Gov. Tom Wolf Signs PPP Loan Forgiveness Measure
The PICPA won a major legislative victory when state lawmakers added a provision addressing Paycheck Protection Program (PPP) loan forgiveness to legislation providing COVID-19 relief to Pennsylvania small businesses. Senate Bill 109 was approved unanimously by the state House and Senate and signed by Gov. Tom Wolf. It is now Act 1 of 2021.
As originally drafted and approved last week by the Senate, Senate Bill 109 appropriates $197 million in educational grants, $570 million for rental and utility assistance, and $145 million for grants to the restaurant and hospitality industry. On Feb. 4, Senate Bill 109 was amended in the House Appropriations Committee with language mirroring Rep. George Dunbar’s (R-Westmoreland) House Bill 385. That bill would exempt income received from the federal PPP from taxation under the state’s Personal Income Tax (PIT).
The U.S. Congress exempted PPP income from federal taxation in the Consolidated Appropriations Act of 2021. Because the corporate net income tax (CNIT) conforms to the federal tax base, PPP income is not taxable under Pennsylvania’s CNIT. Because the PIT does not conform to the federal individual income tax base, PPP income would not automatically be excluded from the PIT. Approximately 80% of businesses in Pennsylvania pay the PIT.
House Bill 385, sponsored by Rep. Dunbar, was reported out of the House Finance Committee by a vote of 19-6 (see how your representative voted).
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Gov. Wolf Proposes $36.1 Billion FY 2021-2022 Spending Plan
In his budget plan for fiscal year 2021-2022, Gov. Tom Wolf says he will remove barriers and cut taxes for working class families in Pennsylvania while investing billions of dollars into Pennsylvania schools and workforce development initiatives. The proposed General Fund budget unveiled this week is $36.1 billion, an increase of $1.46 billion, or 4.22% over the prior year.
The governor’s budget plan includes several tax proposals and tax law changes. The governor is again proposing mandatory combined reporting in conjunction with a phasing down of the corporate net income tax (CNIT) rate and cap on net operating losses at 40%. These changes would generate $208.5 million in additional revenue. The governor also is again calling on lawmakers to approve his proposed severance tax on Marcellus Shale natural gas production.
Wolf is seeking a significantly higher personal income tax (PIT) rate (from 3.07% to 4.49%) in conjunction with expanded tax forgiveness. Under the governor’s proposal, the special tax forgiveness credit will be expanded, and working class families will have their taxes reduced or eliminated completely. The proposal increases the allowances for tax forgiveness to $15,000 for single filers, $30,000 for married filers, and $10,000 allowance for each dependent. Filers with incomes at or below these thresholds will receive 100% tax forgiveness. The percentage of tax forgiveness declines by one percentage point for each $500 above the threshold for 100% forgiveness. For example, families with two children making less than $84,000 will receive a tax cut, while a family of four making $50,000 will have their taxes eliminated.
Legalizing recreational marijuana is one of the governor’s top legislative priorities. The revenue generated from legalization will be used to support historically disadvantaged small businesses through grant funding and provide them the assistance they need to rebuild from the economic crisis and strengthen our economy.
The governor is proposing more than $1.3 billion in basic education funding. This investment directs all existing state-level basic education funding through the Fair Funding Formula and includes a $1.15 billion adjustment so that no school district is negatively affected. An additional $200 million investment in basic education funding is proposed to allow all districts to continue to invest in student achievement.
The governor’s plan lowers the maximum administrative set-aside for scholarship organizations participating in the Education Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC) programs from 20% to 5%, which will increase the amount of money available for scholarships by up to $36 million without increasing costs for taxpayers.
The governor also is proposing comprehensive Charter School Law reform that will save school districts an estimated $229 million per year. These resources can be reinvested into students and educators. This package of policy and budget initiatives promotes innovation while ensuring charter schools provide high-quality education, are accountable for their academic performance and financial management, and meet the same standards Pennsylvanians expect from traditional public schools.
Budget hearings will begin in the next few weeks before the House and Senate appropriations committees. The PICPA will monitor the hearings and provide updates as warranted.
You have an opportunity to speak directly to state senators and representatives in your area about the 2021-2022 Pennsylvania budget.
At one of our six PICPA members-only webinars, learn how lawmakers plan to accelerate our state's economic recovery, gain insight into the agenda for the upcoming legislative session, and possibly have your questions addressed. Sign up today! We welcome members to attend any session that interests you, and remember to submit your questions in advance.
- South Central & Central | Feb. 17
Sen. Jake Corman (R-Centre), Senate President Pro Tempore
Rep. Seth Grove (R-York), House State Government Committee Chair
- Pittsburgh & Southwestern | Feb. 18
Sen. Jay Costa (D-Allegheny), Senate Minority Leader
Rep. Nick Pisciottano (D-Allegheny), CPA Legislator
- Greater Philadelphia | Feb. 19
Sen. Art Haywood (D-Montgomery, Philadelphia), Senate Finance Committee Member, Health & Human Services Minority Chair
Rep. Jordan Harris (D-Philadelphia), House Minority Whip
- North Central & Northeastern | Feb. 24
Sen. John Blake (D-Lackawanna, Luzerne, Monroe), Senate Finance Minority Chair
Rep. Aaron Kaufer (R-Luzerne), House Finance, Subcommittee on Tax Modernization and Reform Committee Chair
- Erie & Northwestern | Feb. 25
Rep. Donna Oberlander (R-Clarion, Armstrong, Forest), House Majority Whip
- Lehigh Valley & Reading | Feb. 26
Rep. Matt Bradford (D-Montgomery), Minority House Appropriations Committee Chair
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January 2021 Revenue Collections Fall Short of Mark
Pennsylvania collected $2.7 billion in General Fund revenue in January, which was $162.4 million, or 5.8%, less than anticipated. Fiscal year-to-date General Fund collections total $21.2 billion, which is $307.4 million, or 1.5%, above estimate.
According to the Independent Fiscal Office’s January monthly revenue update, actual collections were $245.8 million below IFO projections. The report compares fiscal year 2020-2021 revenues to the revised IFO official estimate published in January 2021 and compares collections to the prior year. January General Fund revenues of $2.66 billion reflect a decrease of $412.6 million (-13.4%) compared to the same month in the prior year.
Sales tax receipts totaled $1.1 billion for January, $9.9 million above estimate. Year-to-date sales tax collections total $7.5 billion, which is $64.3 million, or 0.9%, more than anticipated.
Personal income tax (PIT) revenue in January was $1.1 billion, $271.9 million below estimate. This brings year-to-date PIT collections to $8.5 billion, which is $235.9 million, or 2.7%, below estimate.
January corporation tax revenue of $186.3 million was $61.3 million above estimate. Year-to-date corporation tax collections total $2.4 billion, which is $371.7 million, or 18.7%, above estimate.
In addition to the General Fund collections, the Motor License Fund received $197.2 million for the month, $10.5 million below estimate. Fiscal year-to-date collections for the fund – which include the commonly known gas and diesel taxes, as well as other license, fine and fee revenues – total $1.6 billion, which is $16.3 million, or 1.0 percent, below estimate.
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Bills to Protect Quality, Stable Health Care in Pa.
State Sens. Vincent Hughes (D-Philadelphia/Montgomery), Maria Collett (D-Montgomery/Bucks), Wayne Fontana (D-Allegheny), and Tim Kearney (D-Delaware) reintroduced a package of bills to ensure Pennsylvanians maintain quality, stable health care for years to come.
The legislation package aims to codify certain protections to help stabilize health care in Pennsylvania, independent of federal mandates. The bills reintroduced include:
- Senate Bill 50 – Prohibits denial of coverage based on preexisting conditions.
- Senate Bill 51 – Provides for essential health benefits such as mental health and addiction treatment.
- Senate Bill 52 – Prohibits selling insurance policies that have an annual or lifetime limit on coverage.
Pennsylvania has fully implemented the federal Patient Protection Act and the Affordable Care Act, which has led to an increase in insured individuals and rate decreases. The senators want continued growth through the exchange and policy that will at least maintain the same levels of coverage as the prior year.
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Senate Hearing Details Inadequacies of State’s Vaccine Distribution
The Senate Health and Human Services Committee and the Senate Aging and Youth Committee heard testimony about the difficulties in prioritizing vaccines for residents of long-term care facilities. According to the U.S. Centers for Disease Control data tracker, as of the day of the hearing, Pennsylvania ranked 45th in the percentage of received COVID-19 vaccines administered.
One speaker who represented long-term care facilities pointed out that only 32 of the state’s 1,200 assisted living facilities and personal care homes have been scheduled or received their first vaccine, and approximately 150 of the state’s 700 nursing homes have not completed their first vaccination clinic.
Testimony was provided by representatives from the Pennsylvania Department of Health, hospitals, long-term care advocates, and pharmacies.
Several suggestions were offered to improve the state’s distribution plan and ensure more vaccines are distributed to eligible Pennsylvanians quickly and efficiently. Acting Secretary of Health Alison Beam expressed a willingness to explore new options to improve the state’s distribution plan.
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Advisory Commission Accepts Audit of General Assembly’s 2020 Finances
The bicameral, bipartisan Legislative Audit Advisory Commission (LAAC), chaired by Rep. George Dunbar (R-Westmoreland), voted unanimously to accept the audit report of the Pennsylvania General Assembly’s finances for the 2020 fiscal year as conducted by an independent CPA firm. The audit was carried out by Boyer and Ritter LLC of Camp Hill.
The annual audit of the various legislative departments and service agencies revealed a reserve of $200,065,204 as of June 30, 2020. View the full audit and report. Audits and reports from previous years are also available online.
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Boockvar Out at Department of State
Kathy Boockvar, secretary of the Pennsylvania Department of State, has resigned effective Feb. 5 in response to her department’s failure to advertise a proposed constitutional amendment that would extend retroactively the timeline for victims to file civil actions against their abusers. Because of the error, the process to amend the Pennsylvania Constitution must now start from the beginning, unless the General Assembly pursues this initiative through the bill process.
The proposed constitutional amendment, a response to the child sexual abuse by Catholic clergy, first passed the legislature as House Bill 963 in November 2019. The Department of State was required to advertise the wording of the proposed constitutional amendment in two newspapers in every county, in each of the three months before the next general election when members of the General Assembly are elected. That advertising did not occur before the 2020 general election.
Proposed constitutional amendments must pass in two consecutive sessions of the state legislature, after which the proposal is put to the voters in a statewide referendum. The General Assembly was set to begin the process for the second passage this week, but Department of State staff noticed late last week that the amendment had not been previously advertised.
Gov. Wolf will appoint Veronica Degraffenreid to serve as acting secretary of the Department of State. Degraffenreid was the department’s special advisor on election modernization. She has over 12 years of experience in election administration and was the former director of election operations for the North Carolina State Board of Elections.
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