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Legislative Update

Week Ending Oct. 3, 2008

• Don’t Overlook the Pa. Attorney General Race
• Health Care Reforms Approved by Senate
• Revenue Department Releases September Collections
• House Commerce Committee Discusses U.S. Economy
• Time is Running Out to Register to Vote!
  

Don’t Overlook the Pa. Attorney General Race

In a year that boasts one of the most highly publicized Presidential contests in recent history – as well as an inordinate number of contentious Congressional and state legislative races – it is vital that PICPA members pay close attention to the Pa. election for the Office of the Attorney General, featuring incumbent Tom Corbett and challenger John Morganelli.
 
The Attorney General’s office plays a key role in the development of public policy, including the areas of consumer protection and legal liability reform. Pennsylvania CPAs need to determine which candidate will promote economic and business development, and which candidate understands and appreciates the function of the CPA profession as it relates to safeguarding Pennsylvania consumers.

Republican candidate Tom Corbett, who CPA-PAC has financially supported, was appointed Attorney General in 1995 by then-Governor Tom Ridge to complete the term of Ernie Preate. Corbett served in that role until 1997, when he returned to private law practice. Corbett was elected to the office in 2005. Recently, the Attorney General’s office has faced both support and criticism for its investigation into allegations that taxpayer dollars were illegally used by legislative offices to fund political work. The exposure of possible wrongdoing was generally applauded, but some have questioned the timing of the initial round of indictments, and the limited scope of those indictments to the House Democratic caucus. Corbett has said the investigation into the other caucuses is ongoing, and further charges will be brought following the Nov. 4 election.

John Morganelli is the Democratic nominee and current Northampton County District Attorney. If elected, he would break an almost 30-year GOP tenure in the office of Attorney General. Morganelli is no stranger to the race; however, in three attempts to win the Democratic nomination for this post, this is his first success. He has been District Attorney of Northampton County since 1991. Initiatives he seeks to bring to the office include a better utilization of the consumer protection division, an enhancement of the state’s criminal justice system, and creation of a gun trafficking unit.

Both candidates will increase their public exposure in the weeks leading up to the election, including two debates – one on Oct. 28 in Philadelphia and another on Oct. 29 in Allentown – both of which will be televised across the state. Corbett’s camp will tout his platform, including the creation of the Child Predator Unit, Public Corruption Unit, and Elder Abuse Unit. Morganelli will highlight his 16 years of experience as a state prosecutor and tap into the outpouring of newly registered Democrats seeking change under his direction.

The debates should prove to be educational and will help Pennsylvanians make an informed decision on Election Day. Members would be wise to pay attention to this highly contentious, yet often overlooked, race for Attorney General.

Learn about any and all state and local candidates by visiting www.pennsylvaniaprosperity.org. 

Health Care Reforms Approved by Senate

Health Care reform measures that address the affordability and accessibility of care were unanimously passed by the state Senate recently.

Senate Bill 1453 would extend health care insurance coverage to dependent children up to age 30, at the expense of the policyholder. Coverage would apply to adult children who are not married, have no dependents, are residents of the Commonwealth, or are enrolled as a full-time student at an institution of higher education. Insurers would have the authority to determine premium increases necessary to cover the cost of the additional coverage.

Senate Bill 1422 would create a mini-COBRA Small Employer Group Health Plan in the state. Under the bill, employer-based group benefits would continue for individuals employed at a company with two to 19 employees who have lost employment and would not have access to group-rated health insurance. Under the current federal law, COBRA benefits only apply to employers with 20 or more employees.

Gov. Rendell continues to lobby lawmakers for his health care reform proposal—Access to Basic Care.  In a letter to Senate Republicans this week, the governor outlined the framework of two proposals, both of which would add 250,000 people to the state’s existing adultBasic program, and expand the benefits offered through that program. His proposals also would extend a subsidy for physicians who have to purchase $500,000 in medical malpractice insurance from the state-run MCARE Fund. However, his new pitch was without a fiscal note, which is cause for concern with many lawmakers.

Revenue Department Releases September Collections

Secretary of Revenue Tom Wolf Sept. 30 reported that Pennsylvania collected $2.3 billion in General Fund revenue in September, $163.8 million, or 6.5 percent, less than anticipated. Fiscal year-to-date General Fund collections total $5.8 billion, which is $281.4 million, or 4.7 percent, below estimate.

“September is the first significant collections month of the fiscal year, as quarterly corporation tax and personal income tax estimated payments were due this month,” said Wolf. “Pennsylvania has weathered the economic storm better than other states, but it’s clear that the uncertainties in the national economy are affecting our tax collections in Pennsylvania.” 

Sales tax receipts totaled $688.3 million for September, $33.3 million below estimate. Sales tax collections year-to-date total $2.2 billion, which is $61.1 million, or 2.7 percent, less than anticipated.

Personal income tax (PIT) revenue in September was $954 million, $50.9 million below estimate. This brings year-to-date PIT collections to $2.4 billion, which is $58.2 million, or 2.4 percent, below estimate. 

September corporation tax revenue of $502.1 million was $42.7 million below estimate. Year-to-date corporation tax collections total $629.6 million, which is $61.8 million, or 8.9 percent, below estimate.

Other General Fund revenue figures for the month included $62.6 million in inheritance tax, $3.9 million below estimate, bringing the year-to-date total to $203.6 million, which is $13.5 million below estimate.

Realty transfer tax was $31.5 million for September, bringing the total to $103.7 million for the year, which is $15.4 million less than anticipated.

House Commerce Committee Discusses U.S. Economy

As has been widely reported in the national news, on Monday, September 29, the U.S. House of Representatives surprisingly rejected a $700 billion “bailout” bill, which in turn caused the Dow Jones Industrial Average to make a dramatic 777 point drop. As Congress and the White House discuss moving the plan forward, the stock market has since made a moderate recovery.

However, in the wake of what Pennsylvania House Commerce Committee Chairman Pete Daley (D-Washington) called the “greatest economic crisis Americans have faced…since the Great Depression,” the committee met with state financial services industry representatives on Wednesday, October 1, to discuss the impact this could have on the Pennsylvanian economy.

Pennsylvania Department of Banking Secretary Steven Kaplan remarked that, while the idea of an economic “bailout” might not be a popular one among average Americans, the ramifications if the government does nothing are far direr. Kaplan noted that small businesses in particular may be adversely affected, unable to meet payrolls or apply for credit.
 
Robert Rupel, president and CEO of Lafayette Ambassador Bank in Easton and immediate past chairman of the Pennsylvania Bankers Association, agreed, saying that if the rules governing how financial instruments are valued for accounting purposes and how capital losses are treated as income are not addressed, “I think consumers will continue to hoard dollars, small businesses will continue to hoard dollars.”

Rupel continued, “We’ve had consumers come in to our banks and want to take out $300,000 and $400,000, and they’re adamant: they do not want to leave with a check; they want to leave with cash. That, to me, has very frightening implications.”

Kaplan and Rupel both assured committee members that community banks and credit unions overseen by the state Department of Banking remain sound, and Kaplan went on to say that he sees no jeopardy regarding the monetary capacity of the Federal Deposit Insurance Company (FDIC).

Kaplan also noted that Pennsylvania took a positive first step by enacting several mortgage lending reform bills during this legislative session. Among other provisions, lenders would need to provide a “good faith analysis” to loan applicants, outlining what they can and cannot afford. This would help to prevent borrowers from receiving loans with payments they could not possibly make.

The overarching concern is a lack of investor and consumer confidence in the markets. When questioned as to the timeframe necessary to enact a stabilization plan to correct this, Secretary Kaplan replied, “Yesterday would have been better than today; today is better than tomorrow.”

The Senate Appropriations Committee will meet Monday, October 6, to seek further counsel regarding the statewide impact of the current national banking “crisis” by hearing from Pennsylvania Budget Secretary Mary Soderberg and economic consultants from Global Insight.

Time is Running Out to Register to Vote!

While the weather is cooling down, the elections are heating up. You can make a difference this fall by voting for the candidates that best represent your interests. But you can’t vote unless you are registered. PICPA wants you, your family, your friends, and your neighbors to be registered to vote. Download the voter registration forms, print them out, complete them, and mail them back to your county as instructed at www.pavoterservices.state.pa.us. In Pennsylvania, you must be registered by October 6 to vote in the November Election. Register today so your voice can be heard on Nov. 4!