Week Ending April 2, 2021

Apr 02, 2021


Pa. House Takes Up Two PICPA-Backed Proposals

PICPA’s advocacy efforts scored two legislative victories recently in the Pennsylvania House.

House lawmakers unanimously approved legislation sponsored by PICPA member Rep. Keith Greiner, CPA (R-Lancaster), that permits licensed professionals, including CPAs, architects, and engineers, to receive advice from their licensing boards. Under House Bill 325, no person who acts in good faith on an advisory opinion issued by a licensing board or commission shall be subject to criminal or civil penalties or any disciplinary action by the board or commission, provided that the material facts are as stated in the opinion request. Similar to Department of Revenue Letter Rulings, an advisory opinion shall not be binding upon the licensing board or commission except with respect to the person for whom the opinion was rendered. Likewise, they will be public records and may be published. House Bill 325 will now go to the Senate for consideration.

Another bill championed by PICPA, House Bill 766, also sponsored by Greiner, changes the due date for corporations to file Pennsylvania tax returns, from 30 days after the due date of federal returns to the 15th day of the month after the due date of the federal return. House Bill 766 was unanimously reported from the House Finance Committee. While technical in nature, the bill will create more certainty and eliminate confusion for corporate taxpayers. The bill is pending before the full House for a vote.

 

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Competing COVID Recovery Plans Outlined by State House Lawmakers

State House Democrat and Republican lawmakers recently outlined a range of COVID-19 recovery plans. The competing initiatives will likely be vetted as part of upcoming budget negotiations for the fiscal year that begins July 1.

“Now that we’re breaking records getting people vaccinated and there is truly hope on the horizon, we need to make sure we’re directing those American Rescue Plan dollars to the people who’ve been hit the hardest by COVID’s impact on our economy,” House Democratic Leader Joanna McClinton (D-Philadelphia, Delaware) said. “From supporting businesses that couldn’t go virtual to helping workers who need help paying for training or college, the House Democrats’ PA Rescue Plan is our best path to recovery.”

The Pennsylvania Rescue Plan invests federal dollars to help workers, businesses, and schools. Key components of the Pennsylvania Rescue Plan call for investing $1.1 billion in businesses, $800 million for public health infrastructure and preparedness, $1 billion to support families, and $168 million on workforce development programs.

House Republicans’ Commonwealth COVID Comeback initiative would incentivize manufacturers and provide protections to small businesses, and would offer tax and regulatory reform to bring family-sustaining jobs to Pennsylvania.

Rep. Josh Kail’s (R-Beaver, Washington) bill would allow the Commonwealth Financing Authority to designate strategic and targeted zones in the state to be used as a base of operations for manufacturing. Businesses in those zones would receive tax abatements for state and local taxes and would be eligible for targeted job creation tax credits.

A second bill, sponsored by Rep. George Dunbar (R-Westmoreland), would allow companies to deduct net operating losses up to 100%. The additional 60% deduction can only be from losses incurred in 2020.

A bill drafted by Rep. Natalie Mihalek (R-Allegheny, Washington) would provide tax relief to low-income families and foster a climate aimed to assist struggling businesses and attract new business by adjusting the special poverty provisions tax exemption thresholds and reducing the corporate net income tax from 9.99% to 5.99% by Jan. 1, 2025.

A bill authored by Rep. Torren Ecker (R-Adams, Cumberland) would help provide for the expedited and efficient resolution of lawsuits arising out of exposure to COVID-19.

 

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PICPA Virtual Town Halls Offer Exclusive Access to Elected Officials

The PICPA government relations and chapter relations teams recently hosted a second series of six virtual town hall meetings representing all 11 PICPA chapters. Sixty-three PICPA members spoke directly to state House and Senate leaders about the 2021-2022 Pennsylvania budget and other legislative issues in these PICPA’s exclusive town-hall-style discussions.

Our guests included state Sens. Jake Corman (R-Centre), Art Haywood (D-Montgomery, Philadelphia), Jay Costa (D-Allegheny), Joe Pittman (R-Armstrong, Butler, Indiana, Westmoreland), and Judith Schwank (D-Berks). From the state House, we hosted Reps. Seth Grove (R-York), Jordan Harris (D-Philadelphia), Nick Pisciottano (D-Allegheny), Donna Oberlander (R-Clarion, Armstrong, Forest), and Matt Bradford (D-Montgomery).

Some topics included Gov. Wolf’s proposed budget, the ongoing COVID-19 pandemic and the fiscal challenges associated with it, an increase in the minimum wage, redistricting, property tax reform, and strategies for addressing skilled worker shortages.

The series gave all members throughout Pennsylvania an opportunity to hear from elected officials in an informal setting, connect with them, and ask questions. We plan to hold more of these sessions in the future. We hope you will join us.

If you missed the most recent series of advocacy updates, replays are available

 

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March State Revenue Collections Come in Higher than Estimates

Pennsylvania collected $4.8 billion in General Fund revenue in March, which was $378.2 million, or 8.5%, more than anticipated, according to the Department of Revenue. Fiscal year-to-date General Fund collections total $28.7 billion, which is $1.3 billion, or 4.7%, above estimate.

According to the Independent Fiscal Office’s (IFO) March monthly revenue update, actual collections were $284.2 million above IFO projections. The report compares fiscal year 2020-2021 revenues to the revised IFO official estimate published in January 2021 and to the prior year. March 2021 General Fund revenues of $4.84 billion reflect an increase of $407.9 million (9.2%) compared to the same month in the prior year.

Sales tax receipts totaled $916.0 million for March, $85.8 million above estimate. Year-to-date sales tax collections total $9.3 billion, which is $256.8 million, or 2.8%, more than anticipated.

Personal income tax (PIT) revenue in March was $1.4 billion, $95.1 million above estimate. This brings year-to-date PIT collections to $11.2 billion, which is $272.6 million, or 2.5%, above estimate.

March corporation tax revenue of $2.2 billion was $82.6 million above estimate. Year-to-date corporation tax collections total $4.6 billion, which is $476.7 million, or 11.5%, above estimate.

Inheritance tax revenue for the month was $155.7 million, $59.5 million above estimate, bringing the year-to-date total to $963.2 million, which is $105.8 million, or 12.3%, above estimate.

Realty transfer tax revenue was $52.5 million for March, $16.5 million above estimate. This brings the fiscal-year total to $465.6 million, which is $68.7 million, or 17.3%, more than anticipated.

Other General Fund tax revenue, including cigarette, malt beverage, liquor, and gaming taxes, totaled $70.1 million for the month. This is $21.1 million above estimate and brings the year-to-date total to $1.3 billion, which is $62.0 million, or 4.9%, above estimate.

Nontax revenue totaled $118.8 million for the month, $17.6 million above estimate. This brings the year-to-date total to $825.3 million, which is $37.0 million, or 4.7%, above estimate. 

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Committees Begin Pushing Out Legislation

After a slow start to the new legislative session, House and Senate committees are now moving on legislative proposals. Here are some of the bills recently approved by committees that are pending before the state House and Senate.

The Senate Finance Committee recently approved a number of measures, including a Constitutional amendment titled the “Taxpayer Protection Act” that limits spending increases. The committee also reported a bill that clarifies the sales tax exemption for multipurpose agriculture vehicles and legislation that allows for dynamic scoring for revenue estimates by the Independent Fiscal Office for bills and the annual budget that could have an impact of $50 million or more.

The House Commerce Committee recently approved a series of bills to help small businesses. The committee approved legislation that would guarantee that one customer at a time could shop in small-business stores during a state of emergency and a proposal that would authorize certain financial institutions to offer customers incentives for saving money. Also reported from the committee was legislation requiring businesses that apply for the Second Stage Loan Program to be located in Pennsylvania.

The House State Government Committee advanced a bill sponsored by PICPA member Rep. Frank Ryan, CPA (R-Lebanon), that would establish a bipartisan Keystone Solvency Operating Study (SOS) Commission. Under House Bill 120, the commission would analyze past and projected economic conditions and risk factors related to the unfunded obligations of municipalities, school districts, public pension plans and post-employment benefits, as well as the aftermath of the COVID-19 pandemic. The commission would have six months to conduct its study and report its findings and recommendations to the governor and General Assembly. House Bill 120 is headed to the full House for consideration. 

 

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Constitutional Amendment Would Eliminate School Property Taxes

State Sen. John DiSanto (R-Dauphin) and Rep. Perry Stambaugh (R-Perry, Cumberland) introduced a plan that would allow Pennsylvania residents to vote directly on the elimination of school property taxes through an amendment to the state constitution.

These constitutional amendments, Senate Bill 424 and House Bill 927, would task the General Assembly with replacing property tax revenue with a combination of state and local sales and income taxes. The proposal would also ensure local school districts receive the same amount of revenue as the year prior to enactment so school needs are met. A constitutional amendment bill must pass the Senate and House in two consecutive sessions to be placed on the ballot.

Sen. Wayne Fontana (D-Allegheny) is taking a different approach toward property tax reform. Fontana’s Senate Bill 380 would freeze school property tax rates at 2020 levels. The bill has been referred to the Senate Finance Committee for study.

 

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Senators Introduce Renewable Energy Measure

State Sens. Art Haywood (D-Montgomery, Philadelphia) and Dan Laughlin (R-Erie) plan to introduce legislation that will promote economic development efforts and generate jobs by supporting alternative energy production and use.

The new legislation proposes the following:

  • A more modest increase in Pennsylvania’s Alternative Energy Portfolio Standards (AEPS) Tier I goal – 18% by 2026 – that will still spawn new investment and create jobs while minimizing impacts to all electric customers.
  • A requirement that a 3.75% portion of the 18% comes from in-state, grid-scale solar (i.e., projects greater than 5 megawatts) and 1.75% comes from in-state distributed solar (i.e., rooftop solar projects connected to the distribution grid).
  • A limit on the cost of the alternative energy credits (AEC) and providing for long-term contracting (minimizing impacts to ratepayers) and calling for a study of renewable energy storage.

AEC trading is a market-based program that drives renewable energy investments based on supply and demand. Thus, as the goal rises, the industry brings investment to build and meet that goal. When the goal is met, investment slows, say the senators. Under the current AEPS, Pennsylvania is on track to surpass its goal for renewable energy, which drives AEC pricing.

The provisional program expires in May 2021. Without an adjustment to this law, surrounding states will outperform the economic development in Pennsylvania. New Jersey, Delaware, Maryland, New York, and most New England states have AEPS goals of 50% by 2030. Last year, Virginia enacted a law calling for 100% clean energy by 2050. Immediate action will ensure the renewable energy economy continues to develop in Pennsylvania.

 

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