Week Ending June 11, 2021

by PICPA Government Relations | Jun 11, 2021


Lawmakers Move to End Disaster Emergency, Begin to Position Budget Bills

State lawmakers moved to end Gov. Tom Wolf’s COVID-19 emergency disaster declaration. By a vote of 121-81 in the House and 30-20 in the Senate, lawmakers approved House Resolution 106, a concurrent resolution that terminates the pandemic emergency declaration and ends the governor’s power to close employers, limit occupancy, suspend state statutes, or issue stay-at-home orders due to COVID-19.

In addition, lawmakers sent Wolf legislation that would ensure critical waivers remain in place. Under House Bill 854, all waivers that were previously effective under the COVID-19 emergency will remain in effect until Sept. 30, 2021, unless terminated by the authority that initially authorized the waiver. Wolf signed House Bill 854 into law on June 10.

Also in the past week, the process of moving the legislative pieces that make up a state budget got underway. The House Appropriations Committee positioned several budget-related bills (House Bills 1508 through 1516), while the Senate Appropriations Committee did the same with Senate Bills 255 through 269. As negotiations unfold and a spending plan begins to take shape, the PICPA government relations team will monitor developments and keep PICPA members informed on the latest news. The new fiscal year begins July 1.

The General Assembly returns to legislative session on June 14.

 

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Data Center Sales and Use Tax Exemption Passes House

Rep. Donna Oberlander’s (R-Clarion) legislation, House Bill 952, passed the House on third consideration by a vote of 177-26. The bill establishes a sales and use tax exemption for certain equipment purchased by computer data centers and their tenants.

Act 84 of 2016 enacted a tax refund program on the sale of data center equipment that has an annual cap (a $5 million cap was raised to $7 million under Act 13 of 2019). However, the $7 million is allocated pro rata among all eligible refund applicants. This means that companies considering locating their data centers in Pennsylvania do not know the amount of savings they would receive until more than a year after they make their investments.

House Bill 952 will replace the existing tax refund program with a sales tax exemption on data center equipment. Replacing the tax refund program will allow Pennsylvania to compete with Ohio, West Virginia, New York, Virginia, and nearly 20 other states that have a standard sales tax exemption program, allowing for new investments from companies not formerly located in Pennsylvania.

House Bill 952 now goes to the Senate for consideration.

 

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Democratic Lawmakers Call for School Investment, Delivering Equity

Democrats in the state House and Senate are calling for an investment of half of the $3 billion in above-expected state revenue to go toward improving schools for students statewide and fully implementing the state’s Fair Funding Formula.

House Democratic Leader Joanna McClinton (D-Philadelphia, Delaware) said, “It’s time to make sure the playing field is level. It’s time to make sure a line drawn on a map decades ago isn’t a ticket to success for one child while being a ticket to struggle for another. We’ve had the tools, now we have the money. Let’s do this right.”

“Between the American Rescue Plan and the surplus we have, there is money for our schools and the time for excuses has passed,” said Senate Democratic Leader Jay Costa (D-Allegheny).

The Fair Funding Formula, signed into law by Gov. Wolf in 2016, was designed to address inequities in school districts. The problem, according to the lawmakers, is the Fair Funding Formula only applies to new investments since its enactment. Last year $700 million – 11% of total school spending – was distributed fairly. This plan would apply Fair Funding to all school spending and protect all districts from any cuts.

 

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Tax Proposals Gain Committee Approval

Members of the state House and Senate finance committees met this week to consider several tax proposals.

The Senate Finance Committee approved two bills. Senate Bill 368 provides tax relief for small businesses impacted by the pandemic by permitting them to take a net loss against other sources of income and to carry back losses to previous tax years. It would also allow employers to take net operating losses against future years for up to 20 years. The changes would give small-business owners the option to benefit from the same tax strategies as large corporations and provide the same immediate relief that is offered at the federal level. The committee also approved Senate Bill 734, which provides reforms and controls to prevent fraud in the sale of Pennsylvania tax credits. The two bills go to the full Senate for consideration.

The House Finance Committee reported several bills this week. House Bill 128 requires the Independent Fiscal Office (IFO) to identify and assess critical risk factors as part of its annual economic and budget outlook. House Bill 1006 allows Pennsylvania farmers to defer income received from disaster-related crop insurance payments for one year, mirroring existing federal law. House Bill 1177 establishes the Transportation Reinvestment and Improvement Program and Transportation Reinvestment and Improvement Program Fund and provides for transfers. House Bill 1539 amends the Keystone Scholars Grant Program and the Keystone Scholars Grant Program Account.

The Senate Education Committee approved Senate Bill 1. The bill would provide up to $300 million in total state tax credits in fiscal year 2021-2022 for businesses that contribute to the existing Education Improvement Tax Credit program and up to $100 million in total state tax credits for the existing Opportunity Scholarship Tax Credit program, with automatic 25% annual increases in the total amount of available tax credits for these programs in future years. In addition, the bill would create a seven-member Public Charter School Commission to consider charter school applications where existing local avenues are blocked.

The House Commerce Committee had scheduled a vote on House Bill 1377, which prohibits Keystone Opportunity Zone zone-hopping, but it was passed over. Rep. Brad Roae (R-Crawford, Erie), committee chair, noted that some language in the bill went beyond the scope of the original intent. An amendment is being drafted to address the concerns raised by a number of groups, including the PICPA. The bill is now scheduled for consideration on June 15.

 

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IFO Reports on Jobs Creation, Impact Fee Collection

The Independent Fiscal Office (IFO) released a new monthly publication that provides an update on the status of the state labor market and the pool of potential workers who may seek to reenter the workforce this summer and fall. Despite an infusion of federal stimulus, the latest three months of employment data show that the number of payroll jobs lost due to the pandemic has not improved. IFO says the report will be updated each month as new data become available.

In addition, IFO updated its impact fee data. The report notes that Pennsylvania’s $146.3 million in impact fees for 2020 was a $54.1 million decrease from 2019, and the lowest amount since the fee's inception.

 

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New Unemployment System Launches

The Pennsylvania Department of Labor & Industry (L&I) launched a new unemployment benefits system. The Pandemic Unemployment Assistance program is not affected by the change.

The new unemployment compensation (UC) system replaces a 40-year-old system that made filing for unemployment benefits complicated for users and cumbersome for staff processing benefits. The new system makes filing for benefits easier and faster for users, and department staff will need less time to process claims. This is expected to help reduce the number of users waiting for claims to be processed.

L&I is reviewing feedback from those now using the new system, and it has identified areas where users have had questions. One, in particular, is that multiple users who receive payments via direct deposit reported seeing the payment type listed as “debit card.” Because payment data is stored primarily by the Pennsylvania Treasury and not the UC system, this is a display issue and not a problem with payment type. After a person’s payment is made, the correct payment method will be displayed. Users do not need to take any action to correct this issue should they see “debit card” listed instead of direct deposit.

Unemployment Compensation and the Pandemic Emergency Unemployment Compensation are on the new system. Historic information for individuals who filed on the Extended Benefits program will also be on the new system.

 

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General Assembly Welcomes New Members

The state House and Senate lawmakers welcomed new members the week of June 7.

Former state Rep. Marty Flynn (D) was sworn in to serve the 22nd District in the Pennsylvania Senate. Flynn was elected to serve Lackawanna, Luzerne, and Monroe counties in a special election held in May 2021. Flynn follows Sen. John Blake (D), who resigned to take a job on the staff of U.S. Rep. Matt Cartwright (D-Pa. 8th). Flynn will serve as the Senate Democratic Chair of the Finance Committee.

Also taking the oath of office was Chris Gebhard (R), who will represent the mostly Lebanon County-based 48th Senatorial District. Before winning a special election following the death of Sen. Dave Arnold (R), Gebhard spent 25 years working in the insurance field.

The state House welcomed its 56th and 57th women to the chamber as Rep. Abby Major (R- Armstrong) and Rep. Leslie Rossi (R-Westmoreland) were sworn into office. Women represent 28% of the 203-member Pennsylvania House.

House Speaker Bryan Cutler (R-Lancaster) ordered a special election to coincide with Pennsylvania’s municipal general election on Nov. 2, 2021, to fill Flynn’s now-vacant House seat in the 113th Legislative District. Candidates for the office will be selected by their respective political parties, and the winner of the special election will take office after the results are confirmed. 

 

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About PICPA

The Pennsylvania Institute of Certified Public Accountants (PICPA) is a premier 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.

Learn more about how you can become involved in the legislative process, through PICPA's Key Contact Program and CPA-PAC.

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

Address:
500 N. 3rd St., Ste. 600A 
Harrisburg, PA 17101

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