Week Ending Nov. 16, 2018

by PICPA Government Relations | Nov 16, 2018

Licensure Expungement Guidelines Proposed 

The commissioner of the Pennsylvania Bureau of Professional and Occupational Affairs (BPOA) published proposed guidelines to provide for the expungement of certain disciplinary records of licensees under its jurisdiction. The proposal was published in the Nov. 10 Pennsylvania Bulletin. The guidelines are needed to effectuate Act 6 of 2018, which the PICPA supported.

Expungement is only available for two discrete categories of disciplinary record: discipline imposed for a violation involving failure to complete continuing education requirements, and discipline imposed for a violation involving practice for six months or less on a lapsed or expired license, registration, certificate, or permit. Act 6 prohibits the BPOA from expunging any other categories of disciplinary record.

In addition, licensees seeking an expungement may not be subject of an active investigation related to professional or occupational conduct, nor may the licensee be in a current disciplinary status (revoked, suspended, or on probation). All fees, fines, civil penalties, and costs associated with the disciplinary record must be paid in full. Finally, the licensee may not have more than one disciplinary record expunged.

The expectation is that licensees will apply for expungement through BPOA’s online PALS licensing system, which contains all records associated with a license, registration, certificate, or permit, including all disciplinary actions. A licensee must wait at least four years from the final disposition of the discipline to apply for expungement.

This proposed rulemaking would set forth a fee of $155 for the expungement of a disciplinary record. This fee is based on an evaluation of the costs associated with processing expungement applications by the BPOA’s legal office staff, including administrative overhead.

This proposed rulemaking will be effective upon publication of the final-form rulemaking in the Pennsylvania Bulletin. Look to PICPA’s Legislative Update to report when that occurs.


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2018 State and Local Business Tax Burden Study

The Council on State Taxation and the State Tax Research Institute released the report, Total State and Local Business Taxes: State-by-State Estimates for Fiscal Year 2017. The document was prepared by Ernst & Young LLP, and shows all state and local business taxes paid in each of the 50 states and the District of Columbia.

Businesses paid $738.4 billion in state and local taxes in fiscal year 2017, an increase of 2 percent from fiscal year (FY) 2016. State business taxes increased by 0.4 percent, and local business taxes grew by 3.7 percent. In FY 2017, business tax revenue accounted for about 44 percent of all state and local tax revenue. The business share has been within about 1 percent of the 45 percent mark since FY 2003.

Here are some other key findings of the study:

  • Business property tax revenue increased 3.9 percent in FY 2017, a gain of $10.9 billion. Property taxes remain by far the largest state and local tax paid by businesses, accounting for 38.9 percent of the total. Property taxes are also by far the largest local tax paid by businesses (accounting for 76.4 percent of all local taxes paid by businesses).
  • General sales taxes on business inputs and capital investment totaled $157.4 billion, or 21.3 percent of state and local business taxes. Overall sales taxes paid by businesses increased 2.7 percent. Sales taxes on business inputs are the largest state tax paid by businesses (accounting for 32.4 percent of all state taxes paid by businesses).
  • In FY 2017, corporate income and statewide business gross receipts tax revenue was $62.7 billion, or 8.5 percent of all state and local business taxes (a decrease of 0.7 percent from FY 2016). The decline was much less than what was seen last year, however, when corporate income and statewide business gross receipts tax revenue fell by 5.6 percent from FY 2015.
  • Individual income taxes on pass-through business income accounted for 5.3 percent of total state and local business tax revenue. Individual income tax revenue on business income fell by 2.9 percent from FY 2016.
  • Severance taxes increased nearly 15.7 percent to $8.9 billion in FY 2017, after about a 39 percent decline last year.
  • On average, business taxes are equal to 4.5 percent of private-sector gross state product (GSP), which measures the total value of a state’s annual private sector production of goods and services. The data reflect a substantial variation, with ratios ranging from 3.4 percent to 7.5 percent.
  • On average, businesses continue to pay more in state and local taxes than they receive in benefits from governmental spending. Businesses paid $3.30 for every dollar of government spending benefiting businesses, on average, assuming that education spending does not benefit local businesses. An alternate assumption, that half of education spending benefits local businesses, results in businesses paying $1.16 for every dollar of government spending benefiting businesses.


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IFO Economic and Budget Outlook for Pennsylvania

The Independent Fiscal Office (IFO) released its long-term economic and budget outlook, Economic & Budget Outlook: Fiscal Years 2018-19 to 2023-24.

The report evaluates the demographic, economic, revenue, and expenditure trends that will affect the Pennsylvania’s fiscal condition through fiscal year (FY) 2023-2024. Updated revenue and expenditure estimates suggest policymakers could face a potential budget imbalance of up to $1.71 billion in the upcoming fiscal year.

The potential imbalance falls to $1.58 billion in FY 2023-2024 based on current policies. A new sales and use tax transfer to the Public Transportation Trust Fund beginning in FY 2022-2023 reduces revenue by about $500 million annually, and contributes to the shortfall in the final two years of the forecast. The imbalance is described as “potential” because policymakers have various tools to control expenditures on a temporary or permanent basis.

“Expenditures are expected to increase by $2.70 billion in FY 2019-2020, which is roughly $1.70 billion more than the projected increase in net revenues. The factors driving the unusually large growth in expenditures in the budget year are associated with more than $1.0 billion in one-time funding sources used to balance the FY 2018-2019 budget, as well as FY 2019-2020 increases in state costs associated with health and human service programs,” noted Matthew Knittel, IFO director.

Over the last four years of the forecast (FY 2020-2021 through 2023-2024), three factors drive lower growth in expenditures: SERS and PSERS employer contribution rates stabilize; a contraction of the school age population restrains the growth of elementary and secondary education expenditures; and the aging of Pennsylvania’s workforce (high wage employees retire and are replaced with less-experienced, lower-wage staff).

This report does not assume that a recession occurs over the five-year budget window. However, the report includes a cautionary note on the economic and revenue implications of a recession. A recent survey of economists by The Wall Street Journal indicates that most economists believe that a recession is more likely than not to occur over the next three years.


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House Caucuses Choose 2019-2020 Leadership

This week, state House lawmakers returned to Harrisburg to elect their leaders for the 2019-2020 session that begins Jan. 1. Despite losing more than a dozen seats, Republicans will maintain a 110-91 majority (with two Democratic vacancies) to start the new year.

Rep. Bryan Cutler (R-Lancaster) was elected the new Republican majority leader. He replaces the retiring Rep. Dave Reed (R-Indiana). Following his election Cutler said, “We will also focus on running government as efficiently and transparently as possible, ensuring our students have the tools and opportunities they need to succeed and working to create an environment which promotes job growth and economic prosperity.”

House Republican Leadership:
Speaker-nominee: Mike Turzai (R-Allegheny) -- The formal election for speaker will take place in the full House when the 2019-2020 session begins on Jan. 1, 2019.
Majority leader: Bryan Cutler (R-Lancaster)
Appropriations chair: Stan Saylor (R-York)
Whip: Kerry Benninghoff (R-Centre)
Caucus chair: Marcy Toepel (R-Montgomery)
Caucus secretary: Mike Reese (R-Westmoreland)
Caucus administrator: Kurt Masser (R-Northumberland)
Policy chair: Donna Oberlander (R-Clarion)

Speaking on behalf of House Democrats, Rep. Frank Dermody (D-Allegheny), who was reelected minority leader, said, “More Democratic candidates successfully flipped seats to our side this year than in any election in the last 44 years. I’m honored to be chosen to continue leading the House Democratic Caucus as we go forward together, fighting for our Plan for Pennsylvania.”

House Democratic Leadership:
Minority leader: Frank Dermody (D-Allegheny)
Appropriations chair: Matt Bradford (D-Montgomery)
Whip: Jordan Harris (D-Philadelphia)
Caucus chair: Joanna McClinton (D-Philadelphia)
Caucus secretary: Rosita Youngblood (D-Philadelphia)
Caucus administrator: Neal Goodman (D-Schuylkill)
Policy chair: Mike Sturla (D-Lancaster)

Swearing-in day is Jan. 1, 2019.


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State Senate Leadership Remains Mostly Unchanged

Democrats and Republicans in the state Senate selected their leadership teams for the upcoming 2019-2020 legislative session, with little change occurring on either side.

Senate Republican Leadership:
Interim president pro tempore: Joe Scarnati (R-Jefferson)
Majority leader: Jake Corman (R-Centre)
Appropriations chair: Patrick Browne, CPA (R-Lehigh)
Whip: John Gordner (R-Columbia)
Caucus chair: Bob Mensch (R-Montgomery)
Caucus secretary: Richard Alloway (R-Franklin)
Policy chair: David Argall (R-Schuylkill)

Senate Democratic Leadership:
Minority leader: Jay Costa (D-Allegheny)
Appropriations chair: Vincent Hughes (D-Philadelphia)
Whip: Anthony Williams (D-Philadelphia)
Caucus chair: Wayne Fontana (D-Allegheny)
Caucus secretary: Larry Farnese (D-Philadelphia)
Caucus administrator: John Blake (D-Lackawanna)
Policy chair: Lisa Boscola (D-Northampton)

Democrats took five seats in the Senate on election night, narrowing the Republicans majority to 29-21.


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State Insurance Department Announces Workers’ Comp Filings

Jessica Altman, Pennsylvania insurance commissioner, announced that the Insurance Department received two midyear workers’ compensation loss cost filings from the Pennsylvania Compensation Rating Bureau (PCRB). They have a proposed effective date of Jan. 1, 2019, and the department is committed to an immediate review of these new filings.

The PCRB, an independent bureau that makes filings to the Insurance Department on behalf of the nearly 325 companies that write workers’ compensation insurance in Pennsylvania, filed a proposed 5.24 percent reduction in overall loss costs as a result of this new law. Loss costs are a component of insurance rates.

At the same time, the PCRB is filing another midyear loss cost revision to modify an earlier loss cost filing submitted in November 2017, effective on April 1, 2018. In late October 2018, the PCRB identified the need to modify the filing, and notified the Insurance Department. It has since prepared the new filing. This filing contains a decrease in overall loss costs of 10.02 percent. Changes in the loss costs impact insurers and employers in different ways, so it is not possible to say how this issue may have impacted the rates paid by employers since April 1, 2018.


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PICPA Legislative Update Webinar

There is still time to register for the PICPA government relations team’s Legislative Update Webinar on Nov. 21 at 9:00 a.m. In this 50-minute webinar, Peter Calcara, PICPA’s vice president of government relations, will recap the 2017-2018 legislative session, review November’s election results and what it means in Harrisburg next year, and preview the 2019-2020 Pennsylvania General Assembly and PICPA’s legislative agenda.


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Torsella Won’t Accept Contributions from Gaming Interests

Pennsylvania Treasurer Joe Torsella announced that he will continue the practice of not accepting campaign contributions from gaming interests, despite a recent federal ruling that lifts the statutory ban on such contributions in state elections. Torsella serves a unique role as an ex-officio member of the Pennsylvania Gaming Control Board, and is the only elected state official to sit on the board.

“Following this ruling, I want to be perfectly clear: I won’t take a dime from gaming interests, despite this federal ruling. As the only elected official on the Pennsylvania Gaming Control Board, it may now be legal for me to accept campaign contributions from the gaming industry, but it is still not ethical,” said Torsella. “Pennsylvanians should have trust that the best decisions are being made, not being bought.”

Torsella’s announcement follows a U.S. District Court ruling in September that struck down Pennsylvania’s statutory ban against campaign contributions from gaming interests in state elections as a violation of the First Amendment.

Torsella urged the legislature to impose a limit on contributions from gaming interests to prevent reoccurrence of criminal conduct, noting the extensive opportunity to influence gaming policy and licensing decisions.

There are about 30 licenses or certificates pending approval or renewal before the Gaming Control Board in the form of applications for casino operator renewals, minicasino licenses, sports waging operators, fantasy sports operators, manufacturer license renewals, iGaming operators, and video gaming terminal licenses.


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The Pennsylvania Institute of Certified Public Accountants (PICPA) is a premiere statewide association of more than 22,000 members working in public accounting, industry, government, and education. Founded in 1897, the PICPA is the second-oldest and fourth-largest state CPA organization in the United States.

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Contact the Government Relations Team at governmentrelations@picpa.org or (717) 232-1821.

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