Week Ending Jan. 6, 2017

Jan 06, 2017

New State Lawmakers Take Oath of Office

The 201st session of the Pennsylvania General Assembly got under way Tuesday, Jan. 3, with members of the state House and Senate taking the oath of office. Surrounded by family, friends, and key supporters, the newest class of Pennsylvania lawmakers, which included six new state senators and 22 new House members, kicked off what many anticipate to be a challenging 2017-2018 legislative session.

(Click here for a recap of the PICPA’s Year of Advocacy.)

In the Senate, Joe Scarnati (R-Jefferson) was nominated to again serve as President Pro Tempore. Sen. Scarnati has held the post since 2007. Republicans hold a commanding 34-16 majority in the upper chamber. Five new Republican senators and one new Democratic senator were sworn into office. The new state senators are as follows:

  • Sen. John DiSanto, 15th District (R-Dauphin and Perry)
  • Sen. Wayne Langerholc, 35th District (R-Bedford, Cambria, and part of Clearfield)
  • Sen. Daniel Laughlin, 49th District (R-Erie)
  • Sen. Scott Martin, 13th District (R-Lancaster)
  • Sen. Mike Regan, 31st District (R-Cumberland and York)
  • Sen. Sharif Street, 3rd District (D-Philadelphia)

In the state House, 200 of the 203 members were present for the swearing in. Rep. Leslie Acosta (D-Philadelphia) resigned her seat because of a guilty plea to federal charges last March. The resignation was effective Jan. 3. A special election will be held to fill her seat. The Republicans hold a 121 to 81 majority.

House members unanimously elected Mike Turzai (R-Allegheny) to serve as Speaker of the House.

“We have great opportunities in front of us, and we have the responsibility to govern,” Rep. Turzai said. “Working together, the members of this House will look at how government is structured from top to bottom, and streamline operations to save taxpayer dollars.”

Later in the day, the two chambers held a brief joint session to receive and certify the election results for the state’s three elected row offices—Auditor General Eugene DePasquale, Attorney General-elect Josh Shapiro, and Treasurer-elect Joseph Torsella. All three are Democrats.

Lawmakers return to Harrisburg later this month.


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PICPA Comments on Proposed Sales Tax Bulletin

The PICPA Committee on State Taxation recently submitted a comment letter in response to a Pennsylvania Department of Revenue (DOR) draft of Sales & Use Tax Bulletin 2016-02.

The draft bulletin, which was released to the PICPA at its Dec. 6 quarterly meeting with the DOR, proposes changing the procedure for handling large and complex sales and use tax refund petitions. The bulletin stipulates that to improve overall tax compliance and the efficiency of reviewing these requests, large refund requests may be addressed through the field audit process.

The DOR has not indicated a timeline for the bulletin to go into effect. 


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Hutchinson to Chair Senate Finance Committee

Sen. Scott Hutchinson (R-Venango) was selected by Senate President Pro Tempore Joe Scarnati to serve as chair of the Senate Finance Committee.

“I appreciate the opportunity to serve as chairman of the Finance Committee,” Hutchinson said. “We consider a number of tax bills each session, and I look forward to the opportunity to work with the members of the committee to review these pieces of legislation to ensure that they are in the best interest of the Commonwealth and the people of Pennsylvania.”

Hutchinson served as vice chairman of the Senate Finance Committee during the 2015-2016 legislative session, and previously served on the House Finance Committee. He earned a bachelor of science degree in economics from the Wharton School of Finance at the University of Pennsylvania in 1983.

Economic development and job growth will be his legislative priorities. The state tax code and the mix of revenues that fund state government are the main purviews of the Finance Committee. As such, comparisons of the types, provisions, and mixes of taxes with other locations are key components of job competitiveness and business investment.

Other Senate standing committee chair assignments include the following:

Aging & Youth
Sen. Michele Brooks (R-Mercer)
Sen. Art Haywood (D-Philadelphia)
Intergovernmental Operations
Sen. Camera Bartolotta (R-Washington)
Sen. Anthony Williams (D-Philadelphia)
Agriculture & Rural Affairs
Sen. Elder Vogel (R-Beaver)
Sen. Judy Schwank (D-Berks)
Sen. Stewart Greenleaf (R-Montgomery)
Sen. Daylin Leach (D-Montgomery)
Sen. Pat Browne, CPA (R-Lehigh)
Sen. Vincent Hughes (D-Philadelphia)
Labor & Industry
Sen. Kim Ward (R-Westmoreland)
Sen. Tina Tartaglione (D-Philadelphia)
Banking & Insurance
Sen. Don White (R-Indiana)
Sen. Sharif Street (D-Philadelphia)
Law & Justice
Sen. Charles McIlhinney (R-Bucks)
Sen. Jim Brewster (D-Allegheny)
Communications & Technology
Sen. Ryan Aument (R-Lancaster)
Sen. Art Haywood (D-Philadelphia)
Local Government
Sen. Scott Wagner (R-York)
Sen. John Blake (D-Lackawanna)
Community, Economic & Recreational Development
Sen. Mario Scavello (R-Monroe)
Sen. Larry Farnese (D-Philadelphia)
Health & Human Services
Sen. Lisa Baker (R-Luzerne)
Sen. Judy Schwank (D-Berks)
Consumer Protection & Professional Licensure
Sen. Robert Tomlinson (R-Bucks)
Sen. Lisa Boscola (D-Northampton)
Rules & Executive Nominations
Sen. Jake Corman (R-Centre)
Sen. Jay Costa (D-Allegheny)
Sen. John Eichelberger (R-Blair)
Sen. Andrew Dinniman (D-Chester)
State Government
Sen. Mike Folmer (R-Lebanon)
Sen. Anthony Williams (D-Philadelphia)
Environmental Resources & Energy
Sen. Gene Yaw (R-Lycoming)
Sen. John Yudichak (D-Luzerne)
Sen. John Rafferty (R-Montgomery)
Sen. John Sabatina (D-Philadelphia)
Sen. Scott Hutchinson (R-Venango)
Sen. John Blake (D-Lackawanna)
Urban Affairs & Housing
Sen. Tom McGarrigle (R-Delaware)
Sen. Wayne Fontana (D-Allegheny)
Game & Fisheries
Sen. Pat Stefano (R-Fayette)
Sen. Jim Brewster (D-Allegheny)
Veterans Affairs & Emergency Preparedness
Sen. Randy Vulakovich (R-Allegheny)
Sen. Jay Costa (D-Allegheny)


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House Committee Chairs for 2017-2018 Session

Speaker of the House Rep. Mike Turzai (R-Allegheny) announced the appointments of Republican and Democratic committee chairs for the 2017-2018 legislative session. Committees are outlined in the House Rules enacted for each session.

House committees study each bill and determine which proposals will go to the full House. They conduct public hearings where citizens and interested groups can have a say in the legislative process, and they serve as a resource for members and residents.

Turzai made the following appointments, which are unofficial until announced on the House floor later this month:

Aging & Older Adult Services
Rep. Tim Hennessey (R-Chester)
Rep. Steve Samuelson (D-Northampton)
Rep. Tina Pickett (R-Bradford)
Rep. Tony DeLuca (D-Allegheny)
Agriculture & Rural Affairs
Rep. Martin Causer (R-McKean)
Rep. Eddie Day Pashinski (D-Luzerne)
Rep. Ron Marsico (R-Dauphin)
Rep. Joseph A. Petrarca (D-Westmoreland)
Children & Youth
Rep. Kathy Watson (D-Bucks)
Rep. Scott Conklin (D-Centre)
Labor & Industry
Rep. Rob Kauffman (R-Franklin)
Rep. John Galloway (D-Bucks)
Rep. Brian Ellis (R-Butler)
Rep. W. Curtis Thomas (D-Philadelphia)
Liquor Control
Rep. Adam Harris (R-Juniata)
Rep. Paul Costa (D-Allegheny)
Consumer Affairs
Rep. Robert Godshall (R-Montgomery)
Rep. Thomas R. Caltagirone (D-Berks)
Local Government
Rep. Kate Harper (R-Montgomery)
Rep. Bob Freeman (D-Northampton)
Rep. Dave Hickernell (R-Lancaster)
Rep. James Roebuck (D-Philadelphia)
Professional Licensure
Rep. Mark Mustio (R-Allegheny)
Rep. Harry Readshaw (D-Allegheny)
Environmental Resources & Energy
Rep. John Maher, CPA (R-Allegheny)
Rep. Mike Carroll (D-Luzerne)
State Government
Rep. Daryl Metcalfe (R-Butler)
Rep. Greg Vitali (D-Delaware)
Rep. Bernie O’Neill (R-Bucks)
Rep. Jake Wheatley (D-Allegheny)
Tourism & Recreational Development
Rep. David Millard (R-Columbia)
Rep. Mark Longietti (D-Mercer)
Game & Fisheries
Rep. Keith Gillespie (R-York)
Rep. Bryan Barbin (D- Cambria)
Rep. John Taylor (R-Philadelphia)
Rep. William F. Keller (D-Philadelphia)
Gaming Oversight
Rep. Scott Petri (R-Bucks)
Rep. Patrick Harkins (D-Erie)
Urban Affairs
Rep. Mark Keller (R-Perry)
Rep. Michael O’Brien (D-Philadelphia)
Rep. Matt Baker (R-Tioga)
Rep. Florindo "Flo" Fabrizio (D-Erie)
Veterans Affairs & Emergency Preparedness
Rep. Stephen E. Barrar (R-Delaware)
Rep. Christopher Sainato (D-Lawrence)
Human Services
Rep. Gene DiGirolamo (R-Bucks)
Rep. Angel Cruz (D-Philadelphia)



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Monthly Revenue Trends Report

The Independent Fiscal Office’s (IFO) December edition of the Monthly Trends Report has been published on the IFO website.

December 2016 General Fund revenues of $2.62 billion decreased by $106.6 million (-3.9 percent) compared with the same month in the prior year. Fiscal year-to-date revenues of $13.45 billion increased by $54.2 million (0.4 percent) compared with the prior year. Other revenue highlights are as follows:

  • Tax revenue decreased by 4.3 percent for the month and increased 0.4 percent for the fiscal year. Corporate tax collections and personal income tax due dates motivated most of the monthly decline.
  • Non-motor sales tax increased by 3.9 percent for the month, bringing the three- and 12-month average growth rates to 2.8 percent.
  • Motor vehicle sales tax decreased by 10.2 percent for the month, bringing the three-month average growth rate to -0.6 percent and the 12-month average growth rate to -0.4 percent.
  • Personal income tax withholding, which decreased by 9.7 percent for the month, was affected by the timing of certain due dates. Adjusted for due dates, the three- and 12-month average growth rates were 2.8 percent and 2.3 percent, respectively.
  • Realty transfer tax increased by 35.5 percent for the month, bringing the three-month average growth rate to 11.6 percent and the 12-month average growth rate to 9.9 percent.

The report also discusses recent data regarding state gross domestic product (GDP). For the first half of 2016, Pennsylvania’s GDP declined at an average annual rate of 2.0 percent.


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Tax Refund Offset on Court-Ordered Obligations

Under Act 93 of 2016, if a taxpayer has an unpaid court-ordered fine, fee, restitution or other obligation, then part or all of their state income tax refund will be directed to the clerk of the court for the county in which the order was entered. A small administrative fee will be deducted by the department prior to remitting the payment to the court. Any remaining amount of the refund will be issued to the taxpayer.

The Department of Revenue has no role in this process other than sending a refund to the appropriate court as required by state law.

If taxpayers have questions about this requirement under the Crime Victims Act or for information about a court-ordered obligation, they must contact the court to which the obligation is owed.


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Medical Marijuana Implementation Update

At her regular briefing on the status of Pennsylvania’s medical marijuana program, Secretary of Health Dr. Karen Murphy announced that applications for medical marijuana growers/processors and dispensaries will be available beginning Jan. 17, 2017. Permit applications will be accepted from Feb. 20, 2017, until March 20, 2017.

Since the medical marijuana program was signed into law on April 17, 2016, the department has done the following:

  • Completed the safe harbor temporary guidelines and safe harbor letter application process, as well as approved 134 applications
  • Slated temporary regulations for laboratories to be published in the Pennsylvania Bulletin on Dec. 24, 2016
  • Released public surveys to aid in the development of temporary regulations for growers/processors and dispensaries/laboratories
  • Published temporary regulations for growers/processors and dispensaries in the Pennsylvania Bulletin
  • Developed the Medical Marijuana Physician Workgroup
  • Released a Request for Quotations for Electronic Tracking IT solutions for the tracking of medical marijuana

The medical marijuana program became effective on May 17, and is expected to be fully implemented by 2018. The program will offer medical marijuana to patients who are residents of Pennsylvania and under a physician’s care for the treatment of a serious medical condition as defined by Act 16.

Questions about the medical marijuana program can be e-mailed to RA-DHMedMarijuana@pa.gov. Information is also available on the Department of Health website at www.health.pa.gov.


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Board of Finance and Revenue Provides Update

Since the Pennsylvania Board of Finance and Revenue was transformed three years ago by Act 52 of 2013, the board has seen a clear increase in transparency, efficiency, and balance in its deliberations and decisions. The PICPA initiated and supported these changes through the legislative process.

As an example of the transformation, a searchable database was established on Treasury’s website that contains nearly 5,000 orders — a significant accomplishment considering decisions of the board were never previously published. While these decisions do not set precedent, they do provide valuable tax guidance to Pennsylvania citizens, businesses, and those considering moving to or expanding in the state.

The new board has also approved scores of compromises and reviewed many reconsiderations, thereby reducing the need for costly and time-consuming litigation. The Department of Revenue, while no longer a member of the board, has been involved as a party in each appeal, resulting in a more robust and balanced approach to the tax appeal system.

For more details on the board’s achievements since the reorganization and to take a closer look at the various deadlines required to meet the legislative objective, check out this edition of Matters of Appeal.


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