Week Ending March 6, 2020

Mar 05, 2020

State Budget Hearings Conclude

The third and final week of 2020 state budget hearings took place in both chambers. State lawmakers use the hearings to delve into the details of Gov. Tom Wolf’s proposed $36 billion spending plan for the new fiscal year beginning July 1, 2020.

The House Appropriations Committee heard from the Department of Education, the Pennsylvania Higher Education Assistance Agency, Pennsylvania State System of Higher Education, state-related universities, the Department of Human Services, the Pennsylvania Professional Liability Joint Underwriting Association, and the budget secretary/governor’s executive offices. The Senate Appropriations Committee heard from the Department of Agriculture, the University of Pennsylvania School of Veterinary Medicine, Pennsylvania State University Agricultural Research and Extension, state-related universities, the Department of Conservation & Natural Resources, Penn College of Technology, Thaddeus Stevens College & Community Colleges, the Department of Environmental Protection, the Pennsylvania Professional Liability Joint Underwriting Association, and budget secretary/governor’s executive office.

Agriculture Secretary Russell Redding and senators discussed a wide range of issues, such as Wolf's proposed transfer of $204 million from the Pennsylvania Race Horse Development Trust Fund (RHDTF) to underwrite a new state college scholarship program, the need for more revenue to support state dog law enforcement, the future of the dairy industry, and implementing new Pennsylvania Farm Bill programs and Spotted Lanternfly infestation efforts.

The leaders of Pennsylvania's four state-related universities addressed a host of questions about how they are responding to changes in higher education. The hearings before the Senate and House appropriations committees covered public concern about the expense of higher education and growing levels of student debt, continuing declines in enrollment of traditional students, development of Pennsylvania's workforce to meet employer needs, and the mandate of the Pennsylvania Higher Education Funding Commission to investigate the intertwined issues of funding for higher education and affordability for students. Wolf has proposed flat state funding for the four universities in fiscal year 2020-2021. The universities did receive a 2% increase in state aid for the current fiscal year. The four universities are asking for increases in state aid of varying amounts.

Supplemental appropriations – in particular those for the Department of Human Services – were also discussed. Lawmakers wrangled over the budget supplementals and programmatic forecasting. The hearings in both the House and the Senate concluded with the budget secretary/governor’s executive office.

Both chambers will reconvene on March 16 to continue sorting through the budget details.


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Bill Proposes to Close the Delaware Loophole

State Sen. Christine Tartaglione (D-Philadelphia) introduced legislation that aims to follow the lead of other states to close a corporate tax loophole. The target of Tartaglione’s legislation is the “Delaware Loophole,” which the senator says provides an unfair advantage for certain corporations that are out of state but conduct business in Pennsylvania.

“Closing the loophole would help ease the tax burden for all Pennsylvania businesses, especially those which are newly established or struggling to remain open, while also increasing revenue to the state,” notes Tartaglione. “I believe this will ultimately help to bring greater economic stability to Pennsylvania.”

Senate Bill 1032 would implement combined reporting, provide for apportionment of sales of services, and reduce the corporate tax rate from 9.99% to 6.99% over several years.

The PICPA Committee on State Taxation, which has prepared an issue brief on the topic, will be reviewing the legislation.

Senate Bill 1032 has been referred to the Senate Finance Committee. 


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Volunteers Requested for Student Loan Working Group

Borrowing money for college is a common practice, but many people regret taking out student loans after the fact. U.S. student loan debt has reached the $1.59 trillion mark. That’s more than the total U.S. auto loan debt (currently at $1.13 trillion) and credit card debt ($1.04 trillion).

An estimated 65% of students who graduated in 2017 took out student loans, and about 15% of that debt consisted of private student loans. Meanwhile, the average monthly student loan payment (not including borrowers whose payments are in deferment) is $393, reports the U.S. Federal Reserve.

Student loan debt is a huge issue in Pennsylvania, with the state leading the nation in average student loan debt per resident. If you are interested in exploring this topic and related legislative solutions via a PICPA volunteer working group, please express your interest via email.


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PICPA Urges Support for Fiscal State of the Nation Resolution

In January, U.S. Sens. Kyrsten Sinema (D-Ariz.), Jacky Rosen (D-Nev.), Angus King (I-Maine), and Joni Ernst (R-Iowa) introduced S. Con. Res. 35. The bipartisan resolution would require the U.S. Comptroller General to give an annual presentation to the U.S. House and Senate budget committees regarding the audited financial statement of the federal government.

The CPA profession has supported improvement in federal government financial oversight and transparency for many years. This resolution is a step forward in helping policymakers make better decisions with more information. More Senate co-sponsors are needed from both parties to increase the chances of legislative success.

The PICPA wrote letters to Pennsylvania’s Sens. Bob Casey (D-PA) and Pat Toomey (R-PA) urging support for the resolution.


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Killion Introduces Redistricting Reform Legislation

State Sen. Tom Killion (R-Chester, Delaware) introduced legislation designed to end congressional gerrymandering in Pennsylvania.

Senate Bill 1023 would establish an 11-member Independent Redistricting Commission to redraw congressional district lines. The Independent Redistricting Commission would consist of a randomly selected group of participants who support the major political parties, independents, and third-party voting categories. Commission members and their spouses cannot have been lobbyists, political staff, or federal or state employees within five years prior to appointment to the commission.

Senate Bill 1023 has been referred to the Senate Sate Government Committee for review.


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Bill to Extend Financial Relief Program for Veterans and Families

A bipartisan group of state lawmakers plan to introduce legislation to indefinitely extend the Military Family Relief Assistance Program (MFRAP). The initiative has provided more than $1.9 million from Pennsylvania taxpayers and private donations to Pennsylvania servicemembers and veterans who are in need. The program is administered by the Pennsylvania Department of Military and Veterans Affairs.

Created in 2005, the MFRAP provides grants of up to $3,500 to the state’s veterans, servicemembers, and their immediate families experiencing hardship. The legislation – sponsored by Sens. Pam Iovino (D-Allegheny, Washington), Lisa Baker (R-Luzerne, Pike, Susquehanna, Wayne, and Wyoming), Bob Mensch (R-Berks, Bucks, and Montgomery), and John Sabatina (D-Philadelphia) – would eliminate the sunset date for the program, which is June 30, 2020.

The bill will be referred to a legislative committee for study.


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February 2020 Revenue Collections Strong

Pennsylvania collected $2.2 billion in General Fund revenue in February, which was $90.5 million, or 4.4%, more than anticipated. Fiscal year-to-date General Fund collections total $20.9 billion, which is $249.1 million, or 1.2%, above estimate.

Sales tax receipts totaled $811.8 million for February, $17.1 million above estimate. Year-to-date sales tax collections total $7.7 billion, which is $92.4 million, or 1.2%, more than anticipated.

Personal income tax (PIT) revenue in February was $940.1 million, $9.5 million above estimate. This brings year-to-date PIT collections to $8.7 billion, which is $105.6 million, or 1.2%, above estimate.

February corporation tax revenue of $136.5 million was $44.3 million above estimate. Year-to-date corporation tax collections total $1.9 billion, which is $85.7 million, or 4.3%, below estimate.

Inheritance tax revenue for the month was $102.9 million, $24.6 million above estimate. This brings the year-to-date total to $751.4 million, which is $45.3 million, or 6.4%, above estimate.

Realty transfer tax revenue was $36.1 million for February, $9.5 million above estimate. The fiscal-year total is $366.5 million, which is $14.5 million, or 4.1%, more than anticipated.

Other General Fund tax revenue, including cigarette, malt beverage, liquor, and gaming taxes, totaled $135.1 million for the month, $3.1 million below estimate. The year-to-date total is $1.2 billion, which is $6.1 million, or 0.5%, above estimate.

Nontax revenue totaled $5.1 million for the month – $11.3 million below estimate. This brings the year-to-date total to $284.5 million, which is $70.8 million, or 33.1%, above estimate.


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