PICPA Scores Win in Tax Bill
The PICPA notched a legislative victory in this year’s tax bill. The measure, which was championed by PICPA member Rep. Keith Greiner, CPA (R-Lancaster), originally as House Bill 706, was amended into an omnibus amendment to House Bill 262, now Act 13 of 2019.
The Greiner/PICPA amendment to the Tax Reform Code provides that if the executor of an estate and the trustee of the trust make an election under Section 645 of the Internal Revenue Code to treat the income of the trust as part of the estate, the fiduciary
may make and file a joint tax return for the estate and trust. If a joint return is filed, the tax liabilities of the estate and trust shall be joint and several. This provision applies to taxable years beginning after Dec. 31, 2019.
House Bill 262 includes several other tax law changes. The bill eliminates the inheritance tax on transfers of property from a parent to a child age 21 or younger upon the death of a parent, requires any personal income tax return completed by a paid
tax preparer to be signed and bear the IRS preparer tax identification number of the paid preparer, and conforms Pennsylvania law to the U.S. Supreme Court’s Wayfair decision concerning collection of sales and use tax from online marketplace
sellers and facilitators with annual sales over $100,000 to Pennsylvania customers (as opposed to the $10,000 in sales in current law). It integrates requirements for online sales into the sales and use tax section of the Tax Reform Code.
The bill also removes the “taproom tax” on small breweries, which was announced under the Pennsylvania Department of Revenue’s recent state tax bulletin. The bulletin indicated that breweries that sell beer directly to consumers in their
tasting rooms and retail storefronts would be required to issue the 6% state sales tax at the point of sale. A standard formula to apply the 6% tax at 25% of the retail value was incorporated into House Bill 262, eliminating the taproom tax that was
poised to go into effect on July 1.
The bill was also amended to include a provision to exempt volunteer fire departments from collecting and remitting sales tax when selling food and beverages for fundraising efforts. This provision will enable volunteer fire departments to raise funds
without worrying about the burden of collecting and remitting sales tax.
To help Pennsylvania’s agriculture industry grow and thrive, the bill exempts building materials and supplies used for the construction or repair of an agricultural animal housing facility from sales tax. The bill also creates an exclusion to the
Realty Transfer Tax on real estate subject to an agricultural conservation easement established under the Agricultural Area Security Law to a qualified beginning farmer.
The PICPA government relations team will host a Legislative Update: FY 2019-2020 Budget webinar later this month. Look for details.
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Wolf Signs $34 Billion State Spending Plan
On June 28, Gov. Tom Wolf signed a $33.997 billion spending plan for the new fiscal year that begins July 1. The plan increases spending by $579.6 million, or 1.8%, over the previous fiscal year, includes no broad-based tax increases, provides funding
for essential services, promotes workforce development efforts, bolsters education spending at all levels, and makes a substantial investment in the state Rainy Day Fund.
The state House passed House Bill 790, the General Appropriations Act of 2019,
by a vote of 140-62. The Senate ratified the measure, 42-8.
Among other investments in education, the budget accomplishes the following:
- Provides an increase of $265 million for Pre-K through 12th grade, including $160 million for basic education, $25 million for Pre-K Counts, $5 million for Head Start, and $15 million for preschool Early Intervention.
- Increases funding for higher education by 2% for Pennsylvania’s community colleges, the Pennsylvania State System of Higher Education, and the state-related universities. Over the past five years, funding for higher education has increased by
- Expands on the innovative PAsmart workforce development program by again providing $20 million for STEM (science, technology, engineering, and math) and computer science education, $10 million for job training and apprenticeships, and an additional $10 million to support career and technical
- Raises the school dropout age from 17 to 18 and lowers the required age to start school from 8 to 6.
House Bill 790 also provides support for Pennsylvanians most in need:
- Increases home visiting services to reach an additional 800 vulnerable families. This program has been proven to reduce neglect and abuse and improve health and education outcomes.
- Increases the number of slots in high-quality and affordable day care programs, and the amount of available childcare subsidies so more children start life on the right path.
- Raises the rate for early intervention (EI) programs for the first time in a decade. This 3% rate increase will assist EI providers in recruiting and retaining qualified staff members to serve the at-risk children and families in the EI system.
- Increases funding to take nearly 800 individuals off of the waiting list for services for people with intellectual disabilities.
The budget bolsters investment in the agriculture industry:
- $6 million to provide grants, loans, and tax credits for farmers to install and implement best management practices.
- $5 million to fund research and development, organic transition assistance, value-added processing, and marketing grants in support of Pennsylvania’s dairy industry.
- $500,000 to reestablish a program to fund agricultural and rural youth organizations to help increase knowledge and awareness of agricultural issues within the commonwealth.
- $500,000 to improve agriculture infrastructure in urban areas, the aggregation of product, sharing of resources, and support for community development efforts.
- $2 million to create an Agricultural Business Development Center to serve as a resource to help every farmer create a business plan, transition plan, or succession plan.
- $2.6 million to support the overall PA Preferred program, bolster enrollment in the Homegrown by Heroes Program, and develop the PA Preferred Organic initiative.
The budget also promotes workforce development and job training initiatives:
- Funding for Career and Technical Education increases by 7.6% ($7 million), from $92 million to $99 million.
- Funding for Career and Technical Education Equipment Grants increases by 117.6% ($3 million), from $2.5 million to $5.5 million.
- Funding for the Pennsylvania College of Technology increases by 17.6% ($4 million), from $22.7 million to $26.7 million.
- Funding for Thaddeus Stevens College of Technology increases by 27.2% ($4 million), from $14.7 million to $18.7 million.
- Funding for New Choices/New Options increases by 50% ($250,000), from $500,000 to $750,000.
The spending plan also makes a $330 million deposit into the Rainy Day Fund.
With a budget in place, state lawmakers are in summer recess. The House is scheduled to return on Sept. 16 and the Senate returns to voting session on Sept. 23.
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The 2019-2020 Fiscal Year Budget
The state budget is a complex document with many parts. In addition to the General Appropriations Bill (House Bill 790), the General Assembly
typically approves and sends to the governor a number of other bills that complete the full state budget package. Here is a listing of the bills that make up the 2019-2020 fiscal year state budget.
House Bill 33 amends the Human Services Code to eliminate the general assistance cash benefit program, continue the medical assistance Day
One incentive payment for nonpublic nursing homes, and extend the Philadelphia hospital assessment.
Senate Bill 48 amends the Election Code, including the replacement of voting machines.
Senate Bill 144 amends the Public School Code to provide for $60 million for the School Safety and Security grant program and adds new school
House Bill 262 amends the Tax Reform Code.
Senate Bill 695 reauthorizes the Human Services Code.
Senate Bill 700 amends the Public School Code to create the Public Higher Education Funding Commission and implement recommendations from
the Public School Building Construction and Reconstruction Advisory Committee.
Senate Bill 712 is the Fiscal Code Bill.
House Bill 1461 amends the Administrative Code to expand the investigative powers of the state Inspector General among other changes.
House Bill 1615 amends the Public School Code regarding educational tax credits and makes other changes.
Senate Bill 235 provides fiscal year 2019-2020 funding for the Bureau of Professional & Occupational Affairs.
Senate Bill 236 provides Workers’ Compensation Act and Pennsylvania Occupation Disease Act funding for fiscal year 2019-2020.
Senate Bill 237 provides fiscal year 2019-2020 funding for the Office of Small Business Advocate.
Senate Bill 238 provides fiscal year 2019-2020 funding for the Office of Consumer Advocate.
Senate Bill 239 provides fiscal year 2019-2020 funding for the Public School Employees’ Retirement Board.
Senate Bill 240 provides fiscal year 2019-2020 funding for the State Employees’ Retirement Board.
Senate Bill 241 provides fiscal year 2019-2020 funding for the Philadelphia Parking Authority.
Senate Bill 242 provides fiscal year 2019-2020 funding for the Pennsylvania Public Utility Commission.
Senate Bill 243 provides State Gaming Fund Appropriations funding for fiscal year 2019-2020.
House Bill 1350 provides fiscal year 2019-2020 funding for Pennsylvania State University.
House Bill 1351 provides fiscal year 2019-2020 funding for the University of Pittsburgh.
House Bill 1352 provides fiscal year 2019-2020 funding for Temple University.
House Bill 1353 provides fiscal year 2019-2020 funding for Lincoln University.
House Bill 1354 provides fiscal year 2019-2020 funding for the University of Pennsylvania for veterinary activities and for the Center for
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Bill Establishing State-Based Exchange in Governor’s Hands
Legislation that establishes a state-based health insurance exchange and reinsurance program now sits on Gov. Wolf’s desk. House Bill 3,
sponsored by House Majority Leader Bryan Cutler (R-Lancaster) and Democratic Leader Frank Dermody (D-Allegheny), passed both chambers in unanimous fashion.
House Bill 3 establishes the Pennsylvania Health Insurance Exchange Authority to create, manage, and maintain the Pennsylvania Health Insurance Exchange. The powers and duties of the Exchange Authority are vested in, and exercised by, an 11-member board.
The bill also establishes a council to advise the Exchange Authority.
Wolf plans to sign the bill this week.
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Measures to Support Agriculture Sent to Governor
A package of bills that support Pennsylvania’s farmers and help new farmers continue the state’s rich agricultural heritage received legislative approval and were sent to the governor for enactment into law. The legislative package includes
Senate Bill 338 increases the allowable width for farm equipment on roads.
House Bill 370 addresses provisions for farmland preservation.
Senate Bill 478 provides a personal income tax credit for landowners who lease or sell their land, buildings, and equipment to beginning
Senate Bill 585 establishes the Pennsylvania Dairy Future Commission to review the current status of the dairy industry and make recommendations
on how to support its future.
Senate Bill 634 creates a “Conservation Excellence Grant Program” to provide financial and technical assistance to farmers to
install and implement best management practices.
Senate Bill 661 creates the Commonwealth Specialty Crop Block Grant Fund.
House Bill 915 allows milk haulers to travel on highways during a declaration of disaster emergency.
House Bill 1514 provides for Farm-to-School program grants.
House Bill 1516 establishes the Agriculture Rapid Response Disaster Readiness Account.
House Bill 1520 creates a grant program to reimburse federal meat inspection costs for small or new processors and to subsidize the first-time
purchase of equipment needed for federal compliance.
House Bill 1526 establishes the Agriculture-Linked Investment Program.
House Bill 1590 establishes the Dairy Investment Program and Dairy Investment Program Account.
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Panel Hears Testimony on Proposed Medical Liability Rules Change
While the state budget was taking center stage, the Legislative Budget and Finance Committee (LBFC) held a two-day hearing on the impact of a proposed medical malpractice venue rule change. The hearing was authorized by Senate Resolution 20 (SR 20).
The hearings, which included testimony from a range of speakers in the areas of law, physicians’ rights, and patient advocacy, resulted from an intensive push by Republican lawmakers earlier this year to delay Pennsylvania Supreme Court action on
proposed rule changes.
SR 20 calls on the Senate committee to conduct a study of the impact of venue for medical professional liability actions on access to medical care and other related issues. The hearings held this week were to discuss the impact that reverting current
medical malpractice litigation venue rules could have on citizens' access to health care.
Business and legal reform groups, including the Pennsylvania Coalition for Civil Justice Reform, of which the PICPA is a member, warn that a health care crisis in the state could return
if pre-2002 venue guidelines are implemented by the Pennsylvania Supreme Court. They say former venue rules were to blame for high malpractice insurance costs that caused fewer health care options for patients.
At the close of Tuesday’s proceedings, Sen. Robert Mensch (R-Bucks), chair of the committee, said he had been expecting more quantitative evidence. He hopes to be able to present the General Assembly with a data-heavy report, rather than something
based on anecdotes.
In February, organizations from across Pennsylvania joined forces to voice strong opposition to a proposed “venue shopping” rule change making its way to the Pennsylvania Supreme Court. The proposed Venue Change Amendment to the Civil Procedure
Rules would gut the most significant reform that provided relief from the medical malpractice crisis of the early 2000s.
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Impact Fee Update and 2019 Outlook
An Independent Fiscal Office report
analyzes 2018 impact fee collections from natural gas extraction, details the number of wells and fee schedule by operating year, and discusses two potential scenarios for collections. The report also translates the impact fee into an annual average
effective tax rate (ETR) based on recent natural gas price and production data.
Proceeds from the impact fee are distributed to local governments and state agencies to provide for infrastructure, emergency services, environmental initiatives, and various other programs.
The annual impact fee for an unconventional natural gas well is determined according to a bracketed schedule, based on the number of years since a well became subject to the impact fee (operating year), the type of well (horizontal or vertical), and,
to a limited extent, the price of natural gas.
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Candidates Selected for Summer Special Election
The candidates for the Aug. 20 special election for the state House’s 85th District have been selected.
Dr. Jennifer Rager-Kay won the Democratic nomination and will face Republican David Rowe, vice chair of the East Buffalo Township board of supervisors. The two are vying to fill the seat vacated by Fred Keller after Keller won his bid for the 12th Congressional
The 85th District includes Snyder and Union counties.
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