Week Ending Jan. 10, 2020

Jan 10, 2020

State Lawmakers Convene for Start of New Year

State House and Senate lawmakers returned to Harrisburg for a nonvoting session day on Jan. 7, the constitutionally prescribed day for the General Assembly to convene. While the day was mostly ceremonial, both chambers did have some official business to conduct.

Sen. Joseph Scarnati (R-Jefferson) was once again unanimously elected president pro tempore for 2020. This is the fourteenth time Senate colleagues elected Scarnati to the third-highest office in Pennsylvania. In his acceptance comments, Scarnati told the chamber that he would like to see the Senate take up the longstanding issue of property tax reform. Though he did not endorse any one plan, he said tackling the issue would not be easy and would require lawmakers to put up some “tough votes.”

House Speaker Mike Turzai (R-Allegheny) set two days for special elections. On Feb. 25, voters in Philadelphia’s 190th state House District will go to the polls to fill the vacancy created when Movita Johnson-Harrell resigned last month after being charged with stealing from a charity. Three special elections will be held March 17 to fill seats vacated by Rep. Gene DiGirolamo (R-Bucks), Rep. Tedd Nesbit (R-Mercer), and Rep. Justin Walsh (R-Washington). All three resigned after being elected this past November to local offices.

The House will be in session the week of Jan. 13, but the Senate is not scheduled to return until Jan. 27.


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New Legislation in the Pipeline

State lawmakers may have been in recess for the holidays, but that has not stopped them from introducing legislation. Here’s a quick rundown of some recently introduced legislation and/or bills poised to be introduced that the PICPA Government Relations Team is monitoring:

  • Fraud Prevention Act for Taxpayer Accountability – State Sen. Lindsey Williams (D-Allegheny) and Rep. Seth Grove (R-York) have teamed up to introduce this proposal, which is modeled after the federal False Claims Act to prevent waste, fraud, and abuse of state government funds.
  • Advanced manufacturing technologies and processes development – State Sen. Joe Scarnati (R-Jefferson) will introduce legislation that focuses on infrastructure, innovation, and research and development. It will emphasize partnerships between private entities and our state-related universities and the development of programs to fund shared research facilities, shared equipment, and incentives to attract and further “start-up” high-level academic research efforts.
  • Additional recourse for license-holder cases being heard before any of the state’s licensing boards – State Reps. Greg Rothman (R-Cumberland) and Kyle Mullins (D-Lackawanna) are working on a bill that will require defendants/respondents to appear in person for any scheduled hearing that is being held before a licensing board, commission, or hearing examiner.

All the bills will be referred to a standing committee of the General Assembly for study. 


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December Revenue Collections Take a Dip

Pennsylvania tax revenues dipped below expected levels last month. The state collected $2.9 billion in General Fund revenue in December, which was $91.5 million, or 3.1%, less than anticipated. Fiscal year-to-date General Fund collections total $15.6 billion, which is $75 million, or 0.5%, above estimate.

The Independent Fiscal Office’s (IFO) December Revenue and Economic Update shows actual collections were $58.5 million below IFO projections. The report also compares collections to the prior year. December 2019 General Fund revenues of $2.91 billion reflect an increase of $2.0 million (0.1%) compared to the same month in the prior year.

Sales tax receipts totaled $981.4 million for December, $6.7 million below estimate. Year-to-date sales tax collections total $5.8 billion, which is $42.7 million, or 0.7%, more than anticipated.

Personal income tax (PIT) revenue in December was $1 billion, $18.9 million above estimate. This brings year-to-date PIT collections to $6.2 billion, which is $93 million, or 1.5%, above estimate.

December corporation tax revenue of $542.2 million was $80.7 million below estimate. Year-to-date corporation tax collections total $1.7 billion, which is $126.7 million, or 7.1%, below estimate.

Inheritance tax revenue for the month was $94.7 million, $7.7 million below estimate, bringing the year-to-date total to $555.7 million, which is $14.3 million, or 2.6%, above estimate. 


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2020-2021 State Budget Hearing Schedules Announced

Pennsylvania Gov. Tom Wolf will deliver his fiscal year 2020-2021 state budget address to a joint session of the General Assembly on Feb. 4. Legislative hearings on the spending plan will get underway thereafter.

The state House Appropriations Committee and Senate Appropriations Committee both begin their vetting of the budget proposal on Feb. 18. The Department of Revenue will appear on Feb. 18 in the House with an afternoon appearance before the Senate that same day. Hearings are scheduled in both committees until the first week in March.

The PICPA Government Relations Team will be monitoring the sessions and will report back on the hearings.


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Elimination of Net Operating Loss Expiration Legislation in the Works

State Reps. Mike Jones (R-York) and Pete Schweyer (D-Lehigh) plan to introduce bipartisan legislation that will remove the time limitation that a business may carry forward a net operating loss from one year to the next.

Under Pennsylvania’s corporate net income tax, net operating losses (NOL) can be carried forward into future tax years for up to a maximum of 20 years. The lawmakers say that in some cases, where a business is either starting up or looking to grow for example, they may not be able to use their net operating loss deductions within that timeframe. Jones and Schweyer also say that the expiration of the credit is inconsistent with recently adopted federal standards that eliminated the expirations.

The legislation has not yet been formally introduced. The PICPA Committee on State Taxation will be reviewing the legislation.


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Governor Launches Mental Health Initiative

Gov. Wolf announced an all-agency effort and anti-stigma campaign, Reach Out PA: Your Mental Health Matters, that is aimed at expanding resources and the state’s comprehensive support of mental health and related health care priorities in Pennsylvania.

“The steps I’m outlining today are just the beginning of what I plan to grow into a large-scale effort to combat mental health issues in Pennsylvania,” Wolf said. “We’ve seen success with a multi-pronged attack against the opioid crisis. Reach Out PA will do the same with mental health.”

The governor announced several initiatives and reviews of commonwealth agencies to bolster the effort. Further, over the coming weeks agencies will announce additional initiatives.


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New Federal Overtime Rules Go into Effect

The U.S. Department of Labor’s new federal overtime rules went into effect Jan. 1, 2020.

With a few exceptions, all hourly employees who work more than 40 hours per week are eligible for overtime pay, as are most salaried employees who work more than 40 hours per week and earn less than $684 per week/$35,568 per year, regardless of their job duties. Most salaried employees who are not engaged in an executive, administrative, or professional capacity, regardless of how much they are paid, are also eligible.

Those who are not eligible for overtime include salaried employees who are engaged in an executive, administrative, or professional capacity and make more than $35,568 per year, as well as those working in occupations specifically exempted by the minimum wage act.

For more information on the new overtime rule, visit the Pennsylvania Department of Labor and Industry’s Bureau of Labor Law Compliance website at dli.pa.gov, call (800) 932-0665, or email RA-LI-SLMR-LLC@pa.gov.


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Legislator Retirements Mount

The list of legislative retirements continues to grow, with more announcements expected as the deadline to circulate ballot petitions draws closer.

Here is the current list of state lawmakers who will not seek reelection in 2020:

  • Rep. Stephen Barrar (R-Delaware)
  • Rep. Cris Dush (R-Jefferson)
  • Rep. Garth Everett (R-Lycoming)
  • Rep. Neal Goodman (D-Schuylkill)
  • Rep. Marcia Hahn (R-Northampton)
  • Rep. Mark Keller (R-Perry)
  • Rep. Steve McCarter (D-Montgomery)
  • Rep. Harry Readshaw (D-Allegheny)
  • Rep. Justin Simmons (R-Northampton)
  • Rep. Marcy Toepel (R-Montgomery)

The first day to circulate and file ballot petitions is Jan. 28. The last day is Feb. 18.


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