation rate for private sector health insurance.

In addition, the state’s payment would be targeted to offset the costs of all school districts but provide the most assistance to the school districts with the greatest financial need.

Lawmakers Urged to Act Swiftly on Mortgage Reform

Appearing before the state Senate Banking and Insurance Committee on Sept. 18, Acting Secretary of Banking Steve Kaplan told lawmakers that Pennsylvania needs better laws to protect consumers from abusive mortgage lending.

“There’s no question that there are serious problems in the mortgage industry,” said Kaplan. “Borrowers have been getting loans they can’t afford – and on terms they don’t fully understand. Now, many of them are struggling to keep their homes. I urge the General Assembly to act swiftly to give the Banking Department the tools it needs to address the current situation and ensure it never happens again.”

Senate Bills 483-488 would allow the Department of Banking to strengthen licensing and education requirements; to more quickly notify the public about fines and other actions against companies; and protect more borrowers under the state interest law. Similar legislation has been in introduced in the House in the form of House Bills 1079-1084

The legislation is the result of a 2005 foreclosure study by Department of Banking, which found that abusive lending practices, particularly in the subprime market, were pushing Pennsylvania’s foreclosure rate above the national average.

The department is also pursuing a new regulation to require mortgage companies to better verify a mortgage applicant’s income and ability to repay a loan and to more clearly disclose certain loan features such as a prepayment penalty, a variable interest rate, or a balloon payment. The regulation was published in the Pennsylvania Bulletin in July and is under review by the state’s Independent Regulatory Review Commission.

House Republicans Unveil Tax-Free Energy Plan

On Sept. 18, House Republicans unveiled an alternative energy proposal, described as a ”new tax- and debt-free energy plan,“ which would use tax credits to encourage conservation and energy development. A Special Legislative Session on Energy was convened by Gov. Ed Rendell on Sept. 17.

Under the House Republican’s plan, businesses that invest in alternative fuel projects and clean-coal technology would be eligible for tax credits. In addition, the state would be required to cut its energy bill by 10 percent by 2010 through conservation and energy efficiency. A requirement that the Commonwealth increase the number of hybrid vehicles in its fleet is also part of the proposal.

The energy debate centers on the best approach to addressing alternative energy use and energy conservation. The Rendell administration’s plan would subsidize companies of the government’s choosing that have already been guaranteed a market through the 2004 Alternative Energy Portfolio Standards Act. This law set alternative energy standards for the Commonwealth.

For more information about the Special Session on Energy, contact your PICPA Government Relations Team.

Judicial Elections Are Important

Believe it or not, Election Day is rapidly approaching. Voters across the state will decide whether or not to retain judges, will elect judges to fill vacancies, and will select county commissioners and other local officials. While off-year elections rarely feature the glitz and glamour of presidential, congressional or legislative elections, they are still incredibly important races. But where can you find information about these races?

The Pennsylvania Prosperity Project (PAP2) is a non-partisan effort developed in cooperation with private sector companies, business associations and organizations that understand what it takes to protect and grow jobs in the Commonwealth. PAP2 is a means for employers to communicate with employees about elections and issues. The Web site gives visitors the opportunity to download necessary forms to register to vote and apply for an absentee ballot. It provides information about elected officials through a zip-code driven database that easily finds the elected officials that represent a constituent.

Additional information has been added for the 2007 Election including a listing of all candidates for county commissioner and an overview of all statewide judicial races. More detailed information about candidates for Supreme Court and Appellate Courts are also provided. Most recently, a link to a Pennsylvania Defense Institute compilation of summaries of decisions made by Supreme Court Justice Tom Saylor (up for retention) and Superior Court Judges Maureen Lally-Green, Seamus McCaffrey and Debra Todd has been added to PAP2.

Professional Issues Updates: Hear What You’re Missing

Join us for the 2007 Professional Issues Update series in which PICPA President Denise Devine and CEO Bert Trexler travel across Pennsylvania to talk about the issues that that affect your professional success: tax patents, the CPA statute, local tax collection, peer review standards, CPA image, private company financial reporting, student recruitment, emerging CPAs and more.

Visit www.picpa.org/update, for location and time of an Issues Update near you.