PICPA-Backed PPP Loan Forgiveness Bill Approved
Legislation that ensures debt forgiveness granted under the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) will not be subject to state personal income tax was approved by the Pennsylvania House by a vote of 201-1. The PICPA supports this legislation.
House Bill 2497, sponsored by Rep. George Dunbar (R-Westmoreland), clarifies the treatment of Paycheck Protection Program (PPP) loan forgiveness under state tax law. According to the Fiscal Note prepared by the House Committee on Appropriations, Pennsylvania personal income tax does not conform to the federal individual income tax base; as a result, there is uncertainty as to whether such forgiveness for PPP loans would be considered taxable income for Pennsylvania personal income tax purposes.
Legislation with a similar provision (House Bill 2408 also authored by Dunbar) passed the House on May 4, 2020. That bill is pending in the Senate Appropriations Committee.
The issue has become murky since the IRS issued Notice 2020-32 stating that businesses that qualify for PPP loan forgiveness will not be able to deduct certain expenses, including wages, paid for by the loan. A bipartisan bill (S. 3612) pending in Congress would clarify that receipt and forgiveness of a PPP loan does not affect the tax treatment of ordinary business expenses.
House Bill 2497 has been referred to the Senate Finance Committee.
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House Speaker Mike Turzai Steps Down June 15
House Speaker Mike Turzai (R-Allegheny) announced Wednesday that he will resign his seat and the speakership effective June 15 to take a position in the private sector.
Turzai has served as speaker of the House since 2015. Prior to that he served as majority leader for four years. He announced last January that he would not seek reelection for his state House seat, one he has held since 2001.
His resignation will set off a chain of events that will ripple through the Republican caucus. Rep. Bryan Cutler (R-Lancaster), the current majority leader, is favored to become speaker. To replace Cutler, there likely will be a battle between Rep. Stan Saylor (R-York), current House Appropriations Committee majority chair, and Rep. Kerry Benninghoff (R-Centre), majority whip. Should one of those two win it will set off another intra-caucus election.
Turzai was an unwavering ally to the PICPA and the CPA profession. His passion and commitment to public service are unquestioned. The PICPA thanks him for his service to the Commonwealth of Pennsylvania and we wish him well in his next endeavor.
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Black Caucus Members Protest Police Brutality
For nearly 90 minutes at the start of the June 8 House session, members of the Pennsylvania Legislative Black Caucus (PLBC), along with numerous House Democratic colleagues, held the speaker’s rostrum and demanded action on 19 bills in the House and Senate that would address police reform across Pennsylvania.
“Too many times we’ve seen police using unauthorized tactics or excessive force, in some cases leading to deaths that could have been prevented,” said state Rep. Stephen Kinsey, chair of the PLBC. “Our goal is to rebuild trust between officers and the community, and that starts with accountability. We need to do better.”
The protest was planned by House members on the Police Reform Working Group, which also includes the chief defender of the Defender Association of Philadelphia, as well as several attorneys. The group recently put forward several proposals to address law enforcement misconduct and police-community relations.
The reforms target actions that can be taken by the governor, the General Assembly, and local city councils. Some of the reforms include the following:
- Outlaw the use of chokeholds or any other action that constricts an airway by law enforcement.
- Establish an independent review process for any law enforcement encounter that results in serious injury or death.
- Require law enforcement to report officer misconduct or corruption.
- End stop and frisk policies, which have disproportionately targeted black and brown communities.
- Create a deputy inspector general focused on deterring, detecting, and preventing misconduct, brutality, waste, fraud, and abuse within law enforcement agencies.
- Create a civil unrest damage recovery fund.
- Create an independent civilian-led and managed review board with subpoena and disciplinary powers to recommend internal affairs and criminal investigations.
Following the protest, House Speaker Mike Turzai said he would welcome a special session to review police reform bills.
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State Lawmakers Act on Several COVID-19 Related Measures
With a base budget in place for the new fiscal year that begins in a few weeks, state lawmakers are now focused on other legislative priorities. However, this past week a handful of COVID-19 related measures still needed to be addressed by House and Senate lawmakers.
The Republican led legislature sent Gov. Tom Wolf a demand (House Resolution 836) to end his COVID-19 disaster declaration. The resolution would also allow companies in Pennsylvania to operate safely and consumers to use their services without the need for a business waiver process that has been criticized as arbitrary and unfair. The General Assembly claims the authority to terminate a state disaster emergency at any time by Concurrent Resolution. Upon adoption of the resolution, the governor must issue an executive order or proclamation ending the state of disaster emergency. Wolf has argued that the resolution does not compel him to end the declaration. In all likelihood, the matter will be decided by the courts.
Senate Bill 1166, which received bipartisan support, would limit the length of an emergency declaration to 30 days unless approved for a longer duration by the General Assembly. The bill also would amend the Pennsylvania Constitution to prohibit the denial of equal rights based on race or ethnicity. The change would bring the state Constitution into line with the equal protections afforded by the U.S. Constitution. Because Senate Bill 1166 would require an amendment to the Pennsylvania Constitution, the bill must be passed by the Senate and House of Representatives in two consecutive legislative sessions and then approved by voters via referendum. Senate Bill 1166 passed the Senate by a vote of 44-6 and now goes to the House for consideration.
The Senate also approved Senate Bill 1125, sponsored by Sen. Scott Martin (R-Lancaster), that would give each school district the option to extend property tax discount periods and remove penalties for late payments through June 30, 2021. The bill mirrors a proposal signed into law in April also authored by Martin that allows counties and municipalities to provide property tax relief to taxpayers affected by the COVID-19 pandemic. Senate Bill 1125 now goes to the state House for consideration.
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Grant Program Announced for Small Businesses Impacted by COVID-19
Gov. Tom Wolf announced a $225 million statewide grant program to support small businesses affected by the COVID-19 public health crisis and subsequent business closure order.
The funding was developed in partnership with state lawmakers and allocated through the recently enacted state budget, which included $2.6 billion in federal stimulus funds through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, of which $225 million was earmarked for relief for small businesses. The funds will be available through three programs:
- The Main Street Business Revitalization Program provides $100 million for small businesses that experienced loss as a result of the March 19, 2020, order relating to the closure of all non-life-sustaining businesses and have or will incur costs to adapt to new business operations related to COVID-19.
- The Historically Disadvantaged Business Revitalization Program provides $100 million for small businesses that experienced loss as a result of the business closure order, have or will incur costs to adapt to new business operations related to COVID-19, and in which socially and economically disadvantaged individuals own at least a 51% interest and control management and daily business operations.
- The Loan Payment Deferment and Loss Reserve Program provides $25 million and allows the Community Development Financial Institutions (CDFIs) to offer forbearance and payment relief for existing portfolio businesses that are struggling due to the impact of COVID and shores up the financial position of the CDFIs that are experiencing significant increases in defaults in their existing loan portfolios.
Eligible businesses will be able to use the grants to cover operating expenses during the shutdown and transition to reopening and for technical assistance, including training and guidance, for business owners as they stabilize and relaunch their businesses.
The Department of Community and Economic Development (DCED) will distribute the funds to the CDFIs, which will administer the funding in the form of grants.
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House Passes Causer-Dunbar Bill to Boost Rural Broadband Access
To bring much-needed broadband internet service to the state’s most rural communities, the House approved legislation authored by Reps. Martin Causer (R-Cameron/McKean/Potter) and George Dunbar (R-Westmoreland) that would create a grant program to boost investment in the service.
House Bill 2348 would create the Unserved High-Speed Broadband Funding Program and fund it, in part, by repealing the Mobile Telecommunications Broadband Investment Tax Credit. This credit is currently limited to $5 million per year and is available to mobile telecommunication providers to invest in broadband equipment in Pennsylvania. Under the bill, the $5 million would instead be directed toward a grant program.
The grant program would be administered by the Commonwealth Financing Authority. Along with the $5 million appropriation, additional state and federal funding could be directed to the account and used for grant awards.
The bill now goes to the Senate for consideration.
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PASSHE Reform Measure Approved by State House
State Rep. Curt Sonney’s (R-Erie) legislation to update and reform the Pennsylvania State System of Higher Education (PASSHE) passed the Pennsylvania House with overwhelming bipartisan support.
House Bill 2171 will reform the governance and accountability of PASSHE’s board of governors and the university councils of trustees. The bill will update current laws allowing the chancellor and board of governors to better manage and optimize the state system, as well as be more flexible, responsive, and competitive in today’s everchanging higher education landscape.
Additionally, to create a more streamlined governance structure, House Bill 2171 will add language to clarify the powers and duties of the board of governors, chancellor, university councils of trustees, and university presidents.
House Bill 2171 passed the House 200-2 and now heads to the Senate for consideration.
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Special Needs Bill of Rights Passes House
The state House unanimously passed legislation to create a bill of rights for those with special needs.
House Bill 1363, sponsored by Rep. Tom Murt (R-Montgomery/Philadelphia), requires the Department of Human Services (DHS) to develop and submit a plan to address the waiting list for community-based services for people with intellectual disabilities. Within one year of the bill’s effective date, DHS must develop a five-year plan to eliminate the current and future critical and emergency waiting list for individuals with intellectual disabilities. This plan would be submitted to the governor, the General Assembly, and the county intellectual disability program administrators.
The bill would require that DHS’s plan include statistical information on the current and projected annual increase to the waiting list on a county basis. It would also require DHS to examine the costs associated with eliminating the waiting list.
House Bill 1363 now moves to the Senate.
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