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Legislative Update

Week Ending Oct. 5, 2007

• Gov. Rendell Calls for Action on Health Care Reform Plan
  
• Rep. Denlinger Urges Congress to Reform AMT
  
• Committee Considers Police Pensions Consolidation Proposal
  
• Special Session on Energy Offers Alternatives
• Rendell to Seniors: "Checks Are In the Mail"
• First Lawmaker Announces Retirement from State House
  
• New PURTA Surcharge Rate Published
  
• Revenue Department Releases September Collections
• Professional Issues Updates: Hear What You’re Missing

Gov. Rendell Calls for Action on Health Care Reform Plan  

At a state Capitol rally on Tuesday, Gov. Ed Rendell urged the General Assembly to promptly act on the unfinished components of his innovative “Prescription for Pennsylvania” health care reform initiative, including his landmark Cover All Pennsylvanians insurance proposal.

“In the United States – the richest nation in the world – we have a moral responsibility to make sure everyone has access to health care,” Gov. Rendell said. “Those without access to health care are not the poorest among us, but are overwhelmingly the working middle class.”

The plan to Cover All Pennsylvanians—or CAP—will provide uninsured residents access to affordable health care coverage. Under Gov. Rendell’s plan, small business employers will be able to participate if they have 50 or fewer employees who earn less than the state average wage. Employers who choose to join CAP will pay approximately $130 per employee per month, and each employee will pay a premium of up to $70 per month depending on the employee’s family income. 

PICPA Past President Bill Lazor testified before the Senate Banking and Insurance Committee in April on the plan’s proposed 3% “fair share” tax on employers. Lazor cautioned senators to maintain a clear, unambiguous tax system for employers to help ensure compliance.

Portions of the Governor’s Prescription for Pennsylvania already have been enacted. In July, the Governor signed bills allowing advanced-practice nurses, physicians’ assistants and dental hygienists to practice to the full extent of their education and training, and another bill to more aggressively attack and eliminate hospital acquired infections.

Rep. Denlinger Urges Congress to Reform AMT

PICPA member state Rep. Gordon Denlinger, CPA, thinks Congress should get to work on reforming the Alternative Minimum Tax (AMT). “When it was established in the 1980s, the AMT was not properly indexed to follow inflation, resulting in an increasing number of middle class citizens being subject to the tax today,” noted Denlinger.

On Wednesday, Oct. 3, the House Finance Committee approved unanimously Denlinger’s  House Resolution 137, a resolution urging the United States Congress to make significant changes to the AMT.   

Reforming the AMT law to better reflect its original intent is a priority for both PICPA and the AICPA.  The full House will consider HR 137 when legislators return on October 15.

Committee Considers Police Pensions Consolidation Proposal

On Oct. 3, the Senate Finance Committee met in a public hearing to discuss legislation that would consolidate municipal police pension plans into one statewide plan. The aim of Senate Bill 596, introduced by Sen. Jane Orie, is to not only reduce the costs of administering those pension plans, but also to improve the benefits they provide.

At 3,129, Pennsylvania currently supports more local government pension plans than any other state, and more than a quarter of the total number of public employee pension plans in the entire country.

SB 596 would create four standardized pension plan benefit systems, from which each municipality would choose the system most closely resembling what it currently has in place. All full-time officers would, from that point on, be required to join the statewide system.

The administrative cost savings alone of such a consolidation is significant: the average cost of small plans is $1,378 per year, whereas the cost per member for larger plans is $300. The Public Employees Retirement Commission estimates that approximately $700 million per year could be saved, in addition to a reduction in costs to municipal governments, which would then be passed on to taxpayers.

As additional hearings are held by the Senate Finance Committee regarding this and other consolidation legislation, PICPA will continue to monitor the issue and update its members.

Special Session on Energy Offers Alternatives

For the past two weeks, the state legislature has convened, not only to address regular business, but also to tackle the Governor’s Energy Independence Strategy—a component of Gov. Rendell’s proposed budget, which legislators were unable to negotiate satisfactorily prior to the June 30 budget deadline.

During this Special Session, members in each chamber have unveiled separate plans to tackle the issue in an attempt to establish a compromise between what the governor proposed in theory in February, and what the more conservative minds believe is feasible in the current economic climate.

Gov. Rendell’s proposal would create an $850 million “energy independence” fund to pay for alternative energy and conservation projects and mandate the use of alternative biofuels, $500 million of this would be used to subsidize renewable energy projects. Another $106 million would be used as grant money and other early-stage research, and the remainder would be applied to rebates and other incentives for the use of alternative energy technologies and appliances.

Senate Republicans are formulating a rival plan with a price tag of only $60 million, none of which necessitates a raise in, or levying of new, taxes. Their initiative would partly substitute tax credits for direct state investment, such as the governor’s proposed subsidies and alternative-energy mandates.

On the other side of the Capitol, House Republicans have also begun developing their own proposal under the leadership of an Energy Task Force assigned for the purpose. Their plan thus far includes a series of tax exemptions for energy-efficient appliances and practices, similar tax credits to those outlined in the Senate proposal, and grants of up to $5,000 for consumers building homes that use alternative-energy systems.

Debates on the Governor’s Energy Independence Strategy and alternate proposals are expected to continue into the winter.

Rendell to Seniors: “Checks Are In the Mail”

Gov. Ed Rendell this week announced that more than 450,000 senior citizens have received Property Tax/Rent Rebates so far this year.  The program paid $80 million more than last year, noted Rendell. Pennsylvanians have until Dec. 31 to apply for a rebate.

According to the Governor, so far this year, $200.8 million in rebates have been sent to 453,951 homeowners and renters through the state’s recently-expanded Property Tax/Rent Rebate Program – that is 141,044 more people and $80 million more than last year.

Act 1 of Special Session 2006, signed into law on June 27, 2006, delivers the largest property tax cut in Pennsylvania history – $1 billion annually to Pennsylvania homeowners.  Senior citizens are expected to receive the most significant property tax relief through an expansion of the Property Tax/Rent Rebate Program.

The total number of senior homeowners receiving property tax rebates under the state’s program is estimated to increase from about 155,000 last year to 575,000 by the end of this year. Nearly 200,000 of these senior homeowners will pay no school property taxes once gaming revenue is available for general property tax relief to all homeowners.

First Lawmaker Announces Retirement from State House

State Rep. Tom Tangretti this week announced that he will retire from the state House of Representatives at the end of the current 2007-08 legislative session. The Democrat represents parts of Westmoreland County. Tangretti first took office in 1989.  

“It has been a wonderful honor representing the people of this legislative district, and I want to thank them for the support and trust in me they have shown over the past two decades,” Tangretti said. “Fighting for the people of this region in Harrisburg and helping thousands of them access and benefit from state government here at home has truly been a privilege.

More retirement announcements are expected.  

New PURTA Surcharge Rate Published

In the Sept. 30, 2007, Pennsylvania Bulletin, the Department of Revenue published the rate of the Public Utility Realty Tax Act (PURTA) surcharge. The tax rate shall be imposed upon gross receipts taxes as provided by law for the period beginning the next January 1.

The result of the PURTA surcharge calculation for the tax year beginning January 1, 2008, is the imposition of 2.8 mills (0.0028) to be paid upon each dollar of gross receipts reported and settled. Exceptions to this surcharge are gross receipts from providing mobile telecommunication services, as well as telegraph or telephone messages transmitted in interstate commerce.

Revenue Department Releases September Collections

On Oct. 1, Secretary of Revenue Tom Wolf reported that the state collected $2.5 billion in General Fund revenue in September, $54.5 million, or 2.3 percent, more than anticipated. Fiscal year-to-date General Fund collections total $5.9 billion, which is $71.9 million, or 1.2 percent, above estimate.

The Gaming Fund received $32.7 million in unrestricted revenues for September. Fiscal year-to-date collections for the fund total $255.6 million. Gaming Fund receipts include taxes, fees and interest. Of the total for the month, $31.7 million was collected in state taxes for property tax relief, bringing the year-to-date total to $103.6 million. 

Other gaming-related revenues collected for September included $3.3 million for the Local Share Assessment, for a total of $12.2 million for the year; $4.7 million for the Economic Development and Tourism Fund, for a year-to-date total of $15.2 million; and $11.2 million for the Race Horse Development Fund, bringing the total for the year to $36.6 million.

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