Week Ending May 10, 2019

May 10, 2019


PICPA Comments on GASB Lease Standard Exposure Draft

The PICPA Local Government Auditing and Accounting GASB Subcommittee submitted a comment letter in response to an exposure draft of the Proposed Implementation Guide – Lease Project No. 3-24 from the Governmental Accounting Standards Board (GASB). The objective of the guide is to clarify and elaborate on the requirements of Statement No. 87, Leases

The proposed GASB guidance is in a question-and-answer format. In its comment letter, the PICPA GASB subcommittee outlined several areas of concern and the need for additional clarification or examples. 

The PICPA appreciates GASB’s continual efforts to listen to the feedback of preparers and interested stakeholders in order to provide consistent and relevant financial reporting for governmental agencies.

Interested in joining your colleagues on the PICPA GASB Subcommittee working on these issues? Contact governmentrelations@picpa.org


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Statewide Commerce Court Approved by House

Legislation by Rep. Seth Grove (R-York) establishing a statewide commerce court was approved by the House this week. 

Under House Bill 332, the state Superior Court and Courts of Common Pleas would be given the option of creating Commerce Courts to ensure businesses receive effective and efficient treatment when navigating the Pennsylvania’s legal system. The specialized courts would handle complex business cases, including acquisitions, mergers, dissolutions and liquidations, among other areas. 

The bill now goes to the Senate for consideration. 


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EITC, OSTC Measure Approved by State House

By a vote of 111-85, the state House approved legislation making changes to the Educational Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC) programs.

House Bill 800, sponsored by House Speaker Rep. Mike Turzai (R-Allegheny), increases the tax credits available by $100 million to $210 million for the 2019-2020 fiscal year. Under current law the maximum amount of tax credits available to scholarship organizations in a fiscal year is $110 million. 

House Bill 800 also adds an automatic increase for the total tax credits available by 10 percent if more than 90 percent of the total aggregate amount of the tax credits are used in the prior fiscal year and the General Assembly had not otherwise enacted an increase for that year. 

The bill also includes several technical updates, such as increasing the maximum household income for a student in either program from $85,000 to $95,000 and adding a definition for “qualified subchapter S trust” to the EITC and OSTC programs.

The bill now goes to the Senate for consideration.


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Senate Approves "Farming First" Measures

The state Senate approved a “Farming First” legislative package this week that will help promote and support Pennsylvania's agriculture industry. The package is designed to help new farmers get started in the industry.

Senate Bill 478, sponsored by Sen. Elder Vogel (R-Beaver), would provide a personal income tax credit for landowners who lease or sell their land, buildings, and equipment to beginning farmers. Landowners would receive a one-time personal income tax credit for the sale of property or a multiyear tax credit for the lease of property. The legislation requires all leases to be enforced through written agreements and that the sale of property be for fair market value to qualify for the tax credit.

In addition to SB 478, the “Farming First” package includes the following:

  • Senate Bill 145, sponsored by Sen. Gene Yaw (R-Lycoming), changes the state's farmland preservation program to allow farmers more flexibility for building or subdividing residences. 
  • Senate Bill 338, sponsored by Sen. Wayne Langerholc (R-Cambria), updates Pennsylvania's Vehicle Code to allow the transportation of large farm equipment. 
  • Senate Bill 453, sponsored by Sen. Judy Ward (R-Blair), sets safety standards and removing costly requirements for barn weddings and other social events on farms.
  • Senate Bill 583, sponsored by Sen. Ryan Aument (R-Lancaster), eases restrictions on the use of farmland for farm-related tourism and entertainment activities. 
  • Senate Bill 585, sponsored by Sen. Majority Leader Jake Corman (R-Centre), creates the Pennsylvania Dairy Future Commission to bring together all stakeholders in the industry. 
  • Senate Bill 588, sponsored by Ward, exempts milk haulers from weather-related travel bans.

The package of bills now goes to the House for consideration.


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Auditing Standards of Municipal Authorities Clears House Committee

House Bill 1203, sponsored by PICPA member Rep. Frank Ryan (R-Lebanon), passed the House Local Government Committee this week. 

The bill seeks to amend the Municipal Authorities Act to increase the auditing standards to which municipal authorities must comply. Currently, municipal authorities must complete an annual audit, but there is no definite set of guidelines as to what the audit must look like. 

Ryan’s legislation provides a set of guidelines that require an increased standard of fiscal review for hired CPAs to follow when completing the annual audit. It also addresses a concern relating to the ability of the auditor general to review municipal authorities, and it allows the municipality that created the authority to request assistance from the auditor general’s office to complete an independent audit.

The committee adopted an amendment offered by Rep. Dan Moul (R-Adams) that specifies municipalities may request the auditor general to perform the audit of the authority and that it is a financial audit. 

The bill now goes to the full House for consideration.


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Senate Finance Committee Reports Five Bills

At its meeting this week, the Senate Finance Committee approved five bills. 

Senate Bill 28, sponsored by Sen. Michelle Brooks (R-Crawford), reduces the state inheritance tax on property passing to nonsibling heirs.

Senate Bill 201, sponsored by Sen. John DiSanto (R-Dauphin), provides for like-kind exchange tax deferrals.

Senate Bill 541, sponsored by Sen. Dave Argall (R-Schuylkill), improves Pennsylvania’s historic preservation incentive tax credit program.

Senate Bill 616, sponsored by Sen. Scott Hutchinson (R-Venango), clarifies an existing sales and use tax exemption on certain services or goods purchased by qualified businesses located within a Strategic Development Area.

Senate Bill 618, sponsored by Sens. Argall and John Yudichak (D-Luzerne), grants a 10-year extension of the Coal Refuse Energy and Reclamation Tax Credit from the currently mandated year of 2026 to 2036 and increases the amount of tax credits to $45 million.

All five bills now go to the full Senate for consideration.


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Legislation to Provide Financial Incentives to Small Businesses

Sens. John Blake (D-Lackawanna) and Vincent Hughes (D-Philadelphia) unveiled legislation that would create incentives to help small businesses succeed.

One bill in the package would create tax-deferred savings accounts for small businesses targeted for business growth. The measure would allow profits to be deposited into tax-deferred accounts, and if the money in the account is subsequently used for job creation, then it will remain tax free.

The second bill would exempt business start-up fees for a host of business enterprises. These include women-owned, service-disabled veteran-owned, minority-owned, and disadvantaged small businesses or microenterprises. For businesses that may not qualify for the full exemption, a 50 percent reduction in fees would be available. 

The measures were introduced last year as Senate Bills 1195-1196.


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Plan Boosts Interest in Career and Technical Education

The state Senate approved legislation that would help generate more interest in Pennsylvania’s career and technical education programs.

Senate Bill 89, sponsored by Sens. Vince Hughes (D-Philadelphia) and Ryan Aument (R-Lancaster), would remove references to “vocational-technical schools” in the Public School Code and replace them with “career and technical schools” to help remove any possible stigma associated with these institutions.

A recent study by Georgetown University found that almost two-thirds of all jobs in the United States will require postsecondary education by 2020. Job openings in health care and STEM fields – two sectors addressed by many career and technical schools – are expected to be among the fast-growing occupations.

Pennsylvania is home to 84 schools that offer comprehensive academic and technical education courses. Nearly 25 percent of Pennsylvania’s 500 school districts offer career and technical education programs.

Senate Bill 89 now goes to the state House for consideration.


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Bill to Slash State Debt Advances to Senate

Rep. Andrew Lewis’ (R-Dauphin) debt reform measure earned approval in the House this week.

House Bill 880 would lower the debt ceiling for the Redevelopment Assistance Capital Program (RACP) by $100 million per year starting in 2022 until the ceiling drops to $2.65 billion in 2026. Lewis’s bill kicks in after a current debt reduction law expires in two years. The current law is reducing the ceiling by $50 million per year, and will bring the ceiling down to $3.15 billion in 2021.

The bill now goes to the Senate for consideration.


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