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Legislative Update

Week Ending Oct. 26, 2007

• School Property Tax Relief Proposals Teed Up
• Lawsuit Abuse Reform Package Unveiled
• Bill to Encourage Energy Conservation Passes House
  
• Committee Approves "PA Climate Change Act"
• Bill to Provide Tax Credits for ‘Green’ Buildings Sent to House
• Senator Madigan to Retire Following Current Term
  

School Property Tax Relief Proposals Teed Up

State House lawmakers, looking to win back some confidence with constituents after the ballot box fiasco that was Act 1 of 2006, are working on various alternative school property tax relief proposals that may come for a floor vote in November. One proposal under active consideration is the sales tax expansion plan offered by the conservative Commonwealth Caucus.
 
On Wednesday, Oct. 24, the House Finance Committee took a first step by approving House Bill 1947, a bill that would change the state constitution to allow exemption of up to 100 percent of all primary residences from property taxes. Currently, the state can only reduce homeowner property taxes by 50 percent of the median value of a home in that school district or taxing authority.

The committee also sent to the House floor House Bill 211, a constitutional amendment that would exempt honorably discharged veterans from paying residential property taxes.  

Next Wednesday, October 31, the House Finance Committee will meet again to consider additional school property tax reform proposals. Already on the committee’s agenda for consideration are House Bills 125, 377, 1489, and 1600, all possible legislative vehicles for school property tax relief.  

PICPA continues to strongly oppose an expansion of the sales tax base to include professional services. The sales tax is generally understood to be an even more regressive tax than the property tax many have suggested it replace. Expanding the base for the sales tax will place a greater burden on those who can least afford it.

Moreover, taxing accounting and other professional services is bad tax policy for a variety of reasons, and would actually encourage PICPA members’ clients to purchase accounting services outside the state. An expanded sales tax base would be yet another disincentive for businesses and professional services entities to locate in Pennsylvania and could drive out businesses already here.

Your legislator needs to hear from you, as a constituent and a CPA, about the impact this issue will have on you and your clients. PICPA members are urged to contact their local state representative immediately to voice their opposition to this proposal.

You may also contact your PICPA Government Relations Team with questions as we continue to lobby members of the House on your behalf. Updates will be provided as the legislature moves forward on this matter.

Lawsuit Abuse Reform Package Unveiled

On Oct. 22, former Pennsylvania Gov. Dick Thornburgh joined House Republicans at a press conference unveiling legislation aimed at protecting the business and medical communities in the Commonwealth from lawsuit abuse. Representing PICPA in the Capitol Rotunda were members Cheri Freeh, Steve Geisenberger and Bill Lazor.

A centerpiece of the package is House Bill 850, also known as the Fair Share Act. This legislation reforms the state's joint and several liability law by ensuring that defendants found negligent or liable for an injury are held financially responsible for only their share of the damages.

Lawsuit abuse reform can significantly reduce the cost of doing business in Pennsylvania. Small businesses, including CPA firms, pay more than $95 billion in legal costs annually. Overall, the U.S. legal system costs more than $260 billion per year, with approximately 50 percent of this cost going toward legal fees.

The proposed measures are designed to stabilize liability insurance rates for health care providers and businesses by providing continuity and predictability to the court system. This, in turn, helps consumers by keeping costs down, preventing job losses and ensuring accessibility to a larger selection of quality health care providers.

The legislative package includes the following reform proposals:

• HB 850, the Fair Share Act, which would establish that each defendant found negligent would only be responsible for his share of damages
• HB 1940 (to be filed), certificate of merit, which requires a plaintiff to include a certificate of merit when filing a liability action
• HB 1941 (to be filed), capping attorney fees via constitutional amendment
• HB 1942 (to be filed), capping attorney fees via statute
• HB 860, capping plaintiff damages via constitutional amendment
• HB 1005, statute of repose, which requires cases seeking damages to be brought within 15 years
• HB 686, limiting venue to the county in which the cause of action arose
• HB 1943 (to be filed), collateral source rule
• HB 1946 (to be filed), Private Attorney Retention Sunshine Act, which requires a Commonwealth agency that intends to enter into a private attorney contract to use and open process to select the private attorney
• HB 470, which requires 80% of punitive damages be payable to the Mcare Fund
• HB 1945 (to be filed), which establishes that a benevolent gesture would be inadmissible as evidence of liability

"This package of legislation brings much-needed reform to a system in disarray," said Allegheny County Rep. Mike Turzai, chairman of the House Republican Policy Committee and HB 850’s prime sponsor. "These reforms are necessary to restore fairness, common sense and personal responsibility to our legal system. We need to pass the Fair Share Act immediately.”

Bill to Encourage Energy Conservation Passes House

This week, the state House passed legislation creating a sales tax holiday for purchases of certain ENERGY STAR products. The bill now goes to the Senate for consideration.

Special Session House Bill 11 was introduced as part of the state’s Special Session on Energy Policy. By waiving the state sales tax on these energy-efficient products during a specified time, the legislature hopes to help save consumer costs once the rate caps for how much energy companies can charge for power in Pennsylvania are lifted in 2010.

ENERGY STAR is a joint program of the U.S. Environmental Protection Agency and the U.S. Department of Energy.  

Committee Approves “PA Climate Change Act”

The Senate Environmental Resources and Energy Committee on October 23 approved the Pennsylvania Climate Change Act and sent it to the full Senate.   

Senate Bill 266 would create an advisory committee to counsel the state on climate change issues and to identify “green” economic opportunities in Pennsylvania. The bill would also require the state Department of Environmental Protection to utilize a third-party facilitator in working with the advisory committee.

Bill to Provide Tax Credits for ‘Green’ Buildings Sent to House

On Tuesday, October 23, the House Environmental Resources and Energy Committee met to consider and ultimately approve Special Session House Bill 5, legislation providing tax credits to residential or commercial owners or tenants for either the construction of green buildings or the rehabilitation of less environmentally friendly buildings into green buildings. 

In order to qualify for a tax credit, the building must meet certain size restrictions and must also meet specific environmental standards in several areas, including sustainable site development, water savings, energy efficiency, materials selection and indoor environmental quality.

Senator Madigan to Retire Following Current Term

This week, Republican state Sen. Roger Madigan announced his retirement from the Senate of Pennsylvania following the completion of his current term, which ends on November 30, 2008.

"The greatest reward I have had as a legislator is to serve the good, hard-working people of this area, and to have had their continued support for more than three decades of public service," Madigan said.  "It has been both a joy and an honor.  And now it is the right time to step aside, having addressed many priorities and worked hard to make this state a better place to live."

Madigan was first elected to the House of Representatives in 1977 where he served until his election to the Senate in 1984. His district includes Bradford, Lycoming and Sullivan counties and parts of Susquehanna and Union counties.  He currently serves as chairman of the Senate Transportation Committee and vice chair of the Senate Labor and Industry Committee.