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Legislative Update

Week Ending Feb. 8, 2008

• Rendell Delivers Budget Address
• EIT Reforms Back on Track
• House Delays Vote on Open Records Bill Until Next Week
  
• CPA Mobility Update
• Bill Mandates Prevailing Wage at KOZs
• Annual Audit and Financial Reports DCED
• Mann Announces Campaign for Treasurer
• Save the Date: PICPA Day on the Hill Returns June 11
  

Rendell Delivers Budget Address

On Feb. 5, Gov. Ed Rendell delivered his budget address to a joint session of the General Assembly. Calling his plan "Protecting Pennsylvania's Progress," Gov. Rendell’s $28.3 billion FY 2008-09 General Fund budget increases spending by $1.1 billion, or 4.2 percent over the current FY 2007-08 budget. The centerpiece of his proposal is a short term economic stimulus program for the Commonwealth, aimed at maintaining our state’s relatively comfortable fiscal status.

The Governor’s proposal would repackage three stalled legislative initiatives—The Jonas Salk Legacy Fund for medical research, an Energy Independent Strategy, and an expanded Redevelopment Assistance Capital Program—with six new measures to spend $900 million more in state funds this year.

Education spending would increase by $476 million, or more than 40 percent of the overall $1.1 billion increase. However, the proposal reduces spending by 2.1 percent in all areas other than Education, Public Welfare, Corrections, and Probation/Parole. The spending plan also calls for putting more than $850 million toward providing property tax relief for all Pennsylvanians.

Notably, the 2008-09 budget proposes to modify the remaining Capital Stock and Franchise Tax rate reduction schedule. On Jan. 1, 2008, the CSFT rate was reduced to 2.89 mills. Under current law, the 2009 and 2010 rate is scheduled to be 1.89 and .89 mills, respectively. However, under the governor’s proposal, the rate would dip only to 2.49 mills in 2009 and 1.02 mills in 2010. The tax would still be eliminated Jan. 1, 2011. 

House and Senate Republican leaders called into question several of the governor’s proposals, and sought to cast doubts on whether additional spending and borrowing was the best way to shore up the state’s economy—a goal they share with the administration. They suggested business tax cuts as a better way to stimulate economic growth.

Reaction among Democrats was, expectedly, more supportive of the governor’s plan. Democratic House Whip Keith McCall (D-Carbon) said, “Similar states like California, Illinois and New York are not in as enviable of a position as we are, but we cannot afford to rest on our laurels while the nation braces for a potential economic slowdown. The economic incentives and infrastructure development programs the governor proposes are right on track and will help Pennsylvania stay strong in the global economy.”

With the Governor’s budget now introduced, both the House and Senate will begin to hold appropriations hearings on the proposal. Be assured that your PICPA Government Relations Team will continue to keep you apprised of budget news and developments as we head toward June 30th and the start of a new fiscal year.

EIT Reforms Back on Track

PICPA-supported reforms to Pennsylvania’s archaic and inefficient system of collecting local earned income taxes appear to be back on track in the state Senate. As we reported in last week’s PICPA Legislative Update, the Senate Appropriations Committee failed to report the bill late last months due in large part to last minute opposition from tax collectors and township officials.

Senate Bill 1063 would establish much needed reforms in relation to the collection of the earned income tax that would consolidate the number of collectors from 560 to 66, modernize and introduce uniformity to the system.

In an effort to jump-start the lobbying effort for the bill, PICPA and its coalition partners is hosting a breakfast for legislators and staff on Feb. 12, followed by a press conference featuring PICPA’s EIT Task Force chair, Cheri Freeh, CPA. Freeh will also meet with senators to discuss the importance of passage of SB 1063 to the CPA profession. 

House Delays Vote on Open Records Bill Until Next Week

A fiery debate on legislation amending the state’s Open Records law ended Feb. 6 when the state House voted 100-98 to postpone a vote until Feb. 12. Friction between the caucuses started earlier in the day when House Republicans claimed their counterparts were caucusing on a secret amendment to Senate Bill 1 that Democrats refused to share with their Republican colleagues. Democrats denied the allegations.

House Republicans, who proposed the delay, said the legislation had numerous provisions which needed to be fixed. They included provisions that 911 officials, realtors, and advocates for the elderly and children had complained about, said House Republican lawmakers.  

While Democrats were unsuccessful in their attempts to prevent the bill's consideration being postponed, they did receive support from a somewhat unexpected source: Senate Republicans.  

A spokesman for Senate Majority Leader Dominic Pileggi (R-Delaware) backed the position taken by House Democrats, writing in an e-mail: "It would be possible to ping-pong a rewrite of the Open Records Law between the chambers virtually forever. There are no issues in Senate Bill 1 that should compel further amendments."

CPA Mobility Update

CPA license mobility efforts continue into 2008 with notable success and momentum. Eleven states have now achieved substantial equivalence with “no notification”—Illinois, Indiana, Louisiana, Maine, Missouri, Ohio, Rhode Island, Tennessee, Texas, Virginia and Wisconsin—consistent with the newly revised Uniform Accountancy Act, or UAA.

Pennsylvania is currently one of fourteen states that have mobility legislation pending. The other states are Arizona, Delaware, Hawaii, Idaho, Kentucky, Massachusetts, Mississippi, Missouri (enacted through regulation), New Jersey, New Mexico, Oklahoma, Utah and Washington.

Efforts to introduce bills are underway across the country in at least 10 additional states. Enacting mobility legislation in these states would mean the profession has moved significantly closer to true mobility and a national uniform mobility system between all 55 U.S. jurisdictions.

Bill Mandates Prevailing Wage at KOZs

Legislation to require that certain construction work performed on designated partially and wholly tax-exempt properties in the state to conform to standardized requirements was approved by the House Labor Relations Committee by a vote 21-8 vote on Feb. 7.

House Bill 2054 would amend the Keystone Opportunity Zone, Keystone Opportunity Expansion Zone, and Keystone Opportunity Improvement Zone Acts to include a section stating that the Prevailing Wage Act and Separations Act would apply to any construction, reconstruction, demolition, alteration, and repair work performed on KOZ properties.

Maintenance work that repairs existing facilities and does not affect the size, type, or extent of the facilities would be exempt.

The bill would apply to contracts entered into on or after the effective date of the legislation

Annual Audit and Financial Reports DCED

The Department of Community and Economic Development (DCED) would like to remind PICPA members that its Municipal Statistics e-filing system allows you to electronically file the Annual Audit and Financial Report (DCED-CLGS-30 for municipalities, and form DCED-CLGS-20 for counties) via their Web site.

The department’s e-filing process uses the PAPowerPort identification system, which means a unique user name along with a valid email address is required for each audit e-filed. You will also need to obtain the approval of the municipality whose audit you are engaged to complete.

Mann Announces Campaign for Treasurer 

On Feb. 6, Democratic state Rep. Jennifer Mann of Allentown announced her candidacy for Treasurer of Pennsylvania.

“I’ve made this decision after much thought and reflection with my family,” said Mann. “I’ve reflected on my experience as a member of the General Assembly. I want to be part of the debate that affects the lives of Pennsylvanians.”

Mann also highlighted her experience as vice-chair of the House Finance Committee. “Serving in leadership on this committee has given me the background to handle this important position.”

Mann is a former small business owner who has served as a state representative from Allentown since 1998.

Save the Date: PICPA Day on the Hill Returns June 11

Mark your calendar now to attend PICPA Day on the Hill, which will take place on Wednesday, June 11, 2008, at the state Capitol in Harrisburg.

The day’s activities will include opportunities for PICPA members to speak directly with state representatives and senators about issues of critical importance to the profession, including improving the earned income tax collection process, updating Pennsylvania’s antiquated CPA statute to reflect national trends, and reforming our current joint-and-several judicial system.

Continue to monitor PICPA’s Legislative Update for additional details and registration information, or contact your PICPA Government Relations Team.